Vision 2050: The Future of Bangladesh Knitwear Sector

 

Vision 2050:  The Future of Bangladesh Knitwear Sector

Vision, mission and values are key elements of an organization’s strategic planning process and these guide the development and delivery of program services and activities. When approaching Vision, Mission and Values (VMV), as a process to be undertaken in an organization, it’s important that everyone involved understands the concept and its components parts.  A realistic, credible, and attractive vision statement attracts commitment and energizes people. In addition, a well thought-out vision statement bridges the present with the future while establishing a standard for excellence. BKMEA, as an internationally reputed business organization, has its own strategic vision that is to knit the future with the present for a strategic goal to be achieved over the passage of time. However, the vision has been set by dissecting all geo-political, economic and business trends of the world. So, our vision is based on market economy, labor economy, apparel business trends with economic caprice and consolidation process across the globe. An educative approach to a business expansion model!

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As we are aware of fact that Market management of the world heavily hinges upon the equation of economic stability and upward trend of the development index. With the meteoric advent of BRICS and their subsequent economic activity of product diversification has made the world market even more competitive and posed great threat for Bangladesh. This is the reason; the largest exporting sector (Knit sector) of Bangladesh is faced with competitive international market strategies coupled with the negative effect of the world economic depression and adversities sprung from loan difficulties in the Euro zone. The huge scale debt of euro zone countries, political turmoil and economic depression and at the same time, weaker economic states of the developed countries including USA gives indication of weaker export statistics of Bangladesh in future.

The growth rate of knit products is already exhibiting negative tendencies. In these changing times of the world market, to keep the Knit industry of Bangladesh reigning supreme in the international circle, there is no alternative to the exploration of new markets besides the USA & European markets and expansion of business possibilities in those markets. It is a universal truth that if the economy of the developed world is at risk, it negatively affects the economies of the developing countries of the world. Ripple effect factor!  Most often, unfortunately, economic problems give rise to social chaos and it dampens individual’s purchasing capacity, which is an ominous sign for an exporting nation like Bangladesh.

BKMEA, as per the instructions and guidelines of the Honorable Prime Minister, has, so therefore,  undertaken projects to explore potential, yet untapped new markets besides the USA & European markets; and expansions of business possibilities in those markets. Especially the gradual increase of exports of knit product in Japan, Russia, Mexico, Brazil, South Korea, Malaysia, India, South Africa and China has proved that the new markets are highly potential for Bangladesh. BKMEA has taken an endeavor to integrate the knit sector with the world markets by making a long term plan through innovative research activities and taking strategic measurements.


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A worrying fact is, 11 out of 28 countries of the European Union are sliding towards low growth rate in their respective economies and 7 out of those 11 countries are experiencing economic crisis. At the same time, the growth rate of the USA economy is also on the low ebb. As a result, in the next 4 to 5 years the principal two areas of Bangladesh’s knit products export—The USA and the EU--- (approx. 71% of the total export) may see fall in their economic growth rate. This induces a possibility to see a decrease of 20-30% of Bangladesh export products in those zones.  8 billion dollars out of the total 12.05 billion dollars of knit products exports are exported to USA & European markets. A decline of 20-30% in this export statistic means it will reduce export of 1.5-2.5 billion dollars (approx.) worth of products. In that case the industrialists will be left with no other choice, but to export their products to alternative potential markets.

To expand businesses into those untapped markets outside of the USA and EU,  the industrialists are in urgent necessity of  conducting their businesses with gaining complete knowledge of GDP, economy, sea port, capital & other important cities of a country, per capita income, time gap with Bangladesh, economic demand, main tariff and non-tariff barriers, list of main imports of knit and RMG products, list of import price difference between Bangladesh and other countries in those countries and information about product delivery through air and sea rotes in those countries. In this connection, an absolute grasp of the GSP facilities in the European markets along with facility of zero tariffs for Bangladesh in the 49 other countries is essential. At the same time, knowing the tariff structure of the countries of the world will assist the business owners to negotiate prices accordingly. However, to ensure success in the apparel business, the most critical factor will be the correct interpretation of the blooming economies of the world in the time frame of 2015 to 2020, 2020 to 2025 and thus, up to 2050. The biggest and only publication of business information consisting 2104 pages the “Global Buyers’ Information Directory” published by BKMEA will open doors of possibilities for business owners to expand their businesses.

So, how does BKMEA get itself ready for future opportunities? How do we intend to address the future potentials for expansion of Businesses? What is our gut feeling of rising further amidst the international competition of apparel business? What is our strategic vision and what is it predicated upon?  Let’s dip into the following features.

BKMEA has already designed the blueprint to export at least 20 billion dollars’ worth of knit products by 2020 and at least, 30 billion dollars’ worth of knit products by 2050.

At present Bangladesh is exporting knit products to 153 countries. By 2050 we plan to export our international standard knit products to the whole world (212 countries). This is why we are placing maximum importance on the new market expansion.
We are working tirelessly to increase Bangladesh’s export volume in the currently least important markets such as the countries of the African continent and Latin American markets. A research conducted by the OECD in 2012 has found that the countries of the African continents will exhibit the highest average development growth in the coming days. We have kept our efforts uninterrupted to increase the export of Bangladesh’s knit products in the African markets. A cooperative agreement between the African Customs Union and Bangladesh is so vital for this purpose.

