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Sustainable business model can help Bangladesh maintain its position in global RMG market

 

Sustainable business model can help Bangladesh maintain its position in global RMG marketFor years, Bangladesh reigned as the world’s most preferred apparel sourcing destination. However, a 2019 survey published by the Chief Procurement Officers of McKinsey & Company had highlighted Vietnam’s rising power in world apparel market. Titled ‘What’s next for Bangladesh’s garment Industry after a decade of growth?’ the survey advises the sector to innovate, upgrade and diversify. The report suggests, for retaining its market position, Bangladesh needs to invest more in flexibility, sustainability, worker welfare and infrastructure.

Need to focus on nearshoring and upskilling Though Bangladesh remains one of theSustainable business model can help Bangladesh maintain its position top RMG exporters to Europe, a new preferential trade agreement signed between the European Union and Vietnam in August 2020, threatens its position. In 2020, Vietnam exported 2.5 times more garments than Bangladesh to the US.

To outpace competition, Bangladesh needs to shift towards a more demand-driven and sustainable sourcing model. The country also needs to intensify its focus on nearshoring for greater flexibility and speed, says a Daily Star report. Apparel suppliers need to invest in upskilling, vertical integration, digitalization and automation to ensure speed and transparency.

The inspection and remediation initiatives launched by the Accord and Alliance have made Bangladesh a frontrunner in transparency on factory safety and value-chain responsibility. The Accord on Fire and Building Safety in Bangladesh, the Alliance for Bangladesh Worker Safety, and the RMG Sustainability Council helped Bangladesh close hundreds of unsafe, bottom-tier factories and scaling-up of remediation activities in many others.

Greater capacity to produce high value-added items

As per the McKinsey report, Bangladesh now has a greater capacity to produce garments made from synthetic fibers, manufacture more complex products such as outerwear, tailored items, and lingerie, and provide new washes, prints and laser finishing. Suppliers can offer reduced time than the standard 90 days and its share in the global garment exports increased from 4.7 to 6.7 per cent.

The McKinsey report shows the country has not been able to achieve the growth levels forecasted by a similar report in 2011. Ten years ago, McKinsey had forecasted Bangladesh’s RMG exports will grow 7-9 per cent. However, in 2020, the value of exports fell 17 per cent, registering a a revenue losses of up to $5.6 billion

The report acknowledges the recent progress made by Bangladesh’s RMG industry and its new initiatives on climate change and circularity, says Rubana Huq, President, BGMEA. It says the RMG sustainability Council has added to Bangladesh RMG sector's credibility.

The report terms the resilience of Bangladesh RMG industry as being time-tested having faced several crossroads in the past. Initiated by Daniel Seidl, Former Executive Director, BGCCI and SK Tanzer Ahmed Siddique, Former Senior official, BGCCI in 2011, the report urges the industry to maintain its focus on sustainability and innovation.

 
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