Apparel Online Bangladesh Magazine November Issue 2018 | Page 11

MINDTREE However, at the same time, it has to be kept in mind that the consumers’ mindset also needs to undergo a change when it comes to buying apparels, for this maybe they should be informed/made aware of the value chain... Keeping the current scenario in mind, at the end of the day, local factories will have to improve their productivity and efficiencies, plus they need to go in for automation. This would enable them to minimize their workforce and have fewer but well-paid workers. Ahmed Quamran Merchandiser, FCI (BD) Ltd. As per my understanding, this new minimum wage is going to hit the economy and would have equally big consequences. Afraid of thinking if growth of minimum wage after 5/10 years (51 per cent growth) is rational or not! I am of the opinion that we do not work on an alternative way/approach to the business of apparel manufacturing, the industry would then collapse for sure. Janos Horvath Vice President (Intl. Sales), Wilcom Intl. Pty Ltd. The answer to this question revolves around three vital points, which are: Sustainable Business Model: In today’s competitive world, many business people look for quick profit and one of the easy ways to achieve this is through low wages. There are however many components of the business model that are fundamental to provide sustainability and long- term perspective to a business. I would mention two here: Brand Image and Trust of customers. These factors are intangible values, and it takes a long time to build them but can be lost much faster and easily. But they strongly underpin the long-term success of business. We know that after the tragic industrial accidents in past years, the reputation of Bangladesh employers has been tarnished in countries where the buyers are from. And many people asked how is it possible to buy a T-Shirt at K-Mart in Australia for as low as US $ 5 when shipping, storage and floor space must cost around the same? The gut feel of people suggest that price cannot be that low without extreme exploitation of the workers. Value Addition – Aiming for Niche Markets: Plain garments can be produced by machines with very little human intervention. And people do not buy them because they need to stand out from the average and they need to wear something of value. Murad Khondokar Head of R&D, NIPA Group Wages are increasing across all the apparel manufacturing countries. In comparison, the new minimum wage as declared in Bangladesh is still lower than the others. Keeping the same in consideration, it can be said that revenue from apparel exports in Bangladesh would continue to go up in the coming years. Sarder Elias Hossain Three Star Fashions Wear Ltd. Before I answer the question, I would like to draw the attention of the readers towards the multitude of problems that our industry is facing for the last five years. Now coming to the increase in minimum wage, my opinion is that workers, need of increase in salary and this hike is acceptable but at the same time we also need increase of CM. Hence there is not much profit in such products unless we aim for very large volumes. But ultimately, a business needs to increase not volume but profit. And this can be also done by adding more value to the garment such as ornaments, decoration by embroidery or printing. Besides, the Government needs to help us push the international buyers to increase their offer price without which many factories would have to face serious problems including that of paying the workers on time. Creating smaller series of product volumes with variation and adding a ‘unique’ feel can result in value addition. This requires more skilled workforce and such workforce needs to be paid better, so that they are motivated to learn and aim for higher skilled jobs. The readymade garment sector is a very important sector of our country, which besides providing mass employment, is also the biggest foreign currency earner. Keeping the same in consideration, I think our Government needs to take due care of this sector. I also request the Government to impress upon global buyers to increase prices of apparel products before implementing the new minimum wage. Export Markets vs. Domestic Markets: Twenty years ago, when I started to work with Indian customers, almost everyone was an exporter. Today, most of the Indian garment industry works for the domestic market. This growth was only possible because there is a middle class of three hundred million people with huge buying power, people who have money to spend. Higher paid workers will spend more money and the money recycles, and helps to grow the economy. It creates a better balance between export and domestic markets. This means that garment factories can diversify and should not be exposed to only one market but should balance the business between multiple demand cycles. An old business wisdom is to have many small customers instead of a big one because what happens if you do not get orders from the big customer? Your business goes down because you have no other source of income. Nipun Kundu Division Manager (Sourcing), OODJI The increase in minimum wage would have some implications for the sector, including stakeholders like us. We were planning to increase our sourcing volume by around 25 per cent, but are facing problems in doing so due to the salary increase issue. POST YOUR COMMENTS www.apparelresources.com [email protected] NEXT MINDTREE QUESTION Bangladesh’s apparel exports to India continue to skyrocket with 167 per cent growth during the first three months of fiscal 2018-19. As per EPB data, apparel exports to India stood over US $ 145 million during July-September 2018, which was US $ 54.3 million in the corresponding period in the last fiscal. What are your views on India as an emerging export destination? Please share your views on the same. www.apparelresources.com | November 2018 | Apparel Online Bangladesh 11