1. Bangladesh's textile industry is a major economic driver, especially garment exports which have grown from $1 million in 1978 to over $20 billion currently. 2. The knit sector has a more complete value chain as 95% of fabrics and accessories are sourced locally, while the woven sector relies on 85% imported fabrics. 3. Both sectors would benefit from further developing backward linkages to reduce costs and lead times.

1. Overview of Textile Industry
1.1 Country Profile
Official name : Peoples Republic of Bangladesh
Area : 144 000 sq km
Population : 150 million
Language : Bengali, English
Geographical Location: South Asia
Time : GMT + 6 hours
Main Industries : Textiles, jute, Leather, Frozen
Foods, Agriculture, etc.
GNI per Capita : US $ 470 (2006)
: US $ 620 (2008)

2. History of Apparel Industry in Bangladesh
 There were only 9 export oriented garment
manufacturing industry in 1978, earned only 1 million
dollar.
 Some of them were very small, produced RMG for
local market as well.
 Four such small and pioneer garments were Reaz
garments, Paris garments, Jewel garments and
Boishakhi garments.
 Reaz garments established in 1960, as a small
tailoring outfit, named Reaz store in Dhaka. Served
only domestic market of its initial 15 years.
 In 1973, it changed its name to Reaz Garments Ltd
and started to export by selling 10 000 pieces of shirt
to France, valued 13 million franc in 1978.That was
the first direct export of apparel.

3. History of Apparel Industry in Bangladesh
 Desh Garments Ltd., first joint venture in
Bangladesh, Technical and marketing collaboration
with S. Korean Daewoo Corporation, established in
1979.
 First 100% export oriented company.
 In 1980, Youngone (49%) and Trexim (51% equity)
formed a company named younone Bangladesh
exported first consignment of padded and non
padded jackets to sweden in dec 1980.
 It had trained 120 operators including 3 women in S.
Korea Went to the production in 1980.

4. History of Apparel Industry in Bangladesh
 Till to the end of 1982, there were only 47
garment manufacturing units.
 Break through occurred in 1984-85 when
numbers of garment factories increased to
587.
 In 1999, there were 2900 garment factory in
the country.
 Average growth rate of garment export is
22%.
 Now, the numbers of garment manufacturing
units in Bangladesh is 5500.

5. Reasons of Growth
 External Reasons:
GATT Approved multi fiber agreement (MFA)
Quota,
As a LDC, get preferential access in EU.
GSP
 Internal Reasons:
5% cash incentives
No import duty
Bonded warehouse facilities
Back to back L/C
Concessionary rates of interests
FDI of Joint venture facilities
Concessionary duty on imported machinary
EPZ facilities

6. Textile Production
Mainly Two Sub-sector:
a. Woven:
Horizontally Integrated
85% woven fabric imported off 3 billion yards
Demand increases @ 20%
Requires comparatively higher investment.
223 modern weaving plants, each with an annual
capacity of 10 million meters, will be set up
b. Knit:
Vertically Integrated
Almost self-reliant - 95% Collected Locally.
Annual Increment of Consumption of fabric : 20%

7. Value Chain:
 Michael Porter in 1985 introduced in his book ‘ The
Competitive Advantage: Creating and sustaining
Superior performance’ the concept of the Value
Chain.
 Michael Porter suggested that the organization is split
into ‘primary activities’ and ‘support activities’.
 Primary activities: Operation, Logistics, marketing,
Service,
 Support Activities: Procurement, Technology
development, Human resource mgt, Infrastructure.

8. Value Chain: Knit
 Almost complete value chain
 Some of the factories fully vertically integrated : Spinning to finished
garment.
 Competitive wage, Easily trainable workforce, Expanding supply side
capacity, government supporting policy helped to gain competitive
advantage.
 Core strength is backward linkage.
 90%-95% knit fabric produced locally
 Net export is higher than woven.
 In FY 2006-07, Export share of knit and woven were 37.39% and
38.25% respectively.
 Cumulative average growth of knitwear is 27%.
 Advantages of Bangladeshi Knitwear:
Self sufficient – 95% fabric and accessories collected Locally.
Integrated
Good capacity exists
Unbeatable in price
Cheap labor with high stitching capability
Good reputation of Bangladeshi Knit apparels all over the world.

9. Value Chain : Woven
 Only a few weaving factories that offer quality
product.
 So, majority of fabrics has to be imported –
higher purchasing cost, dependency on
external supplier, pricing disadvantages.
 Can meet only 15% of fabric demand.
 More than 220 modern weaving mill need to
be set up, each with an annual capacity of
10 million yards.
 Annual Consumption of fabric: 3 billion yards.

10. Backward Linkage
 Supporting Industry
 Spinning, weaving/knitting, dyeing, finishing
Industries.
 In addition to these, Interlining, labels,
buttons, sewing threads, packing and
packaging materials, zippers, draw strings all
are backward linked industries.
 70% of accessories collected locally.
 Share of BB L/C in total export dropped from
68.33% in FY 1995 to 45.1% in the first eight
months of FY 2001.
 Total investment in backward linkage is
US$ 2B.

11. SWOT Analysis
 Strength:
 Competitive price advantage due to cheap
labor and Governmental Assistance
 Skilled Human Resource
 Duty and Quota free access and GSP in EU
 Integrated Supply Chain, Specially in
Knitwear
 International Image of a reliable supplier of
basic Products.

12. SWOT Analysis
 Weakness
 Weak Structure, in particular production
efficiency, product development, marketing
skill, customer service, controlling,
planning, management skill, technical know
how
 Producing mainly basic products,
 Heavily depend on importing woven
fabrics, low value addition
 Poor image of adapting international and
Corporate social standards
 Political, Social and worker unrest.

13. SWOT Analysis
 Opportunities:
 Potential for higher value addition by developing
backward linkage.
 Reduce lead time by developing infrastructure of
transportation, faster custom clearance, strong
backward linkage
 Improved image by adapting environmental and
social standards
 Diversifying apparel product; switching from basic
product to fashionable product.
 May get preferential access in USA and Canadian
market in near future.

14. SWOT Analysis
 Threats:
 Risk of loosing competitive advantages-
development steps required.
 Poor political and investment climate leading
declined interest of importers
 Poor capital formation
 Risk of loosing know-how transfer, staff
qualification,
 Totally depend on others for raw materials as
Bangladesh produce neither natural fiber nor
MMF.
 Increased international competition
 Woven sector requires huge investment
 Single market concentration.

15. Distribution Structure
 Contact Directly to the apparel producers
regarding price, samples, delivery schedule
etc – more dependency on manufactures
regarding quality.
 Production Agencies/Buying house: Take care
of product development, purchase of fabrics
and accessories, follow up production,
conducting inspection, scheduling shipment
date etc.
 Satellite office: Has own QC dept. and other
staffs to conduct the operations.