This document provides an analysis of Leatherex Footwear Industries Limited, a leading leather shoe manufacturer and exporter in Bangladesh. It discusses Leatherex's history and operations, product lines, export markets, competitors, and growth opportunities. Leatherex exports leather footwear to over a dozen countries and has an annual turnover of $6 million. While facing competition, Leatherex has established itself as a reliable manufacturer of high-quality footwear and aims to utilize its full production capacity by expanding into new markets.

1. Individual Case Analysis
Leatherex Footwear Industries Limited
Submitted to
Sheikh Morshed Jahan
Associate Professor
Submitted by
Laboni Akter Tarana
Roll: 14; MBA 52D
IBA, University of Dhaka
04 May, 2016

2. Individual Case Analysis on Leatherex
Footwear Industries Limited
Submitted for
Sheikh Morshed Jahan
Associate Professor
Course Instructor: Business Strategy
Submitted by
Laboni Akter Tarana
Roll: 14; MBA 52D
Institute of Business Administration
University of Dhaka
04 May, 2016

3. INDIVIDUAL CASE ANALYSIS ON LEATHEREX
FOOTWEAR INDUSTRIES LIMITED
QUALITY AND COMFORT IN GENUINE LEATHER: LEATHEREX
Leather has been favorite among many for both its longevity and style. It has always fascinated
people by its fashionable and trendy appearance. Also its endurance can outlast, outperform any
synthetic good. Whether it is leather jacket or leather shoe, starting from clothes to accessories,
everything that is leather has always had its own uniqueness.
Leather is a durable and flexible material created by tanning the animal raw hide and skin - often
cattle hide. This material is used for various purposes including clothing, bookbinding, leather
wallpaper, furniture covering etc. It is produced in a wide variety of types, styles and colors using
a wide range of techniques.
Leatherex Footwear Industries Limited is one of the leading leather shoe manufacturer and
exporter in Bangladesh. This 100% export oriented leather footwear company has been working
continuously with inherited expertise and know-how. It is now a leading footwear company in this
country, catering to the footwear needs of a global clientele. It is manufacturing and exporting all
kinds of leather footwear.
The company was founded in March, 2000. It has utilized most modern state-of-the-art machinery
for footwear production and all the manufacturing operations are automated and manual both.
The manufacturing capacity permits a yearly production of up to 12, 00,000 pairs of shoes and
sandals.
Leatherex has been working in the field of leather chemicals for more than a decade. It processes
raw hides to finished leather, produces shoe upper to footwear. All of the experiences helped the
company reach its current position. Leatherex operates under the technical collaboration of
Japan, Italy and Taiwan. It has launched international brands of leather shoes and bags and
Italian famous brand ‘Garden Franco Ballin and Tu Ogi’.

4. Besides exporting to foreign countries, Leatherex also wanted to offer genuine and fashionable
leather goods to Bangladeshi people. With this purpose, Leatherex Fashion and Footwear started
its journey in 2012. It is a sister concern of Leatherex Footwear Industries limited.
Leatherex has already gained popularity among fashion-conscious customers because of its
comfortable, durable and stylish leather products. “I have shopped here for some time and
wouldn’t buy my shoes from anywhere else now. Leatherex offers first rate goods at a very
competitive price”, said Karin Ashraf a student of a private university while she was buying her
shoes from Leatherex.
“Every product of Leatherex is strongly tested and we emphasize on quality. We never
compromise with the genuineness of leather,” said Nazmul Hassan, the managing director of
Leatherex.
The company was founded with a mission of becoming a high-quality manufacturer of footwear
in Bangladesh. It has contributed to the development of the leather sector in this country and
provided tremendous support to the domestic cattle industry in the past years.
LEATHER - EXPORT HUB NEXT TO RMG
Leather is the second largest export sector of Bangladesh next to RMG (Ready Made Garments).
It is one of the oldest traditional industries. It has several components like tanning, footwear &
leather products including garments. This industry has a long heritage of over six decades.
Availability of indigenous raw material (hides and skins) facilitated the setting up of the industry in
early 1940s in the then East Bengal. During Pakistan period (1947-1971), the industry was
dominated by non-Bengali migrants from India, who had the knowledge and the know-how of
leather processing industry. At that time, leather processing was limited to the production of wet
blue leather (semi-processed tanned leather) and the non-Bengali traders exported a large part
of the produce to West Pakistan for further processing and production of leather goods. A few
small tanning units belonged to Bengali entrepreneurs who processed leather mainly for the
domestic market.
After the independence of Bangladesh, the government took over the tannery industry abandoned
by the departing non-Bengali entrepreneurs but had limited success in operating them under the