Product diversification is an essential part of the market expansion. An analysis of the last 14 years knit product export data has shown that Bangladesh exports only non-fancy products (t-shirts, polo shirts and sweaters etc) in bulk amount. But a change in taste and fashion of the consumers worldwide has increased the demand of the fancy products (fashion products).
Especially in the African and Latin American countries, Caribbean Islands and the new developing economic countries has showcased sharp rise in the demand for fashion products. To cope with the changing demand of the global market, the member factories of BKMEA have introduced fashion items in their production line side by side the traditional products. We are assuming, Bangladesh will be able to vastly diversify its knit fashion products by 2020 and by 2050 Bangladesh will occupy the leading spot for production and export of knit fashion items.

Future Projection of Bangladesh Knitwear Industry:
Fact FY 2014-2015 Vision – 2021 Vision – 2050
Knitwear Export $13.25 Billion (Targeted) $21.08 Billion $32.62 Billion
Growth of Knit (%) 15.6 20.9 32.1
Share in Apparel Export (%) 49.75 52.3 69.4
Share in National Export (%) 39.93 41.7 53.2
Share in GDP (%) 6.9 7.2 12.12
Employment Generation 1.6 Million 2.8 Million 4.9 Million
Female Empowerment (%) 45 52 67
Enhancement of Women Savings (%) 8.8 13.69 29.2
Poverty Reduction (%) 6.4 7.5 9.1
Banking & Insurance BDT 176 Billion BDT 187 Billion BDT 201 Million
Shipping & Logistics Industry $ 79 Million $ 84 Million $ 91 Million
Forward & Backward Linkage Industry BDT 212 Million BDT 221 Million BDT 254 Million
Engineering Sector $ 10.1 Million $ 14.1 Million $ 19.4 Million
Econometric forecasting methods: Autoregressive moving average with exogenous inputs (ARMAX), Forecast skill (SS) and Regression analysis

Poverty reduction, inequality elimination, improvement in health and education sector, social development etc. are main determinant factors for the development of economy. If these programs are kept on tract, then it is possible to steer the country into the right direction regardless of the fact which government wins the election. In the international production chain, competitiveness of the Bangladesh apparel sector has successfully been able to improve workers social conditions.

Out of 4.1 million workers employed in the apparel sector, 1.5 million workers are employed in the knit industry. By 2050 the number will rise to 4.9 million, which implies that by 2050 the knit sector will create 3.4 million job opportunities.

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It was the target of Millennium Development Goal (MDG) by the UN to bring the poverty rate down to 29% by 2015. But the poverty rate of Bangladesh was reduced to 26% two years earlier (2013) than the targeted time line. The poverty reduction rate will increase further to 9.1% from 6.4% due to expansion of the knit sector.

At present the knit sector contributes to 6.92% of the total GDP. By 2021 it will reach 7.2% and by 2050 knit sector will contribute 12.12% to the total GDP.

On the other hand, as value addition of the knit sector amounts to 75% (approx.); it is acting as a medium for the speedy growth of backward linkage industries. This results in rise of the knitting sector, spinning sector, shipping industry, bank and insurance organization, logistic industry, cosmetic industry etc. If we take into account the contribution of these sectors in GDP, the economic contribution of the knit sector in GDP will rise substantially.

Apart from this, the economic solidarity of Bangladesh in coming days will be dependent largely on the knitwear sector as it also has far-reaching social contribution.  

The world is placing much emphasis on ‘going green’ policy. Comprehensive discussion is going on over green economy, green building, green banking, green technology, green industry etc. Special emphasis is given to using the green concept index and regulations in industrial supply chain, production and product preparation process. BKMEA has opened a “Green Industry Development Cell” to introduce green factory mechanism in its member organizations.

Under this project, BKMEA is working to make the industries green, using green theory in supply chain, during production and product preparation process; spread the green faculty in the whole industrial management. Especially reduction of carbon emission, ensuring the right standard of chemicals in products, correcting the water treatment by reducing water consumption, preventing wastage of fuel and reducing environment pollution created by it are the main responsibilities of the BKMEA Green Industry Development Cell.

BKMEA follows the standards set by the USGBC of the USA. Through this, CO2 /GHG emission from knit sector will decline by 95%, water wastage will decrease by 50% and environment pollution from energy consumption will fall by 50% by 2050. This confirms Bangladesh knit product exports will reach 32 billion dollar by 2050 and at the same time Bangladesh knit industry will see massive improvement in greening process.

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CO2 emission
Bangladesh Industry - 16.9% - 0.17 % of whole world

Electricity consumption of industries: 17%

Total energy consumption BKMEA factory according to primary data
Average: 6 %

Industrial water waste rate:
109.47 million/cubic meter/year (waste water)

Source:  Waste Concern and ADB (2008)

Future water waste projections
2472.07 million/cubic meter/year (waste water),

Source: UMP (1999), as cited by Waste Concern (2008) Waste Concern and ADB (2008)


BKMEA was established in 1996 as a National Trade Body to represent Solely the Knitwear Sector of Bangladesh. BKMEA’s Mission is to Promote and Enhance Knitwear Sector’s Competitiveness, Productivity and Profitability in The Global Market through Support Service to more than 1900 Members. Capacity Building of The Sector and Networking with all Stakeholders is another key commitment of BKMEA. BKMEA is contributing to Employment Generation, Involving Women in the Formal Sector, Increased Substantial Export Earnings, Women Empowerment, Reduction Child Labor, Gender Equality, Health & Nutrition, Diminishing Child Marriage etc. through knitwear export to across the globe. Our motto is stay afloat in the international competition & Markets with chic, elegant & quality products. We invite buyers/importers of the world to visit our factories & gauge our standards.

Here at the BKMEA, we strongly believe that if business policy and conduction procedure is determined by keeping the social and political indexes at their rightful place, Bangladesh Knit industry will become a role model for the world by 2050.