Bangladesh - Strategic

Opportunities &Planning for the

Future

Date: 24th Nov’ 12Venue: Lake Shore Hotel

ICTA 2012

John T. Smith Comp TI, CText, FTI, CMC, MIMC.

International Coordinator / Long Term Adviser

Textiles and RMGUNIDO – BEST

& Chairman, International EventsThe Textile Institute

• Textiles and Clothing accounted for 87.9% for export in 2011/12

• EU demand for Bangladeshi textiles and clothing surged by 28.6% in 2011

• The EU was also Bangladesh’s largest market for woven clothing

Source: McKinsey Report

Where Are We Now?

Source: McKinsey Report

Where Are We Now?

Source: McKinsey Report

Where Are We Now?

Implication of McKinsey

• SWOT Analysis STRENGTH-EPZ’s-Back to Back L/C-Plentiful Population-Modern Equipment-Dynamic Entrepreneurs- Financial Model

WEAKNESS-Infrastructure : Electricity, Gas, Roads, Rail, Ports-Slow Reaction-Product Development-Technical Management-Literacy- Lack of integrated thought

OPPORTUNITY-Broaden Categories of Products-Move Up market-Introduce more linkages-Cooperation Partners-Introduce non-woven-Introduce fibre production- Change Philosophies

THREATS-Worker Unrest-Uncompetitive Practices- outdated administration

Competitive International Factors

THE WAY FORWARD

New Opportunities for Textiles & Garment Entrepreneurs

• Primary Textiles - Backward/ Forward linkages - New processes - Value raw material for its positive properties - Use international research results - New Fibre use e.g. Bamboo - New Fabric finishing

New Opportunities…

• Garments- More effective production- More CAD/ CAM- More Design Groups- More Fast Response /ERP- More Integrated Product Design- More Mix & Match

New Opportunities…

- Comprehensive Integrated Manufacture!- Use Critical Path Analysis- Product friendliness (change easy parameters)- Many products from few inputs (raw

materials)

New Opportunities…

• Literate Educated Workforce

• Design & Build Eco-Friendly Economic Factories

New Opportunities…

New Buying Markets

Source: McKinsey Report

Major Issues • Infrastructure• Compliance• Supplier

Performance• Raw Materials• Economy &

Political StabilitySource: McKinsey Report

Challenges for Growth

Source: McKinsey Report

The Next Sourcing Hot Spot

• Goldman Sachs includes Bangladesh in the Next 11 (N-11)

• J P Morgan – ‘Frontier Five’ stating that major advantages of Bangladesh

is ‘ Price & Capacity’

• Labour cost expected to rise by 30%

The Next Sourcing Hot Spot

Efficiency Increase to Match Wage Increase

RMG Factories in Different Countries

Bangladesh 5000 +

Indonesia 2450

Vietnam 2000

Cambodia 260

• Shift from ‘Knitwear’ to ‘Woven’ expected

• Upgrade Service Level e.g. Design, Package, Ticketing, Warehousing, Delivery

Expected Trends

• Government

• Supplies ( Garment Makers)

• Buyers ‘The story of Bangladesh has just begun’ – Head

of Sourcing Office ‘ Battle for Capacity is on the Horizon’

Expected Trends

• China dominated in 2010

Source: McKinsey Report

Expected Trends

CPO Forecasts

• 32% will decrease sourcing from China• 54% plan to decrease their sourcing from

China i.e. 86% are reducing• Wages in Coastal China increasing rapidly• Shortage of Garment Workers in the area• China will eventually be a net importer –

not exporter!!

With thanks to :

- The McKinsey Report

- Textiles Intelligence Reports 145 & 157

- UNIDO BEST BWTG Reports

Sources

Thank You For Your Attention