5. public sector. Export of processed leather consisted almost entirely of wet-blue leather till 1980-
81. After 1981, a number of policy support measures aimed at raising the level of value addition
in the industry provided incentive for new private investment in leather industry. The ban on export
of wet-blue leather in June 1990 led to the setting up of modern leather tanning units for the
production of crust leather (tanned leather after further processing of wet blue leather) and
finished leather and this was followed by new investment in leather goods industry, particularly
leather footwear. In fact, real progress in terms of product development with respect to ‘Crust &
Finished’ leather commenced in 1990’s following the ban.
The principal raw materials for this industry are cow and buffalo hides and goat and sheep skins.
Bangladesh produces between 2% and 3% of the world’s leather. Most of the livestock base for
this production is domestic, which is estimated as comprising 1.8 % of the world’s cattle stock and
3.7 % of the goat stock.
Although there are reportedly over 240 tanneries in Bangladesh, but, in fact, 50-60 tanneries are
in real operation with regard to production of ‘Crust & Finished’ leather. However, there are 150
members are officially enlisted with Bangladesh Tanners Association (BTA), the oldest leather
association in Bangladesh.
Around 250 million square feet raw hides and skins are annually processed consisting of 63.98%
cowhides, 32.74%wet-blue goatskins, 2.23% buffalo hides and 1.05% sheep skins. Over 80% of
which is exported in the form of Crust (70%), Finished (23%), footwear and leather-goods (7%).
And the rest is consumed locally for footwear and leather-goods industries. According to EPB
(Export Promotion Bureau), Bangladesh exports its leather, leather-goods and footwear to 53
countries of the world. The major importing countries are Italy, Germany, Japan, Spain, Hong
Kong, China, Brazil, UK, Canada, Australia, the USA, Vietnam and Fiji Island. Bangladesh Hide
and Skin Merchant Association President Md Ali Hossain said, “The country annually produced
200-300 million square feet of finished leather, most of which is exported. Bangladeshi leather is
the best in the world after the French product.”
Having business-friendly environment and imposing European Union’s antidumping duties on the
import of shoes from China, many global leather giants especially shoemakers are rushing to
Bangladesh. USA-based Timberland, Germany-based PICARD, Korea-based Youngone and
most notably Taiwan-based Pou Chen Group (one of the world’s largest shoemakers, producing

6. shoes for Adidas, Reebok, Nike, Puma and so on) as well as many renowned companies from
the leather-world have shifted here lately and many more is in the pipe line to come to
Bangladesh.
According to EPB, export of leather and leather goods crossed $1 billion in fiscal 2014-15 for the
second year in a row. We exported leather and leather goods worth $1.13 billion in 2014-15 which
was $1.12 billion in the previous fiscal year. Compound annual growth for the preceding five years
was over 25 percent, and there are early signs that the industry is moving towards higher value-
added production, more diversified export markets, and innovative new products. Stakeholders
believe that the country’s leather industry would see greater potentials once the tanneries are
shifted from Dhaka’s Hazaribagh to Savar.
Bangladesh Leather Sector is privileged by two potential opportunities. Availability of raw hides
and skins with globally recognized its fine textured grain. And enjoying a comparatively lower
production cost due to having a large number of skilled and semi-skilled low wage work force,
utility cost and cost of living in general. According to LSBPC (Leather Sector Business Promotion
Council), around 100,000 people are employed directly or indirectly in leather and its sub-sectors.
So, it is to say, Bangladesh Leather Sector has all the basic elements to make a sustainable
prospective business here.
PROMISING PROSPECTS OF FOOTWEAR INDUSTRY
Bangladesh is a country that promises great achievements in the years to come. Although the
export basket of our country is heavily skewed towards RMG export, several new sectors have
cropped up over the last decade. Footwear is one such sector which has tremendous potential to
significantly boost country’s export while diversifying the economy’s export basket. The
manufacturers believe Bangladesh’s annual $550-million footwear industry may grow to a $15-
billion sector within a few years, if the opportunity is seized. Total leather industry export marked
a record with over USD 1 billion in fiscal year 2013-2014 of which footwear alone accounted for
around 71 percent of this. All the major exporting companies are mainly export leather footwear.
Besides leather, footwear sourcing is also bringing in increased foreign earnings for the country.

