Events

Resilient, Flexible and Ready to Connect: How Bangladeshi Manufacturers are Adapting to Change

September 16, 2020

Continuing our global series of Serai webinars, on September 9th we brought Bangladesh’s apparel industry into the spotlight, drawing from the experience of our speakers to explore the conditions facing suppliers on the ground and the potential of the market for buyers abroad. We were honoured to see registrations from over 500 industry leaders across 16 different countries, and we hope you find the insights below valuable.

Bangladesh is a key market in global apparel. It has a long history and a wealth of experience, with capabilities that are highly recognised amongst the global sourcing community. The challenge today, in the wake of COVID-19, is how local suppliers can enhance this reputation even further and continue sending a clear message that they remain resilient, flexible and ready to connect.

Discussing these issues were Vivek Ramachandran, CEO of Serai, Dr. Rubana Huq, President of the BGMEA, Kanaiya Parekh, Expert Partner at Bain & Company and Md Mahbub Rahman, CEO of HSBC Bangladesh. They offered important insight into the formidable shifts underway in the apparel industry and how suppliers in Bangladesh can and should respond.

Resilient: The current state of play

The apparel industry in Bangladesh has remained resilient, despite the effects of the pandemic. Most notably, the development of digital infrastructure has been vastly accelerated as an essential step in bolstering the capabilities of local suppliers.

Nevertheless, challenges remain. Rubana highlighted uncertainty around access to credit and working capital constraints as pressing issues for local suppliers, as well as rising competition from neighbouring markets like Vietnam. Bangladesh and Vietnam held 7% and 6% respectively of the global clothing export market in 2019.

Economic diplomacy through greater public-private collaboration was identified as a key strategy to making Bangladesh more attractive as a manufacturing partner to currently under-penetrated markets. This would also encourage more foreign direct investment and build relationships with MNCs, which Rubana sees as essential to increasing export diversification.

Other possible initiatives to increase dynamism within the industry include recycling the almost 400,000 tons of leftover materials into usable yarns and garments or producing domestically the spare parts for factory parts that are currently imported, worth US$1.6 billion in 2018-19.

Flexible: A shift in mindset

All our speakers reinforced the importance of flexibility. Rubana talked about it in the context of Bangladeshi manufacturers adjusting their business models to accommodate smaller order sizes and shorter-term contract commitments. Vivek referred to it in terms of technology and the role data can play in enhancing operations and enabling suppliers to better serve their customers.

But flexibility hinges on a shift in mindset. The world of apparel has changed and it requires a fresh perspective to navigate the new conditions. Both Vivek and Mahbub spoke about B2B suppliers in Bangladesh adopting a B2C mindset as a way for them to reinvent their value propositions. Good quality products delivered on-time is no longer a differentiator. Today, suppliers have an opportunity to help buyers with everything: from predicting demand and trend analysis to shaping designs for the next fashion season.

“What value can you add as a manufacturer beyond the manufacturing?” – Vivek Ramachandran

Adopting a B2C mindset also means suppliers are wise to stay attuned to consumer trends. Kanaiya identified a growing demand for convenience, the preference for digital channels and changing consumption models as among the most important shifts in consumer behaviour. With the global online fashion market expected to rise from US$533 billion in 2018 to US$872 billion by 2023, suppliers will find opportunities in adapting for this growth in their operations.

Ready to connect: The role of online

Rubana affirmed resoundingly that Bangladeshi manufacturers are ready to step further into the virtual marketplace. This means not only doing business through virtual channels, but also building and maintaining trusted business relationships online.

This is where neutral platforms like Serai, which was built to help suppliers establish a digital identity, have an important role to play. In a world where travel is restricted and sourcing executives are unable to walk factory floors or handle physical product samples as easily as before, the ability for suppliers to create an online profile to amplify their capabilities is an important way for them to stand out.

Platforms also allow suppliers to be more selective in the buyers they choose to work with. Kanaiya suggested that in the post-COVID world, not all buyers should be viewed as equal. Some may not last, either due to poor financial prospects or obsolete business models, meaning it has become more important to partner with the right buyers and thereby avoid the uncertainty that comes with distressed clients.

If you’re interested in accessing the latest industry news and networking with potential business partners in the apparel industry, sign up for our free B2B platform here:

Join now

If you enjoyed these insights, be sure to follow us through our social media channels to stay up to date with all the upcoming webinars and events.