THE GROWTH OF

SPECIALIZED AND
FASHION RMG OF
BANGLADESH

ASM Towheed
Department of International Business
 THE GROWTH OF SPECIALIZED AND FASHION RMG OF
BANGLADESH

ASM Towheed
ID - 801312006
Department of International Business,
University of Dhaka

Supervisor: Abu Hena Reza Hasan, Professor - Department of International Business

05th May 2018

Director EMBA

Department of International Business,

University of Dhaka

Subject: Submission of internship report on “the growth of specialized and fashion RMG of Bangladesh”

Honorable Madam,

Here is the internship report I prepared on the growth of specialized and fashion RMG of Bangladesh as you
asked to submit on 03rd May. The paper has been completed by the knowledge that I have gathered from course
in EMBA and my working experience.

This paper presents the existing state of specialized and fashion RMG as lingerie, activewear, tailoring and
ladies dress, the business status of top ten factories those are producing these range of garment and what would
be the alternative outcome should the raw materials are sourced from local source instead of importing.

It is a result of my hard work of last three months I had to dive deep into the industry situation for last three
years, finding out the cost pattern, challenges and opportunities and figure out the reasonable possibility of gain
for these facilities to increase the share of their earning from the projection of 2017-18. I have completed this
assignment meaningfully and correctly as to my knowledge.

Sincerely your ’s

ASM Towheed

ID – 801312006

Department of International Business,

University of Dhaka
 ACKNOWLEDGEMENT

I am thankful to all those persons who provided important information and gave me valuable advices on the
subject matter - Badria Khan, Sunayan Das from M&S and Rahat Khan from M&S.

The personals took their time and helped me with the survey are Rahman Abdur from DBL group, Rashel Khan
from M&S, Forhad Hossain M&S, Zahid Mahmud from M&S, Ruwan Manage from FCI, Monir Hossain from
M&S, Shariful Islam from M&S, Mohammad Shahneoaz from SQ, K.M Tharindu Darshana Wawarathne from
Yunusco, Sanjida Islam from M&S, Partha Das from Kenpark, Zahidur Rahman Tanjil from CMI, Abdullah al
Mamun from Universal and Mohon Rahman from Hams.

Lastly, my wholehearted gratitude to my advisor, Professor Abu Hena Reza Hasan of the Department of
International Business at University of Dhaka for his throughout guidance preparing this paper.
 TABLE OF CONTENTS
SUMMARY ........................................................................................................................................................ 9
CHAPTER 1: INTRODUCTION ...................................................................................................................... 10
CHAPTER 2: LITERATURE REVIEW ........................................................................................................... 12
CHAPTER 3: METHODOLOGY ..................................................................................................................... 14
3.1 Primary objective..................................................................................................................................... 14
3.2 Secondary objective................................................................................................................................. 14
3.3 Research Design ...................................................................................................................................... 14
3.4 Sample Design ......................................................................................................................................... 15
3.5 Analysis ................................................................................................................................................... 15
3.6 Limitation ................................................................................................................................................ 15
CHAPTER 4: HOW THE GROWTH IS ACCOMPLISHED .......................................................................... 16
4.1 The courage the take on the challenge..................................................................................................... 16
4.2 Presenting newness as in new products and ideas to the board ............................................................... 16
4.3 Efficient cost of manufacturing ............................................................................................................... 16
4.4 Consistent delivery performance ............................................................................................................. 16
4.5 Hasty adoption of these technical know-how .......................................................................................... 16
CHAPTER 5: REVIEW OF THE LAST THREE YEARS PRODUCTION OF MAJOR FACTORIES......... 18
5.1 SQ Birichina Ltd...................................................................................................................................... 18
5.2 Yunusco (BD) Limited ............................................................................................................................ 20
5.3 DBL Group .............................................................................................................................................. 21
5.4 FCI BD .................................................................................................................................................... 22
5.5 Universal Menswear Ltd ......................................................................................................................... 24
5.6 Energypac Fashions limited .................................................................................................................... 25
5.7 Kenpark apparel limited .......................................................................................................................... 26
5.8 CMI industry Bangladesh ........................................................................................................................ 28
5.9 Beximco Textiles and Apparel Division ................................................................................................. 29
5.10 HAMS Group ........................................................................................................................................ 30
CHAPTER 6: THE WAY FORWARD TO GAIN MORE ............................................................................... 32
6.1 Findings of the study ............................................................................................................................... 32
Lingerie ......................................................................................................................................................... 33
Tailoring ........................................................................................................................................................ 35
Activewear..................................................................................................................................................... 37
Ladies dress ................................................................................................................................................... 38
6.2 Challenges ............................................................................................................................................... 39
6.3 Conclusion ............................................................................................................................................... 39
6.4 Bibliography ............................................................................................................................................ 40
 LIST OF FIGURES

Figure – 1 Business status in last three years in lingerie for SQ Birichina Ltd……………………………...14

Figure – 2 Business status in last three years in lingerie of Yunusco (BD) Limited………………………...16

Figure – 3 business status in last three years for lingerie of DBL group……………………………………17

Figure – 4 business status in last three years for tailoring of FCI BD………………………………………19

Figure – 5 business status last three years for Men’s Tailoring for Universal Menswear Ltd………………20

Figure – 6 Business status last three years for Men’s Tailoring of Energypac Fashions limited……………21

Figure –7 Business status in last three years for activewear of Kenpark apparel limited………………...…22

Figure – 8 Business status in last three years for activewear for CMI industry Bangladesh……………..…24

Figure – 9 Business status in last three years for dress of Beximco Textiles and Apparel Division…….......25

Figure – 10 Business status in last three years for dress of HAMS Group………………………………….26

Figure – 11 Lingerie projection for 2017-18 (values are in $ million)……………………………………...29

Figure – 12 Tailoring projection for 2017-18 (values are in $ million)…………………………………….31

Figure – 13 Activewear projection for 2017-18 (values are in $ million)………………………………......33

Figure – 14 Ladies dress projection for 2017-18 (values are in $ million)………………………………….34

 LIST OF TABLES

Table – 1 gains through local sourcing for SQ Birichina Ltd…...…………………………..…………………29