7. Leather sector businessmen say foreign entrepreneurs are interested in Bangladesh’s footwear,
thanks to the availability of raw hide, processing infrastructure, low labor cost, and a slew of
government incentives including duty-free machinery imports.
LFMEAB (Leather goods & Footwear Manufacturers & Exporters Association of Bangladesh)
President Syed Nasim Manjur said at least 51 foreign companies had already expressed interest
in establishing joint-venture footwear units in Bangladesh. “China, the world’s largest footwear
manufacturer, is now withdrawing from the global market. And our country is ready with huge
potentials to attract foreign investments in the sector”, he said.
According to a report on www.researchandmarkets.com, China’s annual leather footwear
production had dropped by 5.29 percent in 2012 and 7.45 percent in 2013. Bangladeshi
manufacturers are planning to fill the vacuum in the international footwear market being left by
China.
LFMEAB estimates that in the first nine months of the fiscal year 2014-2015 (July 2014- March
2015) leather footwear exports totaled 354.22 million US dollars, which compares to a target for
the period of 325.08 million US dollars. This positions exports of leather footwear 9% above the
target for the period.
Data recently released by the Export Promotion Bureau of Bangladesh reinforces this, with
estimates for the period July 2014 –May 2015 of total footwear exports of 574.5 million US dollars
(excludes parts of footwear). This compares to 467.21 million US dollars in the period July 2013-
May 2014, and represents an increase of 23%, which is revealing of the country’s dynamic growth
in terms of footwear exports. LFMEAB General Secretary Humayun Kabir said, “Footwear
exports would grow more if duties on import of shoe materials were cut.”
The government has no specific information about the local footwear demand. However, the
footwear sector estimates it to be anywhere between 200 and 250 million pairs a year and 92-95
percent of the domestic demand was met by local products.
Bangladesh is exporting raw leather since the early Seventies, but it got its first footwear exporter,
Apex Footwear, in 1990. Now Apex produces 20,000 pairs of footwear a day in its Gazipur factory.

8. Footwear sector, as a sub sector of leather sector gets also priority from government but this
sector as well was ignored by the government for many years. Now in the era of globalization,
nobody can find an alternative of product/ export diversification. For this reason, government has
now started looking after footwear sector rather than jute and tea.
LEATHEREX EXPORTING TO FOREIGN COUNTRIES
In the wave of globalization, countries are exporting goods and services in which they are more
efficient, to a barrier free world market. Such efficiency rationalizes the specialization of a country
in the production of those goods in which they have a comparative advantage. The low wage rate
and poor enforcement of environmental laws and rules have given footwear sector of Bangladesh
a comparative advantage in the world market. Moreover, the country enjoys duty exemption under
the GSP (Generalized System of Preference) from the most of the importing countries of the
developed world. Bangladesh also enjoys a reduction of Tariff and other non-Tariff barriers from
WTO (World Trade Organization). While this provide an opportunity for a country like Bangladesh
to boost up its export. Also Bangladesh has available and high quality raw materials (hides and
skins) which is convenient for booming the leather and footwear industry.
Previously, Bangladesh only exported crust leather from the leather industry, as intermediate
product. Other leather products such as leather shoes and bags had not penetrated into the
international market by then. Leatherex realized that they could produce high-quality leather items
by utilizing their existing high quality raw materials and competent labor force. Leather footwear
offers a lot more value than Intermediate products or finished leathers. It earns four times more
foreign currency. Hence, to enter into the untapped market in order to enhance the export
earnings from this sector and contribute to the leather industry as a whole, Leatherex stated its
operations back in 2000. Currently, the major exporting market of Leatherex lies in a group of
countries which includes Japan, Germany, Italy, Austria, Australia, Canada and USA.
Keystone Quarterly Review said Bangladesh is increasingly becoming a preferred destination for
leather and footwear sourcing. “A number of Chinese firms have already relocated in Bangladesh
because of its competitive advantages within the value chain which includes: low labor cost, high
supply of raw hide, duty free and GSP facilities etc.”, it said. Several orders which earlier used to
go to China and India are now coming to Bangladesh.

