February 18, 2021
In our recent webinar on February 23, Serai joined industry leaders to discuss the importance of apparel businesses to have effective risk management tools in place. We were honoured to host over 170 attendees from 10 countries.
At Serai, we believe in the power of trusted relationships, and the powerful network that trusted relationships bring. That is why we launched this series - to bring valuable insights from our network to our markets and assist brands & manufacturers across the world in making informed decisions. Check out the highlights video and brief event summary below!
In 2020, order cancellations, reduced order volumes, extended payment terms, and shipping delays left many in the industry in a situation of financial uncertainty. We brought together Vivek Ramachandran, CEO of Serai, Kevin Green, Country Head of Wholesale Banking at HSBC Bangladesh, and Mohammad Hatem, Senior Vice President of the BKMEA to share how you can put last year’s lessons into practise in 2021.
During the pandemic, the propensity to buy online has increased significantly.
In Bangladesh, according to the consumer association of Bangladesh, online shopping increased by 70% - 80% during the times of lockdown in the country.
This trend is presumed to be irreversible, and has resulted in demands for greater variety and faster responses. To manage this market behaviour, retailers increase their order numbers, but with smaller shipment size and shorter lead times.
Manufacturers must focus on streamlined supply chain and operational efficiency through vertical integration. Bangladeshi suppliers should prioritise product diversification to capture more of the global RMG or knitwear market share. Providing design capabilities and producing more high value-added products will increase the export share and their competitiveness.
Responsible and sustainable supply chains are becoming increasingly important as consumers’ choices are coupled with both innovations and disclosure.
The Euro monitor (2012) green buying behaviour survey shows a significant number of people are willing to pay extra for products which are produced in a social and environmental responsible way.
This requires businesses to embrace digital platforms for open communication and wider connectivity. Serai’s platform can support this type of tech connectivity by helping companies showcase what they have done so far and why they are distinct. This borderless platform will connect Bangladeshi textile and garment players with buyers and suppliers in the digitised business landscape.
There are already hundreds of buyers on Serai submitting RFQs for Bangladeshi manufacturers, join Serai and build a strong profile to access them today!
Several risks have evolved for manufacturers from the dynamic apparel landscape. Particularly, the risk associated from buyers, and managing receivables and cash flow.
Trade transactions through Bangladesh have seen a transition from Letter of Credit (LC) to Non-LC modes of trade, for example Open Account terms. These payment terms have gradually shifted from Sight to Deferred payment mode with increased payment risk and financing requirement.
In general, pre-pandemic, the average deferred tenor was 60 days. Post pandemic, the tenor has been increased to 90 days on average for all buyers.
Financing options like Receivables Finance (RF) and Supply Chain Financing (SCF) will help manage the cash cycle of the manufacturers. HSBC has deep experience, combined with a network that stretches across the globe, the bank can support every link in the supply chain. Access to latest technological advances and global network of financial partners will make HSBC quintessential for efficient operations for all players. To learn more about HSBC’s trade financing solutions, you can check out their website here, or reach out to this email: firstname.lastname@example.org
The BKMEA also remains a critical association that will continue to work with the government to protect their members’ interests. Throughout the lockdown situation, BKMEA urged all its member countries to give 100% of their salary on the ground of humanity though they were staying at their home. BKMEA’s entrepreneurs have been successful in bringing back workers to their factories and have resumed production activities in full swing to overcome the sudden disruption of the supply chain. This testifies to the boldness and strength of the Bangladesh RMG entrepreneur.
If local manufacturers are able to take these actions, there is a huge opportunity to tap into the international apparel export market in 2021 and the years to come.
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If you’re interested in accessing the latest industry news and networking with potential business partners in the apparel industry, register for Serai today!