Table – 2 gains through local sourcing for Yunusco (BD) Limited…...………………………………………30

Table – 3 gains through local sourcing for DBL Group…...……………………………..……………………30

Table – 4 gains through local sourcing for FCI BD…...……………………………………………………….31

Table – 5 gains through local sourcing for Universal Menswear Ltd…...………………..……………………32

Table – 6 gains through local sourcing for Energypac Fashions limited…...…………….……………………32

Table – 7 gains through local sourcing for Kenpark apparel limited……………………………………….33

Table – 8 gains through local sourcing for CMI industry Bangladesh………………...……………………34

Table – 9 gains through local sourcing for Beximco Textiles and Apparel Division….……………………35

Table – 10 gains through local sourcing for Hams group..…………………………………………………35

 SUMMARY

Since the first delivery of 1 million pieces of shirts to South Korea from Riaz Garments on 1973 the RMG of
Bangladesh has grown to a staggering number of $28.5 Billion in 2016-17, delivering over 6.4% of all the
apparel production of the world. The inception in the business was very basic garmenting, however Bangladesh
is now producing high-end products. The basic shirts, tees and heavy knitwear do not produce a good amount
to profit to the organization anymore as the number of suppliers have grown massively in Myanmar, Vietnam
and India. Besides Portugal and Turkey are competitive due to their geographical location and the overall lead
time from development of the product, production and transport; which is much shorter than of South Asia. The
margin has shrunk and the operating area has saturated. Thus, the attraction of new business area, the growth of
the specialized products as lingerie, activewear, tailoring and ladies dress have been phenomenal. These have
grown in three times over in size in last three years. Even though, Bangladeshi factories are performing as a
benchmark for the rest of the world, there is a distance between the input of raw material that is performance
fabrics, trims against the capabilities to produce these raw materials in country. Bangladesh lacks providing
newness and ingenuity on the fabric and depends heavily on China and South Korea to source the fabric and
trims. However, China’s closing of the appeal industry and focusing more on electronics which will avail a
stellar opportunity for Bangladesh to grab on the fabric and trims to contribute more on the export revenue
approximately by another 30%. This workout will go to the comprehensive details to figure out; the reasons of
growth in Bangladesh in specialized fashion RMG, the challenges of operation, the current contribution on
export, the way to sustain the growth in future and how the industry can gain more from these. This paper will
go through ten major Bangladeshi factories who produce lingerie, activewear tailoring and ladies dress. Most
of them take imported fabric which costs around 55% of the total FOB cost; so do the trims, generally costing
10% of the FOB. Currently all of which are now being imported from outside. Now, some of the performance
fabrics are with synthetic materials which takes years of experience to master and the investments of establishing
these facilities will be colossal. Having said that, there are lots of options for Bangladeshi mills to challenge
their capabilities and deliver a major chunk of fabric. The same goes with the trims, the required trims are
comparatively easy to produce than fabric saving 10% cost of trims can straightway. On the fabric it would pose
a bigger challenge, however of all the imported fabrics Bangladeshi factories use around half of them can be
produced locally. It means these local factories will not have to give away almost half of the FOB costs rather
this amount of foreign currency could be rotating inside the country and be used to develop the local mills. It
will also improve the overall lead time as the raw materials take around 30 to 45 days for production and another
30 days by sea to reach to the factory in Bangladesh. The transit time of 30 days will immediately be zero when
these are taken from the local source, the cost of transporting will be off which directly reduces the cost of
overall FOB price. To grow the lingerie, activewear tailoring and ladies dress business and gain more,
Bangladeshi mills need to invest more on the fabric and the trims and grow some more in the specialized and
fashion produces in the process.
 CHAPTER 1: INTRODUCTION

For a country that does not produce cotton, Bangladesh sets a standard for the rest of the world being the second
largest source for apparel. At the beginning, 45 years ago, the RMG started in a very small scope, the factories
started increasing the capacity at the late 80 and now this is grown so much as 81% of the export earning
generates from this sector, 4 million people are currently engaged in this trade. Right after the liberation war
there were two or three facilities who started making the simplest shirts and tee shirts with all imported fabrics
and trims. During mid 80’s it started as a mainstream business tread, there were 384 factories delivering $31.57
million worth of garments which was 3.89 % on the total export. The number has grown massively in last 30
years, there are well established 4482 factories now and for the year 2016-17 who had delivered $ 28.2 billion
worth of appeals boosting 81.23 % of overall export revenue. For the past 25-30 years the competitors for
Bangladesh were mainly China, India, Sri Lanka, Pakistan, Cambodia, Turkey and some of the sub Saharan
countries. The products were very plain and flat. All the core products as basic tee, shits, trousers and sweaters.
The workers were non-skilled or semi-skilled. But these has changed drastically from 2010.

Even China is moving to the technology based business, construction and engineering, giving Bangladesh a
great window of opportunity to capture that part of business, the Chinese investment in Africa and the GSP
benefit of Sri Lanka pose a bigger threat to the growth. China has invested $4-billion for 470-mile-long
electrified cross-border rail system in Africa. By 2034, Africa is expected to have 1.1 billion workers, the
world’s largest working-age population. Especially on Ethiopia, the Chinese investment is phenomenal.
Besides, SL is getting GSP+ from 19th May 2017 will be a strong competitor for Bangladesh as they come with
some 40 years of experience as well. Except for the mounting stress of the competition, the recent recession
from December 2007 to June 2009 in the US, the shift of business was more into the low-priced products. To
make things more competitive Vietnam and US have struck new trade deal by Trans-Pacific Partnership (TPP),
which makes Vietnam a force to be reckoned with as they aim deliver same quantity as Bangladesh by the year
2010. All the garment retailers had the same challenge to find source with best cost price. It helped Bangladesh
to gain from Turkey and China. With this rising competition Bangladesh had to improvise to maintain and then
increase their spread of the business.