9. CURRENT POSITION OF LEATHEREX
Leatherex is one of the major footwear exporters of Bangladesh. Apex-Adelchi Footwear Limited
is the market leader in this sector accounting for 45 per cent of the total footwear export earnings.
They shipped $110 million of goods overseas in 2013. Among other major exporters are Jenny’s
Shoes, Landmark Footwear, Bay Footwear, etc. Leather footwear is the major exported item of
these companies besides other leather goods.
Leatherex’s main export market is Japan, Korea, USA, UAE, Germany and Italy. Their factory is
operated under technical supervision of Italian, Japanese and Korean. They import necessary
materials from the renowned manufacturers of the World. Foreign raw material sources are
Korea, India, Italy, Taiwan, Japan & China, besides 70-80% locally sourced leather and others
materials. The tanneries are catering top brand shoe and goods makers in Europe, Far East and
China. So they have strong linkage for leather. They are also looking for new customers / agents
/ marketing companies in Japan, Europe, Middle East and USA to utilize their full capacity.
Leatherex has yearly turnover of 6 million US Dollar (approximately) and yearly capacity of
12,00,000 pairs which depends on design/article. It has a building area 75,000 square feet and
1200 employees.
Leatherex have proved their competency in the global market as a reliable manufacturer of high
quality and brand name leather footwear. “The leather industry of our country frequently faces
stiff competition from countries like Myanmar, India, China, Vietnam and Pakistan. We have to
bear in our minds that we must be competitive and produce better products than our competitors,
in order to stay in business.”, said Mr. Mohammed Nazmul Hassan Sohail, Managing Director of
Leatherex. Exported intermediate products never show the origin of the products but finished
products exported to foreign countries focus the name of the country of origin. ‘Made in
Bangladesh’ inscribed in international brands highlights the country's image globally. They
consider this a pride to be a part of this honor.
PRODUCT LINE AND PRICING STRATEGY
Leatherex’s main products are men’s sandal, casual, formal, women’s sandal, pumps, and boots.
They offer extremely stylish and fashionable ladies bag. These bags are of great quality and look

10. amazing. In addition, Leatherex has leather key rings, wallets, purses, pen holder, belt, cigarette
case etc.
Products Price Range (TK)
Men’s Sandals 1,000 to 7,000
Woman’s Sandal Starts from 700
Men’s Shoe 1,500 To 12,000
Ladies Bag 1,200 to 3,500
Key Rings, Wallets, Purses, Pen Holder, Belt,
Cigarette Case etc.
Within 1,500
Leatherex divided the shoes into sections for women, men and kids, and the shop organizes their
inventory in multiple ways. One can shop by category; Leatherex keeps it basic with sandals,
heels or boots or by special occasions, casual, dress or office. Leatherex’s impressive inventory
and extended categories, their wonderfully showcased outlets, their hard-to-find specialty sizes
or superior customer service makes it clear that it is one of the best shoe stores. Bangladeshi
customers can enjoy world class foreign shopping at home now.
LOCATION AND MARKETING STRATEGY
Bangladesh has a total population of 157.9 million and a large number of target customers.
Besides exporting, Leatherex also serves the home market. It targets the middle to upper class
of Bangladesh. As Leatherex ensures the quality and comfort of the products, we are bound to
keep the price in range which considered high price by many in our country. But considering the
durability and comfortability of the products, their price is quite competent.
Leatherex has five outlets in Dhaka at Gulshan, Dhanmondi, Shimanto Square, Farmgate & New
Elephant Road. They offer both the in-store and online shopping. To shop online, one needs to
simply choose the design from the official Facebook page. We can see their product number,
price including VAT and product description and then contact any helpline to book the order.
Leatherex even offers three months’ replacement guarantee. To make the shopping experience
more convenient, they also offer home delivery services. Considering their huge inventory with
finely tuned categories and their variations, Leatherex is the shoe store that anyone will want to
check out.

