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Prospects and Challenges of RMG Sector of Bangladesh and Roles
of C&F Agents and Buying House
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Specified Cluster/Situation of the factories
Dhaka Region (Savar, Asulia, GajiPur)Narayanganj Region
Chittagong Region
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Bangladesh RMG
DFQF facility
From 49 Countries
4.2 m Worker
75% Women Workers
2nd Position in Knitwear just behind China3rd position
in Woven following China and Italy
Plummy Fashion
1st LEED Platinum Knit Factory in the
world.Vintage Denim
1st LEED Platinum
Denim factory in the
world
Almost 82% of Total National Export
Current Scenario of Bangladesh RMG
3700 Active FactoriesBKMEA
& BGMEA sole trade Body
total export Jul-Feb
18.12b with target 27.37 b (last FY $25.49b )
USGBC registered 156& Certified
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Continued….
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Bangladesh works for3
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Prospects of RMG
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Employment Generation: RMG
2004-05
2006-07
2008-09
2010-11
2012-13
2014-15
00.5
11.5
22.5
33.5
44.5
2.122.4
3.53.63
3.99 4.2
Continued….
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Bangladesh has great opportunity to catch the market share of Chinese RMG in world (420 billion USD without China) as well as domestic market of China (About 300 billion USD) as China is going to divert from RMG production
The growth of Knitwear export in China is 42% where overall export growth is 9.2%
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Improving Standard of Living
Earning income for their family
Having treatment for own and family members
Ensured Food Security
Education to their Children
Continued….
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Substantially Decreasing Social Cost e.g. crime,
violence, moral decadents, wastage of potential labor force
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EU and other Importers are willing to move
from China to Bangladesh to establish big enterprises
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The geographic location of Bangladesh
is ideal for global trade, with very convenient access to International seaports and air routes
3 Sea
Ports1. Chittagong2. Mongla3. Payra
3 Internationa
l Airport22
Land
PortsContinued….
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Pangaon River port Komlapur
ICD
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Trained, enthusiastic,
hardworking and low-cost (even by regional standards) labor force suitable
for any labor-intensive Industry
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Bangladesh is producing & may expand the export of High Value Added Products through product diversification.
Continued….
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Implication of Dhaka-Chittagong 4 lane Highway will be helpful to reduce the transportation lead time
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Challenges:14
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Confrontational Politics(Reoccurrence of political unrest will hamper the export
earnings badly)
Export EarningContinued….
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Lack of marketing Tactics and
Negotiation & Bargaining skills regarding price setting
Continued….
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Somewhat long lead-time of Export or Import
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Banking Assistance• Interest rate for the foreign Investor is just
3%• Interest rate for the Domestic Investor is more than
10%
These types of sick competition for different financial aspects are really a challenge in the development of
RMG
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Shortage of uninterrupted Power & quality Utility services
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Skilled Workers to produce High Value Added Products of Ready Made
Garments
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Some countries in Africa have had zero-tariff facility under AGOA act (Agreement on Agriculture) which helps them to compete
with Bangladesh RMG sector
Continued….
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Lack of development of Backward Linkage of RMG
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Role of Clearance & Forwarding (C&F)
Agent
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Clearance & Forwarding Agent
An entity /company responsible for undertaking export/import cargo arrangements on clients/shippers behalf at a seaport, airport and so on. At seaport it would include collection of freight; collection and issuing bills of lading; notification of arrival and loading of goods; customs, import & export documentation; certificates of shipment; arranging sorting of cargo, cold storage, warehousing, transport to destination including near continent; cargo or damage surveys.Routine tasks e.g. loading, unloading, customs brokerage, storage, local transport services
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The position where a Clearing & Forwarding agent perform
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Shipping documents ask by C&F Agent
Sea:Standard Shipping Order Mate’s Receipt Bill of Lading Shipper’s Declaration of Dangerous Goods Stowage Plan and Stowage Order Certificate of OriginCharter Party
Air:Shipper’s Declaration of Dangerous Goods Cargo ManifestCommercial InvoiceCargo Arrival NoticeAirway Bill
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The role of C&F agent for further development of RMG sector
Continued….
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• Lead time depends on C&F Agent performance• Coordination between Import C&F Agent and
Export C&F Agent• Execute minimum import lead time to facilitate
in export lead time• C&F agent can facilitate in the steps taken
Bangladesh :-National Single Window-ACYCUDA-Custom Modernization
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Role of Buying House
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A buying house is a media between buyer and
manufacturer. It can be a buying agency or a buying
office.
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Normally a buying house has to do the following functions
• Order collection from the buyer
• Finding fittest and complaint suppliers (local factory) to complete the order,
• Order processing from local factories,
• Making product development samples for buyers,
• Contacting with buyers for necessary approvals,
• Forwarding all the comments and approvals to the factories,
• Follow-up order processing according to buyers demand,
• Maintain desired product quality from sample to production,
• Should follow inspection terms and conditions according to buyers demand,
• Shipping the goods.
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Flow Chart of Buying HouseContact with the Buyer
↓ Communicate
↓ Meeting
↓ Send L/C to the Garment
↓ Develop the product
↓ Inspection by Buying House
↓ Complete working paper or document for shipping
↓ Send one copy to the bank ↔ Attach one copy with the
product ↓
Shipment Continued….
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Organogram of a Buying house
Managing Director
1 •Marketing Merchandiser
2 •Development Merchandiser
3 •Production Merchandiser
Marketing & Merchandising Manager
Technical and Quality Control Manager
Lab In-charge
1• Quality
Controllers
1 • Technologist
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70%
6%
8%
16%
Fabrics Accessories Printing and EmbroideryCost of Making (CM)
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**Profit ,Commission Overseas and Some other issues are included in CM
Costing framewor
k
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Different sample required to execute an order
Fit Sample Salesman samplePhoto sampleApproval sample Pre-production sample
Production/Gold seal sample
Shipping sampleContinued….
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Various Lab-tests ask by buying house:
• Fabric test Base test
• Weight (GSM) • Composition • Dimensional stability (wash & dry clean) • Spiraled test (for knitted fabric) • Stretch recovery • Bursting strength (knitted fabric) • Tensile strength (Woven fabric) • Pilling resistance • Surface flash (Brush) • Seam performance (Woven) • Stretch properties (elasticity)
Bulk test • Color fastness to light • Color fastness to wash • Color fastness to water • Color fastness to rubbing • Color fastness to chlorinated water • Color fastness to sweating etc.
• Garment tests: Dimensional stability Print durability Abrasion resistance
• Trims tests Button: Pull test Bow: Pull test Metal: Nickel test Elastic: Latex test etc.
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Buying House should do for further development of RMG
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Ethical roles of buying house to get export order
Buying house depends on exporter: If there is no RMG exporter they have no role to perform Least profit margin: if exporter get loss they cannot able to supply.Work in favor of exporter:Buying House can avoid some unnecessary test that only expand the lead timeBranding Bangladeshi Products to the importer or BuyersBuying house costing framework should be ethical or standard cost framing and an identical cost framework for all. Positive issues and regulations taken by Bangladesh government should be forwarded to importersBangladesh’s trade facilitation signatory branding
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Recommendations
• Skills Development of Worker• Infrastructural Development• Ethical Buying Practices• Enhance Efficiency of workers• Prioritize World Market Demand
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Any Queries?
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