This paper will present the rise of Bangladesh in the heavily technical apparels in terms of managing, executing
the flawless production and great commitment of deliver to the door step of all the big appeal and fashion
retailers. The strong presence of H&M, Walmart, J.C. Penney, Benetton, Gap, Zara, Calvin Klein, C&A, M&S,
Tesco, Carrefour, Esprit, Adidas, Puma, Nike, G-star, BigW, Yamaki, Uniqlo and many others brands are
confident to grow their business in Bangladesh. In last three years many of the Bangladeshi vendors had exceled
on the specialized and fashion RMG, this workout will give the data on top ten facilities and their projections
for the next year. Now there are lots of opportunities for growth in this area of business, but the interesting part
is; the possibility of generating more revenue from the fabrics and trims. The saving of fabrics and trims is
significant even if the small portion of these are manufactured in-country. This workout will focus of the options
of saving in numbers and now that Bangladesh moved out of LDC these exclusivity of specialized and fashion
RMG will keep the progress on going.
 CHAPTER 2: LITERATURE REVIEW

This paper focus on the recent growth of Bangladeshis factories to highly technical and sophisticated products
as lingerie, activewear, tailoring and ladies dress. The concentration of Bangladesh factories has shifted to these
excusive items rather than basic apparels in last five years. There are other reports on the recent progress of
intimate apparels in Bangladesh but they lack contains on activewear, tailoring and ladies dress which are
discussed on this workout. Also, the other papers, blog and newspaper article talks about the growth without
providing the data and the projection. However, the other papers discuss about the diversity that the current
Bangladeshi vendors this paper seeks out the performance of the recent supplier base and intents to convert
them into numbers to support the premise; that is, the possibility of generating more revenue from the fabrics
and trims by using these materials in-country.

The RMG started to grow massively for last 30 years, in the FY 2000-01 the export earnings from RMG was
$4.9 billion, which was 75.14% of total export earnings, it rose to $28.1 billion for the FY 2016-17, making
81.23% of the export earnings. Except for the year 2001-02 (5.68%, to $4.58 billion) and 2016-17 (0.20% rise
to $28.15 billion) the growth of Bangladesh RMG is on the positive figure on each of the financial year. To
sustain the growth the business needs to adapt the change and find the correct flow of motion of the international
bands requirements.

There were hick ups over this long period of time. Aside from the worker unrest, the political crisis, the incident
of Tazreen fashion on 2012 and Rana Plaza on 2013 pushed the RMG business at the edge. There was huge
stress from the retailers’ forum and Disney stopped purchasing from Bangladesh. To build the sense of
confidence over to Bangladesh – Accord and Alliance were formed. They have been working for last 5 five
years will end on May 2018 and the 2nd phase, aka transitional accord, will continue to work on another 3 years
to examine the structural, fire safely compliance and to create federation in the factory to enhance collective
bargaining power. Now that the brands got back the confidence a new era has begun backed with the heavy
investment from the local entrepreneurs. Bangladesh has graduated from the basic products to fashion range,
sophisticated fabric, high SMV (standards minute value) and value added highly technical products.

The brands demand value addition, newness, innovation and the finest craftmanship. To response this
Bangladeshi garment manufacturers have come with Research and development wing, design studio, different
technology and whole new range of product to be more appealing, vibrant and more functional to suffice the
demand and be versatile in the process.

Lingerie: This is one of the most growing fashion item in past 10 years and shows a lot of promise as well. The
business was historically with China, Sri Lanka and Cambodia, but in the context of margin these sources were
getting costly for the international brands and the Bangladeshis facility are performing tremendously. The
lingerie has grown to $493M from $330M in 2016-17 having 15 state-of-the-art facilities, with LEED Green
certification and ever-growing capacity, efficiency and versatility. SQ Birichina was one of the pioneer to start
the project adjointly with H&M on 1997 and now supply for M&S and CK. Intimate Apparels, Apex Lingerie
Ltd, Four H, Hop Lun and DBL group follow the suit pushing Bangladesh as one of the major player in
international intimate garment business.

Activewear: with the technology as smartphone and the smart watches people become more conscious on their
health. The apparel retailers snatched the opportunity to grow the new range with the changed mind set of a big
part of customer. It reveals a greats opportunity for Bangladeshi manufacturers besides the existing small
sportwear. Sports apparel and footwear sales have jumped 42% to $270 billion over the past seven years, half
of which are Activewear. Kenpark, CMI, Habutush are the pioneer of the activewear garments in the country.

Tailoring: Ten years ago, there was only one factory who would me make suits, that is East West Industrial park
all of which were very basic. The number have increased to more than a hundred now they are producing suits
with such sophisticated and costly fabrics that goes $30 to $50 per meter and the FOB cost goes up to $100 for
one suit whereas the selling prices goes as high at $500 for a suit. With the available technology there are
different versions available as Slim, Skinny, Length, Plus fit and of course the classic regular fit. All of which
add more value to the existing volume that Bangladesh is doing and the facilities supporting on growth of
Tailoring are FCI, Shanta, Universal, Energypack, Gee Bee and Kenpark.

Ladies Dress: the latest crown to the Bangladeshis business in RMG is dress. It has just been introduced just a
year ago and picking up strong. Baximco textile, CMI and FCI are the top facilities to produce these range of
product which are previously done in China and Cambodia.

Value added denims and the outerwear are rising as well but capacity building and prospect of the above four
range of phenomenal and practically achievable.
 CHAPTER 3: METHODOLOGY

The workout reviews with the background of the RMG in Bangladesh, the trend of the business to highly
technical products as - lingerie, activewear, tailoring and ladies dress. It focusses on the inception, how these
brunch of business has moved to Bangladesh, growth is last three years, competitors, the recent endeavors of
vendors who are supplying for big brands, the current challenges, opportunities to make more out the recent
business, the forecast for the year 2017-18 for these facilities and how to gain more by using locally produced
material, saving the foreign exchange; so the money can be recirculated in the country to invest on innovation,
to develop resources, installing new machines and infrastructure.

3.1 Primary objective:

This paper will present the rational of last three years of the top ten facilities in Bangladesh who are producing
lingerie, activewear, tailoring and ladies dress. Draw the difficulties and will relate how much can be achieved
if the difficulties are minimized. As the study shows there are options to increase gain and improvements of the
overall garment lead-time, if the raw materials (fabric and trims) are used from local source. This report
approaches that, depending on the facility and product at least 15% (maximum 75%) of the cost can be
reinvested here in country instead of importing from China and Turkey. That will help local factory to grow and
the lead-time will reduce.