11. ENSURING QUALITY
Leatherex team try their best to ensure success and protection of their buyers. They have different
types of policy package for Quality Assurance. In the first one, buyer inspects 100% before
packaging with a support of Quality Assurance Department of Leatherex. In the second one, buyer
can nominate their representative to monitor and inspect the quality before shipment. In the third
one, Leatherex in-house QA (Quality Assurance) team check and inspect 100% merchandize
before shipment and a PSI certificate is being issued to the buyers.
Leatherex takes full responsibility of the products after arriving at the buyer’s destination. In case
of poor quality during inspection after arrived at the destination, Leatherex gives replacement
within 60 days at free of charge. An additional service such as X-ray with scan report is also
available for Japanese customers.
BARRIERS AND CHALLENGES TO OVERCOME
Leatherex started its journey in 2001 with Japanese know-how. Later they spread their business
in Korea, Italy and other countries. Their Japanese collaborator had doubt that if Leatherex would
be able to maintain the strict quality requirements. But Leatherex was able to pull that off
successfully with their competent management, skill labor force and strong determination.
Leatherex had to train its workforce and build the infrastructure of the business. The company
acted in compliance with environmental laws and worker safety which is also required by the
foreign buyers.
In the next 10 years, leather industry is aiming for USD 16 billion export target. Leatherex can
reach that goal only if it can overcome the obstacles that exist in the industry. In order to reach
the desired export target, certain conditions are prerequisite. Such preconditions include calm
and stable political environment, efficient regulatory body, safe and protected industry for the
workers, buyers and entrepreneurs, efficient and accident free traffic, no further such undesired
incidences in the RMG sector like that of Rana Plaza and Tazreen garments, etc. Keeping all
such externalities stable, the company has to look forward to capacity building which will be their
first priority in the years ahead. Most important is competitiveness in the World market and
reduction of high bank interest rate. They would also consistently search for new opportunities
and penetrate into new markets overseas. And, once new scopes and opportunities would be

12. identified, accordingly, they will plan to expand their existing infrastructure to accommodate high
business volume.
All the tanneries are to be relocated from Hazaribag to Savar with next years which is definitely
not only a good initiative but an essential one as well. Recently, the foreign buyers have raised
their concerns about the absence of ETP and pollution-free operations of tanneries in
Bangladesh. Moving the tanneries to Savar would ensure production of leather products in an
environmental friendly way. This would mean more foreign buyers would purchase the leather
products from Bangladesh as environment compliance would be met.
World leather footwear manufacturing industry, which is dominated by China, is shifting to other
neighboring countries in Asia due to labor cost differential. This could mean more foreign
investment in the Bangladesh. But the reality is that currently Bangladesh do not have the required
level of power supply and industrial zone suitable for foreigners in order to accommodate them.
Shortage of power and energy has been the only barrier for such foreign direct investment in the
leather sector. The government needs a long term solution in this regard to capture the fleeing
market share of China.
Shortage of power and energy and inadequate infrastructure pose the main threat to the business.
When there are electricity disruptions, power has to be generated by diesel-run generators, and
the cost of running diesel generators is very high. Poor condition of the Dhaka-Chittagong
highway road also makes it very difficult and costly to move goods as per buyers’ stiff deadline.
Leather industry also requires skilled labor force. The efficient human resource management of
Leatherex consistently focuses on building skilled manpower whose production adds to the GDP
of the country. Additionally, Leatherex values its employees by satisfactory remuneration.
In order to have strong growth of the leather industry, the industry must also get continuous
government policy support and bureaucratic hassles must be eliminated by the government, too.
Higher cost of diesel for power generation should be compensated by higher subsidies.
To run a business in leather industry, one must at first ensure that he/she has an efficient and
qualified management, which is indispensable for the day to day operations of the business.
Additionally, it is also imperative for the entrepreneur to be a leather professional.

13. AWARDS AND RECOGNITIONS
Leatherex achieved the following awards and recognitions.
 National Export Trophy for 2001-2002 (Silver)
 National Export Trophy for 2005-2006 (Gold)
 National Export Trophy for 2008-2009 (Gold)
 National Export Trophy for 2009-2010 (Silver)
 Dun & Bradstreet Corporate Awards-2010
 The Financial Mirror Business Award 2005
 Business Award 2005
 ISO-9001:2000 Certifications
A LOOK TO THE FUTURE
Leatherex look forward to adopting new technologies for their existing manufacturing units in order
to launch new brands under ODM (Original Design Manufacturer) program. ODM is a program
under which They plan to design, manufacture and brand their own products themselves. In the
future, they would also like to invite their major foreign buyers in Bangladesh and showcase their
products and capture more market share.
CONCLUSIONS
The main advantage that Bangladesh leather footwear industry holds is that, it has adequate
supply of the main raw material, leather, which comprises of minimum 50% to 80% of a leather
shoe/bag. In addition to this, the linkage industry like the ones producing shoe insole and outsole
have also developed, gradually. Our labors also have good trainable workers and craftsmanship
which gives us pretty unique combination of advantages over competitors. Our country also
enjoys GSP facilities in EU, Japan, Korea and other countries, which gives us a competitive edge.
From its humble beginning in 2000, Leatherex has become a global player by manufacturing high-
quality brand of footwear. Their products reflect high-quality design, superb craftsmanship,

14. attention to details, high level of customer satisfaction, and latest fashion trend. It is a local
company that has carved out a niche in the global market place.