Apparel Online Bangladesh Magazine May Issue 2019 | Page 20

LEAD STORY TO ADVERTISE GOING TO A GOOD EVENT? Contact Rani Mahendru [phone] (512) [email protected] Send your industry gossip, photos and news to [email protected] Industry’s new recipe to fight the price challenge… BGMEA President Dr. Rubana Huq promises a cell to help garment makers in the all-important issue of price negotiation S ample this, as per a report by Mark Anner, Center Director, Penn State titled: Binding Power: The Sourcing Squeeze, Workers’ Rights, and Building Safety in Bangladesh Since Rana Plaza, the price paid by lead firms to supplier factories has declined by 13 per cent as a result of which supplier factories’ profit margins have decreased by 13.3 per cent. It’s not the only report highlighting price pressure on the garment manufacturers. There are scores including the one from Better Buying Purchasing Practices Index (BBPPI), which underlined how most garment suppliers face mounting pressure from buyers due to their cost negotiation strategies. As per BBPPI such practices impact the suppliers’ social, environmental, quality and other compliance performance, while according to some experts if Bangladesh has increased wages by 263 per cent over the last 10 years, prices have gone for a nosedive, falling as much as by almost 6.63 per cent and 7.33 per cent from the two major export destinations of USA and Europe, respectively. And this after investing massively in compliance issues as per buyers’ demands while also increasing the workers’ wage by more than 50 per cent in the recent past to comply with the social, environmental, worker and work- related parameters. As per BBPPI mounting pressure from buyers due to their cost negotiation strategies impacts the suppliers’ social, environmental, quality and other compliance performance. “…still 70 per cent of the buyers are giving low prices for the garment product, despite improvements in quality, workplace safety and labour rights,” complained an aggrieved Shafiul Islam Mohiuddin, President of the Federation of Bangladesh Chambers of Commerce and Industry and also a former President of the BGMEA speaking to the media. The complicacy of this issue has forced the Government to take up the matter even at global forums but without any result. “We’ve modernised the (RMG) factories. We have ensured building and fire safety with an improved working environment in place. Owners have invested a lot in these areas but price of apparel products is yet to be hiked. Price needs to be increased…,” pleaded ex-Commerce Minister Tofail Ahmed in one of the TICFA meetings held earlier where he underlined how Western buyers do not want to raise the prices on some pretext or the other. However, now with Rubana Huq (Managing Director of Mohammadi Group) taking up the position of BGMEA President, many are hopeful of things changing for better. And why not, after all Rubana has promised to help garment makers in getting fair price for their products. She has planned to establish a separate cell to help the manufacturers in the all-important issue of price negotiations. 20 Apparel Online Bangladesh | MAY 2019 | www.apparelresources.com Rubana’s focus on price negotiations gains more relevance in light of experts’ opinions on price points. As per a consultation meeting organised by South Asian Network on Economic Modelling, Bangladeshi exporters were not getting fair and reasonable prices due to lack of negotiation skills. Speaking on the occasion, former Bangladesh Bank Governor Atiur Rahman said that negotiation skills at both the entrepreneurs’ level and the Government level and relationship with buyers were very important for reaping fair prices. The Government should help the manufacturers and exporters to improve the skills along with creating clothing brand and building the country’s image abroad, underlined Rahman while Bangladesh Knitwear Manufacturers and Exporters Association’s Second Vice- President Fazlee Shamim Ehsan said that the local exporters were getting lower prices for RMG products than what the Cambodian and Vietnamese exporters were getting from the global buyers. Focusing principally on its image of cheap manufacturing destination to bag orders, Bangladesh has failed to match with them on price front, which has been its Achilles heel, many believe. But under Rubana’s leadership, underselling its capabilities is going to be passé, it seems.