The present data and the future projections are used as the plan of the individual facility. These number are legit
as there is no cap on capacity and with the recent flow of the developments, capacity increment, booking from
the retailer these growths are not farfetched.

3.2 Secondary objective:

This workout will also discuss factories role on sourcing the raw material from local source and the saving in
terms of money so the gain from the fabric and trims seem tangible on top of their respective projection for
2017-18.

3.3 Research Design:

It was an underlying research because it tried to find out cost impact on outsource raw material on the top ten
most successful facilities in Bangladesh RMG industry. Most of the data and information were collected by
interviewing based on descriptive questionnaire. But some primary data were also used which was mainly
collected from research papers on similar subject matters.
3.4 Sample Design:

This paper has covered the review and ides if the top successful Business unit managers of different retailers’
Bangladesh sourcing office, experts of the related field, garment makers’ (exporters’) review and forecast.
Around fourth employees from three major international retailer expertise in operation and marketing, twenty
personals from the vendor (garment maker) and two experts on the filed who works on law and economics were
chosen for conducting the interview. Response from personnel of retailer brand and vendor were spontaneous
but in some cases, there were unwillingness of disclosing information on the actual profit / margin from both
the brands and vendors due to legal obligation.

3.5 Analysis:

The data collected from interview were presented in an organized manner. Then this information was used to
make comparisons among competitors from different perspectives which leads to the findings.

3.6 Limitation:

➢ The projections are based on the data provided by the vendors, the paper does not justify the forecast.
➢ This paper does not discuss about the fixed cost of the installment for the new facilities for take on all
the challenges.
➢ As each of the product are different for style, measurements, consumption and end use, it is difficult to
determine the FOB cost for each of the product as individual, thus the concentration of the overall
achieved business and the projected business of the factory.
 CHAPTER 4: HOW THE GROWTH IS ACCOMPLISHED

There are some catalysts of the growth in this country. There are long lists of many success stories and the
reasons are countless, out of those the most outstanding causes are as below:

4.1 The courage the take on the challenge:

It goes on from the 26 years old facilities as Ananta group, producing $250 million revenue yearly with 22000
employees to as latest as Yunusco (BD) Limited only four years old with some earnings of $45 million yearly
– each of the facility possess a great power to take on the challenge and stuck a good deal and make spectacular
opportunities out of the challenges.

4.2 Presenting newness as in new products and ideas to the board:

With the spread of technology keeping up to the speed and world trend in monumental. The credit goes to the
Bangladeshi mills and garment manufactures when they showcase their product hand writing and capabilities
through bringing fresh ideas, innovative techniques and product variations in international fairs and
symposiums.

4.3 Efficient cost of manufacturing:

After the Multi-Fiber Arrangement (MFA) on 1974 the business of RMG started to flourish in Sri Lanka,
Pakistan, India and Bangladesh. Bangladesh has the upper hand when it comes to cost price. The influencing
causes are: availability of skilled, semi-skilled and non-skilled labor, availability of water (a must for wet
processing), the availability of power and gas in EPZ and the positive attitude of investors as the government
gives abundant facility on FDI. But the major reason is the availability of labor. Besides labor, the recent
addition is the use of latest technology. All of which makes the production efficient and effective on strict cost
control.

4.4 Consistent delivery performance:

The newness, development, skilled labor these efforts will be in vain if the goods do not reach on time to be
launched in the stores and to the door step of the consumers – thanks to all online buys. The delivery
performance of the Bangladeshi facilities is milestone for the rest of the world. Despite the fact that, there is
just only one major sea port – which is shallow that the mother vessels cannot reach, the traffic packed highways
and monsoon flood situations all of the brands are satisfied with the performance on timely delivery.

4.5 Hasty adoption of these technical know-how:

Everyone wants a quick turnout of replication and the sooner the return on investment comes out the better, the
RMG is no difference and even some of the cases they are even more adamant when it comes to the return on
new technology. All new facilities have implemented new technologies as the brands require new fashion,
techniques and of course cost reduction, all of which are met and indicates the progress of Bangladeshi factories
on the way to offer agility, flexibility and adaption of the new way of working.
 CHAPTER 5: REVIEW OF THE LAST THREE YEARS PRODUCTION
OF MAJOR FACTORIES

This part is dedicated for top 10 Bangladeshi garment manufactures who are doing tremendously well in very
complicated and specialized products. In recent past all of the factories have grown in capacity, capability to
offer a huge range of versatile products and they foresee the growth has just started as all of them are in the
process to install new machines and some of them have ready operation floors waiting for the trained operators
to join.

5.1 SQ Birichina Ltd

SQ Birichina Ltd, was established in 2008 with a capacity of only six flexible modules in partnership with
Quantum Clothing Ltd, a UK based conglomerate and dedicated supplier to Marks & Spencer. In 2010, the local
management took over. The factory is built on 128,000 sft and has an assembly capacity of 46 modules. To
augment the style elasticity and cost competence, we decided to invest greatly on capacity expansion. Currently,
the facility has built additional 97,000 sft and extended the capacity to 110 modules from June 2014. The
strategy here is to stay on top in terms of size and verticality with other leading performers, while drive for
innovation and technological supremacy to match with regional elites to entice the best patrons and better values.

