The prospects of branding RMG

Writer Noore Alam Siddiqui is a banker & column writer.

Bangladesh has almost 40 years of experience in ready-made garment (RMG). More than 4.0 million people are working in this labour-intensive industry and at the same time billions of dollars have been invested in this sector. According to the Bangladesh Bureau of Statistics (BSB), Bangladesh earned  US$ 31.2 billion from export in FY 2014-15, where ready-made garments’ share was 81.69 per cent. Of this, the knitwear sector accounts for 39.83 per cent of total exports which is worth US$ 12.43 billion.

The RMG sector has experienced an exponential growth since the 1980s.  A significant number of compliant and world class factories have been established in the country. The tragic incidents at  the Rana Plaza and Tazreen Fashions were the turning points for RMG industry in Bangladesh. The matter of compliance gained pace because of those two incidents. All members of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) are working wholeheartedly to carry out the corrective action plans suggested by the Accord, the Alliance and the National Plan of Action on inspections. This required investment of huge amount of money.

Branding is considered one of the most important aspects of any category of business – large or small, retail or business-to-business (B2B). Today’s world markets are highly competitive. So an effective brand strategy gives a major shift in this competitiveness. Innovative, consistent and strategic branding leads to a strong brand equity, which means the value added to the company’s products or services, allowing to charge more for the brand than for identical but unbranded products.

A local demand of 160 million people, of which almost 50 per cent have the status of middle income, is not negligible too.  On the other hand, China is getting out of the typical RMG industry due to lack of cost-effectiveness derived from high labour cost, production cost and gradually shifting to other heavy industries. The typical RMG industry is losing its viability there. Bangladesh is comparatively in a better position than India, Vietnam and Cambodia and some other competitors. Because it has a huge pool of cheap labourers who are hard-working and have a mentality to render services, no matter even it means race against time. Our entrepreneurs and workers have also proved that they could endure a lot of hardships to continue their business during severe social and political unrest.

Innovative entrepreneurs here are trying to establish a brand image of RMG. There are many popular local brands which are making casual and formal dresses and establishing many outlets all over the country. Moreover, they are also very serious about maintaining quality and keeping price at a competitive level. Some of them are also practising franchising mechanism. A couple of brands have already gone global through setting up some outlets abroad.

Only a decade ago local RMG factories had to import the maximum portion of fabrics and accessories from abroad to be used as raw materials. But the situation has changed during the last 10 years. Hundreds of thousands of backward linkage industries have been set up. Local as well as foreign investors have come up with their huge capital. And now more than 60 per cent fabrics and accessories are produced locally by industries based in EPZs or elsewhere. Many local factories are producing quality cotton, twill and denim fabrics which are being nominated by many world famous brands, such as H&M, C&A, Zara, Camaieu and others.

The RMG industry of the country mainly produces cheap casual dresses. Factories just make dress as per the design, specification of the buyer, procuring raw materials, in many cases, from buyer-nominated suppliers. Now Bangladesh is one of the largest makers of clothes for the famous global brands. Cheap and casual dresses are bought by people of all income level and therefore gain a huge sales volume. Quartz, a digital global business news publication recently shows how some cheap fast fashion brand and retail clothing chain stores, such as Zara, H&M, UNIQLO, C&A and PRIMARK and their owners have gained positions among the top wealthy companies  not only in their own countries but also all over the world. Amancio Ortega, owner of the Spain-based fast fashion brand, ZARA is now the second richest man in the world with asset valued at 75.30 billion dollar. Stefan Persson, the owner of Sweden-based brand H&M has wealth worth 22 billion dollar and Lucas Brenninkmeijer, the owner of Netherland-based C&A has wealth worth 33.94 billion dollar.

Bangladesh has also potential for high-end fashion market on creation of brands like Burberry of Britain, Dior of French, Armani, Gucci, Ralph Lauen, Calvin Klein, Levis etc. In order to turn the dream into a reality all stakeholders including the government should draw up a master plan for creating a brand image for RMG. Now in this journey to creation of a brand image a huge investment, research, innovation, rigorous and strategic marketing plan and above all favourable government policies are needed. Here the BGMEA University of Fashion and Technology (BUFT) could play a vital role. This institute is offering graduate and post-graduate degrees to students on fashion design, knitwear technology and apparel merchandising. Simultaneously, fashion, textile and industrial merchandise-related departments need to be introduced to all  major public and private universities in order to gain the market share of high-end fashion markets. This will help branding through meeting the current shortfall of competent professionals at the mid-level of garment factories.

Sufficient infrastructural development is a prerequisite for smooth functioning of all action plans. Therefore, major highways of the country have to be upgraded into four lanes, uninterrupted power supply has to be ensured. The BGMEA, the government and other international partners should take initiatives for developing skills of workers to meet the demand of the industry and enhance productivity. Above all, bureaucratic complexities have to be removed along with showing zero tolerance to corruption.

If things go right, it would not be too challenging for the local brands to establish many outlets in London, New York, Paris and other major cities in the world. Bangladesh products will enjoy reputation of global prestigious brands of clothes and the country’s identity will be shifted from cutting and sewing to innovation in design, creation of fashion trends and many more. Then people all over the world will look for Bangladeshi brands rather than only “Made in Bangladesh” and Dhaka will be a fashion capital like Paris and Rome.