Business status in last three years in lingerie:

SQ Birichina Ltd
FOB Value in $ Million

26.70
22.90

9.70
7.17

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 1 Business status in last three years in lingerie for SQ Birichina Ltd
Challenges:

➢ The fabric and the trims are outsourced costing 75% of the overall FOB price
➢ Challenging FOB price vs raw material cost
➢ Narrowed lead time
➢ Transit and custom clearance lead time is beyond the overall lead-time

Opportunities:

➢ Vertical yarn / piece dyeing to reduce lead-time

➢ Fabric dyeing - first phase of prod by Feb-17 and 3-fold growth done by Feb-18
➢ Fabric printing and AOP facility installation
➢ Vertical Elastic facility deployment for cost reduction
➢ Foam Molding by themselves so they do not have import anymore
➢ Lean implementation by Aug-17
➢ RFID (Real time prod / traceability) to improve efficacy
➢ P2P - panel to pack integrating sectional operations in to single modular system
➢ "Avanzar" - 1:12 Optimizing Man / Machine ratio
➢ Fast track modules - speed and Flexibility
➢ Fastreact - efficient planning software to reduce time of executions
➢ WFX (world fashion exchange) software for merchandising executions, inventory and production
update to get the idea of new trend and present the product range accordingly
➢ Providing design and product intelligence including seasonal trend direction, mood boards, color palette
trends, latest silhouettes, yarn/fabric & lace directions
➢ Providing direction toward latest yarn and fabric trends ahead of the buying seasons through visits to
the key trade fairs in both Europe and the Far East (Pitti Filati, Spin Expo, Salon International &
Interfile)
➢ Offering a bespoke service to all customers in-line with their requirements; from color swatch work,
knit downs, stitch and yarn intelligence to creating a full seasonal design collection.
➢ Continuing to invest in the latest technological innovations and advancements around product
development to offer the most up to date service i.e. virtual sampling.

Way to maximize revenue:

The major part of the cost SQ must let go is the cost of trims and fabric. Bangladesh is still there to produce all
the trims required for intimate products. But they can target for the half of the trims locally. The cost of trims is
10% of the FOB price, 5% can be saved. Now fabric costs 65% of the FOB price. There are two kinds of fabrics
– cotton base and man-made based fabric. The Bangladeshi mills can produce all the cotton base fabrics. But
when it comes to man-made based fabric they will have to go a long way to achieve the requirement. From all
the production that SQ do half of them are on cotton base so these can be sourced by SQ themselves saving
32.5% of the FOB cost straightaway.

5.2 Yunusco (BD) Limited

Yunusco has been delivering intimate apparels for H&M and M&S for last three years now, the business status
in last three years especially – Bras and Knickers and the growth is phenomenal. For the FY 2014-15 they rack
up $ 30 million and by the fourth year of operation then aim to double the revenue to $ 65 million.

Business status in last three years in lingerie:

Yunusco (BD) Limited

FOB Value in $ Million

65.00

45.00
37.00
30.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 2 Business status in last three years in lingerie of Yunusco (BD) Limited

Challenges:

➢ Imported fabric (60% of the FOB cost)

➢ Trims (15% of the FOB cost)
➢ Increasing prices of China fabric
➢ Imported materials longer Lead time - port inefficiencies (Sea port & Air Port)

Opportunities:

➢ Vertical integration, AOP Printing, elastics (Knitted, Woven & Jacquard) and packaging.
➢ Formed in house design unit to come up with new design development concepts with expertise.
➢ Bonding unit has been started and developments are under process.
Way to maximize revenue:

In the current process Yunusco (BD) Limited generates $45 million of revenue, but they will have to let go let
go of 75% (60% costs for fabric and 15% for trims) of the income. With their operation into vertical integration
– where they will be able to produce fabric, do the AOP (all over print), manufacture the elastic, polybags and
other packaging items by their own, the will be able to save 37.5% (30% costs for fabric and 7.5% for trims)
that is half of the cost from fabric and trims.

5.3 DBL Group

DBL Group is a diversified business entity which has vertically integrated textile and apparel manufacturing
facilities, with concerns in Dredging, VLSI Design, Sewing Thread, Dyed Fiber & Yarn, ICT &
Telecommunications and Ceramic Tiles. DBL Group started business in 1991 and till date it has resulted in a
conglomerate of 22 concerns. The Group is currently in process of investing into Pharmaceuticals and Light
Engineering sectors. DBL Group has a dedicated and skilled workforce of more than 28,000 employees and had
an annual turnover of USD 365 Million for the year 2015-16. DBL Group supplies quality apparels to globally
renowned retailers and is focused on upholding the reputation of the readymade garments and textiles industry
of Bangladesh. The most recent venture of DBL group is the lingerie project.

Business status in last three years for lingerie:

DBL Group
FOB Value in $ Million

10.00

0.00 0.00 0.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 3 business status in last three years for lingerie of DBL group
Challenges:

➢ Most of the trims are imported

➢ Increasing prices of China fabric
➢ Lead time
➢ Continuous price pressure
➢ Energy crisis
➢ To get skilled worker is a big challenge at that area: it takes time and money to train the new set of
operation from

Opportunities:

➢ Trims can produce by own source

➢ vertical setup to reduce lead time
➢ product diversification
➢ low labor cost

Way to maximize revenue:

On the first year of producing lingerie DBL finds it suiting and aims for $10 million for the financial year of
2017-18. DBL perceives that 10% of the cost are going out of country for trim and another 55% of the cost goes
on fabric. They already have a state of the art facility for cotton based fabric and AOP to back up 60% of the
fabric requirement but the rest they will have to pay to China for man-made fabric. They have a plan to do all
the trims from the same facility. This way they will be able to save 40% of the total cost of the FOB.

5.4 FCI BD
Had been in operation since 1997, from inception FCI have been producing versatile arrays of garments, ranging
from soft tailoring to structured formal outerwear for many Global Brands. The business is known for the highest
compliance standards, state of the art manufacturing facilities and world class technical know-how. For the past
three years they are performing exceptionally well in tailoring. They had a minor hick up for the FY 2015-16,
but made it up in the next year and projected a growth of 200% for 2017-18.
Business status in last three years for tailoring:

FCI BD
FOB Value in $ Million

4.50

3.14

1.40
0.95

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 4 business status in last three years for tailoring of FCI BD

Challenges:

➢ There are no near sourcing options available for PVL type fabric and must import everything from
China, but there are options to procced with trims as buttons, elastics and readymade waist bands to
produce in-country which cost around 12 to 15% of the FOB.
➢ Limited technical resources available in Bangladesh and must rely on Expat Technical expert for
tailoring
➢ Due to the limitations in Bangladesh sea port /airport and general infrastructure, difficult to offer quick
response compared to countries such as Turkey.

Opportunities:

➢ There is a big potential to migrate high-end product completely to Bangladesh from China and Turkey
and Eastern Europe due to the cost benefit
➢ Design and sourcing options could be leveraged to attract more business
➢ Could offer UK/European technicians in Bangladesh to elevate product status and hand writing
➢ Marketing Opportunity of Bangladesh as country with quality consciousness as there is a perception
that European or east Asian quality is superior in some circles which is far from reality.

Way to maximize revenue:

Now, the idea of producing fabric in-country might be farfetched as it takes a quite a good amount of time to
master the process in the terms of cost it will be 60% of the FOB price. But the option is available to aim for
the low hanging fruits as buttons, elastics and readymade waist bands. They can however save 15% of the cost
of trims sourcing them locally.

5.5 Universal Menswear Ltd

Universal Menswear Ltd. is Established in 2012 as a Joint Venture Company with Bangladesh and Romania
manufacturer to produce Men’s fine tailored Suits, Jackets, Coats and Trousers.

Business status last 03 years for Men’s Tailoring:

Universal Menswear Ltd

FOB Value in $ Million

51.00
41.00 43.00
35.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 5 business status last three years for Men’s Tailoring for Universal Menswear Ltd

Challenges:

➢ Limited Tailoring Factory, Bangladesh have Only 6 tailoring factories out of total 6500 factories.
➢ 100% dependent on Imported fabric (65% of the FOB cost)
➢ Trims (6% of the FOB cost)
➢ Wool price in dramatically shooting Up, impacting on overall Garment price.
➢ Dependent on foreign Technical expertise
Opportunities:

➢ Competitive Price.
➢ Bangladesh can produce the trims including Hangers (Hanger is the Longest Lead Time items after
fabric) in Country.
➢ Factories have invested a Lot in modern machineries, people and established their own design studio.
➢ Factories have doubled sewing lines and finishing lines so there is no dearth of capacity.

Way to maximize revenue:

Universal can save the 6% cost of trims by producing from own facility. But they will have to let of the 65%
cost of fabric as the local mills are yet to be there to support with the fabric.

5.6 Energypac Fashions limited

Energypac Fashions limited was first established back in 2007 with 5 production line to produce formal trousers
with a vision to become a world Class Tailoring Factory within 10 Years.

Business status last three years for Men’s Tailoring:

Energypac Fashions limited

FOB Value in $ Million

30.00

22.00
17.00 18.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 6 Business status last three years for Men’s Tailoring of Energypac Fashions limited

Challenges:

➢ Dependency on Imported fabric (70% of the FOB cost)

➢ Trims (10% of the FOB cost)
➢ Ever increasing fabric and chemical price
➢ Yet to grow the sense of highly fashioned custom-made suits
Opportunities:

➢ Innovative approach to engage high end customers

➢ Open capacity to grow more and skilled labor force to engage
➢ The factory in continue to invest in latest technology to keep up with the challenge of efficiency and
effectivity

Way to maximize revenue:

The biggest part of cost is fabric and the factory will continue to have the fabric sourced from China and Turkey.
The gain will be the 15% cost of trims

5.7 Kenpark apparel limited

Established in 2000, Kenpark is located in the two Export Processing Zones in Chittagong. The company
employs a growing cadre of over 15,600 and has transformed since its modest beginning from a 7-production
line manufacturer in a rented facility, to a benchmark apparel manufacturer in Bangladesh today. They have
now 7 facilities with over 15600 workforce to deliver for over 20 brands worldwide.

Business status in last three years for activewear:

Kenpark apparel limited

FOB Value in $ Million

7.00

5.00

1.00
0.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure –7 Business status in last three years for activewear of Kenpark apparel limited
Challenges:

➢ Imported fabric 40% of the FOB cost

➢ Trims are the 20% of the FOB cost, half of which are imported
➢ Increasing prices of China fabric
➢ Imported materials longer Lead time - port inefficiencies (Sea port & Air Port)

Opportunities:

➢ The fabrics are very technical, hard to achieve the quality from the local source
➢ The half of the trims like the zipper, woven elastic can be produced locally

Way to maximize revenue:

The gain will be from trims that is 20% of the overall cost. The fabrics are heavy on man-made base – polyester
and nylon which Bangladeshi mill cannot produce. Recently some of the factories started the polyester dyeing
but they are just at the initial stage of the learning curve thus the cost is too high to bear. It helps on the overall
lead time but no so much with the FOB price. 10 years down the line these mills will have the capability to
support for now the factories need to concentrate on the gain of trims.
5.8 CMI industry Bangladesh
CMI is delivering since late 2000s but recently they have come up with the activewear range which turned out
to be a fruitful project from them the growth of the business is 67.12% plus on the year but the cost of fabric
and the lead-time is hurting them as the retailers stress for margin benefits every year.

Business status in last three years for activewear:

CMI industry Bangladesh

FOB Value in $ Million

22.11

13.23

0.00 0.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 8 Business status in last three years for activewear for CMI industry Bangladesh

Challenges:

➢ Imported fabric (70% of the FOB cost)

➢ Trims (20% of the FOB cost)
➢ Increasing prices of China fabric

Opportunities:

➢ Bangladesh can produce the terms in county

➢ Offer newness and options
➢ Keeping up with trend

Way to maximize revenue:

It is the same situation as the rest of the activewear suppliers in Bangladesh, the cost of fabric is 70% taking out
most of the chunk of the FOB price, in order to maximize their share of the pie they will need to find out a good
solution to the trims which is 20% of the cost.
5.9 Beximco Textiles and Apparel Division
Over the years, BEXIMCO has developed in-house design capabilities with teams based in Bangladesh and
Spain. Furthermore it has partnered with some of the world’s renowned design institutes, including FID and
NIFD, for access to talented designers. The company has built strong working relationships with its core clients
through a continuous dialogue. Key clients include American Eagle, Arcadia Group, Calvin Klein, H&M, JC
Penny, Macy’s, Tommy Hilfiger and Zara.

Business status in last three years for dress:

Beximco Textiles and Apparel Division

FOB Value in $ Million

11.50

3.80

0.00 0.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 9 Business status in last three years for dress of Beximco Textiles and Apparel Division

Challenges:

➢ Imported fabric (40% of the FOB cost)

➢ Trims (15% of the FOB cost)
➢ Increasing prices of China fabric

Opportunities:

➢ Bangladesh can produce the trims in county

➢ Offer newness and options
➢ Keeping up with trend

Way to maximize revenue:

The cost saving for will come from sourcing the cost of trims and 60% of the cost of fabric as most of the fabrics
are on cotton base.

5.10 HAMS Group

HAMS is a 100 % export oriented composite knit textile unit established with the commitment to cater the
Global needs for knit and casual clothing. They operate as a one stop solution to support from Knitting, Dyeing
to Ready-made Garments production. This is the first time Hams is doing a dress with a small quantity of 11000
pieces. Having the right combination of skill set and positive attitude. But they are yet to prove their competency
to deliver this on time and by Jun them aim to grasp half a million worth of dress business as the year comes to
an end.

Business status in last three years for dress:

HAMS Group
FOB Value in $ Million

0.55

0.00 0.00 0.00

2014-15 2015-16 2016-17 2017-18

(Projection)

Figure – 10 Business status in last three years for dress of HAMS Group

Challenges:

➢ Trims (10% of the FOB cost, half of which are sourced from local source)
➢ Increasing prices of China fabric and cotton yarn
➢ Fabric costs 50% of FOB price

Opportunities:

➢ Bangladesh can produce all trims in county.

➢ Keep the yarn in-housed and store in a bonded warehouse to get better yarn availability and better price
on bulk yarn
➢ As a vertical set-up Hams group pose a sustainable source for the bulk orders of dress
Way to maximize revenue:

10% cost savings will be from trims and half of the fabric can be produced in country. With their ability to make
fabric gives them an upper hand when it comes to negotiating prices and lead time.
 CHAPTER 6: THE WAY FORWARD TO GAIN MORE

6.1 Findings of the study:

There are four parts of costing when it comes to the calculation of FOB price:

1. Cost of making (CM) – represents the wages of stuff, cost of overhead, and service charges. It ranges
between 25-35% of the total FOB cost depending on the product, styling, use of wash, finish and
complexity of making it.
2. Trims cost – includes trims those are sewed in the garment, having functionality to the wearer; i.e. care
label, sewing thread, zipper, lace, padding and so on. Others are presentation only as the promotional
tag, RFID, prices ticket etc. It is 8-15% of the total cost.
3. Fabric cost – consumes most of the cost on any garment, represents the cost of fabric consumed. It
between 40-70% of the FOB cost.
4. Others – it includes cost of bank charges (LC), interest, transportation, documentation and testing
required.

Every factory has their view and way around to figure out CM and others cost. However, this workout focusses
on trims and fabric cost only as there are the part they struggle to source locally and the paper works on the
scenario of possible additional gain if these costs been saved. Now that the facts and figures for these factories
and target of visible for the year 2017-18 and the cost percentages of raw materials which will be imported and
used from local source can be defined and the info will be presented graphically.
Lingerie:

The most flourishing progress is from Lingerie and using local material all the suppliers are gaining. The details
are as follows:

Lingerie
Increased gain in percentage Total earning
Probable gain by sourcing locally Currnet gain
2017-18 (Projection)

150%
16.69
SQ Birichina Ltd 10.01
6.68
26.70

150%
40.63
Yunusco (BD) Limited 24.38
16.25
65.00

114%
7.50
DBL Group 4.00
3.50
10.00

Figure – 11 Lingerie projection for 2017-18 (values are in $ million)

SQ Birichina Ltd – as the Figure – 11 shows the net earnings will increase to 150%

Can be sourced locally Cannot be sourced locally

Cost of trims 5% 5%
Cost of fabrics 32.50% 32.50%
Total cost can be saved 37.50%
Table – 1 gains through local sourcing for SQ Birichina Ltd
Yunusco (BD) Limited – the net earnings will increase to 150%

Can be sourced locally Cannot be sourced locally

Cost of trims 7.5% 7.5%
Cost of fabrics 30% 30%
Total cost can be saved 37.50%
Table – 2 gains through local sourcing for Yunusco (BD) Limited

DBL Group – the net earnings will increase to 114%

Can be sourced locally Cannot be sourced locally

Cost of trims 10% 0
Cost of fabrics 30% 20%
Total cost can be saved 40%
Table – 3 gains through local sourcing for DBL Group
Tailoring:

There are a lot of dependency on foreign fabric, but the quick wins will be the cost of trims they are taking from
outside and the long term plan would be to grasp the cost.

Tailoring
Increased gain in percentage Total earning
Probable gain by sourcing locally Currnet gain
2017-18 (Projection)

75%
1.58
FCI BD 0.675
0.9
4.50

29%
13.77
Universal Menswear Ltd 3.06
10.71
51.00

100%
9.00
Energypac Fashions limited 4.5
4.5
30.00

Figure – 12 Tailoring projection for 2017-18 (values are in $ million)

FCI BD: as the Figure – 12 shows the net earnings will increase to 75%

Can be sourced Cannot be sourced locally

locally
Cost of trims 15% 0%
Cost of fabrics 0% 60.00%
Total cost can be saved 15%
Table – 4 gains through local sourcing for FCI BD
Universal Menswear Ltd – the net earnings will increase to 29%

Can be sourced
Cannot be sourced locally
locally
Cost of trims 6% 0%
Cost of fabrics 0% 65%
Total cost can be saved 6%
Table – 5 gains through local sourcing for Universal Menswear Ltd

Energypac Fashions limited – the net earnings will increase to 100%

Can be sourced locally Cannot be sourced locally

Cost of trims 15% 0
Cost of fabrics 0% 70%
Total cost can be saved 15%
Table – 6 gains through local sourcing for Energypac Fashions limited
Activewear:

The newest range to the business, picking up from the year 2017-18 only, but it shows a good promise to be
bigger.

Activewear
Increased gain in percentage Total earning
Probable gain by sourcing locally Currnet gain
2017-18 (Projection)

50%
4.20
Kenpark apparel limited 1.40
2.8
7.00

67%
11.06
CMI industry Bangladesh 4.42
6.633
22.11

Figure – 13 Activewear projection for 2017-18 (values are in $ million)

Kenpark apparel limited: as the Figure – 13 shows the net earnings will increase to 50%

Can be sourced locally Cannot be sourced locally

Cost of trims 20% 0%
Cost of fabrics 0% 40.00%
Total cost can be saved 20%
Table – 7 gains through local sourcing for Kenpark apparel limited
 CMI industry Bangladesh – the net earnings will increase to 67%

Can be sourced locally Cannot be sourced locally

Cost of trims 20% 0%
Cost of fabrics 0% 70%
Total cost can be saved 20%
Table – 8 gains through local sourcing for CMI industry Bangladesh

Ladies dress:

This part of appeal is the top of the food chain, the construction is the delicate part but the current gain on Ladies
dress stands at the pick with 45% of the total cost. But there are opportunities to gain some more as the figure
14 shows.

Ladies dress
Increased gain in percentage Total earning
Probable gain by sourcing locally Currnet gain
2017-18 (Projection)

24%
6.42
Beximco Textiles and Apparel Division 1.242
5.175
11.50

35%
0.30
Hams group 0.077
0.22
0.55

Figure – 14 Ladies dress projection for 2017-18 (values are in $ million)

Beximco Textiles and Apparel Division: as the Figure – 14 shows the net earnings will increase to 29%

Can be sourced locally Cannot be sourced locally

Cost of trims 15% 0%
Cost of fabrics 24% 16.00%
Total cost can be saved 39%
Table – 9 gains through local sourcing for Beximco Textiles and Apparel Division

Hams group – the net earnings will increase to 35%

Can be sourced locally Cannot be sourced locally

Cost of trims 10% 0%
Cost of fabrics 25% 25%
Total cost can be saved 35%
Table – 10 gains through local sourcing for Hams group

6.2 Challenges:

➢ The need for trial and error – It will not be that easy to jump into conclusions that Bangladesh will
produce all these locally right now as it had taken years of experience for the current suppliers to come
to the place they are today.
➢ The baby elephant syndrome – It is a natural response of human psychology to keep things as they are.
The unwillingness to change has the adverse factor on many international retailers and they will need
be advocated on the capabilities of Bangladeshi vendors by seminars, symposiums and fairs, so they
have certain level of confidence.

6.3 Conclusion:

Bangladesh has got the correct ingredient what it takes to be successful; enthusiasm, effort, capacity, technical
know-how, skilled labor and the supplier base, on the RMG and the next step is to excel to “grab some more of
the cake” which is very much achievable only if the investors keep the eye on the correct opportunity and
capitalize. Bangladesh shows prospect on Bedding, ceramic, pottery but the opportunity on lingerie, activewear,
tailoring and ladies dress are mammoth and it is the right to shift the focus on the specialized and fashion RMG.
6.4 Bibliography:

1. http://www.garmentsmerchandising.com/readymade-garments-industry-of-bangladesh/ (reviewed on
01st Mar)
2. http://www.bgmea.com.bd/home/pages/tradeinformation (reviewed on 01st Mar)
3. http://www.dhakatribune.com/business/2017/08/02/bangladesh-sustains-6-4-share-global-clothing-
market/ (reviewed on 01st Mar)
4. http://www.newagebd.net/article/35805/7-out-of-worlds-top-10-green-units-in-bangladesh (reviewed
on 01st Mar)
5. Made in Bangladesh with Pride – BGMEA (Published on Jan 2018)
6. http://www.bgmea.com.bd/home/pages/tradeinformation (reviewed on 13th Mar)
7. http://www.latimes.com/world/asia/la-fg-china-africa-ethiopia-20170804-htmlstory.html (reviewed on
13th Mar)
8. http://ec.europa.eu/trade/policy/countries-and-regions/countries/sri-lanka/ (reviewed on 13th Mar)
9. https://www.bls.gov/spotlight/2012/recession/pdf/recession_bls_spotlight.pdf (reviewed on 15th Mar)
10. https://textiletoday.com.bd/global-kids-fashion-market-trend-bangladeshs-position/ (reviewed on 15th
Mar)
11. http://www.businessinsider.com/big-brands-in-bangladesh-factories-2013-5 (reviewed on 15th Mar)
12. http://www.thedailystar.net/frontpage/moving-out-ldc-category-bangladesh-well-track-1549405
(reviewed on 17th Mar)
13. https://www.morganstanley.com/ideas/global-athletic-wear-geared-for-growth (reviewed on 01st Apr)
14. http://www.dhakatribune.com/business/2017/07/07/rmg-export-earnings-lowest-15-years/ (reviewed
on 01st Apr)
15. http://www.beximcoltd.com/textiles.php (reviewed on 03rd Apr 2018)
16. https://www.just-style.com/analysis/bangladesh-manufacturers-making-inroads-into-
lingerie_id132598.aspx (reviewed on 13th Apr 2018)
17. http://www.yunusco.com/about_us.php (reviewed on 13th Apr 2018)
18. http://www.dbl-group.com/About-DBL-Group (reviewed on 18th Apr 2018)
19. The 2018 Ethical Fashion Report - THE TRUTH BEHIND THE BARCODE by Baptist world aid
Australia (reviewed on 19th Apr 2018)
20. https://www.aljazeera.com/news/2018/03/vietnam-set-big-winner-tpp-trade-deal-
180308103909067.html (reviewed on 19th Apr 2018)
Questioners:

1. When was the factory established?

2. What is the total number of the employee?
3. How many production lines do you have?
4. Who are your biggest buyers?
5. What is your main range of product?
6. What range of product you think have the determined chance to grow?
7. What was your revenue from FY 2014-15,2015-16 and 2016-17?
8. What is your projected revenue of FY 2017-18?
9. What is your approximate cost breakdown (CM, fabric, trims) in percentage?
10. What are your challenges?
11. What are your opportunities?
12. Where is the option for your growth?
13. Do you have open capacitates to grow further?
14. Are you willing to invest on the new machines requirement for the fabric?
15. Are you willing to invest on the new machines requirement for the trims?

Among above questioners this paper focused on the challenges, opportunities, growth, projection for year 2017-
18 and the probable gain if the raw materials are used from local source.