RMG EXPORT: Unhealthy competition threatens growth

Kazi Azizul Islam

Unhealthy competition over repeated price cut by a section of Bangladeshi garment exporters has intensified in the recent months that may cost a huge price loss to the country’s prime export earning sector, industry people and experts fear.
   They say the growth of Bangladesh textile and apparel industries will be hindered if the price cut competition continues.
   ‘It is just a madness that many exporters offer the making charges for a dozen of basic jeans trousers at $6 while the cost in even a midsized factory is about $9,’ said Emdadul Islam, director of Babylon Group.
   Emdad, who started his career in the country’s pioneer garment exporting company, told New Age that a section of short-sighted entrepreneurs had always been engaged in price war and forced others to follow them.
   The top executive of the Babylon provides New Age with the latest comparison on the prices of T-shirts that European Union had imported from different countries, including Bangladesh.
   Citing European Commission data, he said in 2008, Bangladeshi exporters h ad shipped highest volumes of T-shirts to European market. But the unit price remained much lower than the exporters of others countries.
   A made-in-Bangladesh T-shirt was shipped just for 1.22 Euro which was 37 per cent less than the global average price. Exports price of a Turkish T-shirt was 3.35 Euro, Chinese 2.03 Euro, Moroccan 1.56 Euro while an Indian T-shirt was shipped at 2.10 Euro.
   Echoing Emad, a Bangladeshi merchandiser working with a Dhaka sourcing office of a world leading European retailer says as importers easily get discount on very next Bangladeshi supplier they always search for the cheapest one.
   ‘If a quotation on per dozen of basic T-shirt at $12 from a local knitter is negotiated with four suppliers, it can easily be settled at $9,’ said the executive seeking anonymity.
   Rafiqul Islam, the consultant in Dhaka for a Washington-based labour right group, points out that availing the world cheapest wages, cheaper gas and electricity and no cost for managing waste, local exporters produce cheapest garments.
   ‘Exploiting their workers local exporters continue making their price offers cheaper while importers instigate them as they find Bangladesh a fertile ground for such unhealthy competition,’ he said.
   The Bangladesh Knitwear Manufacturers and Exporters Association president, Fazlul Hoque, traced that unhealthy competition on price cut had been enhanced much in ongoing recession period.
   ‘With flow of orders squeezes the suppliers are in race to get the orders by an affordable loss while some buyers are taking the chances and making the suppliers victims,’ said Hoque.
   Hoque said if the Export Promotion Bureau monitored the unit prices of exports, the BKMEA would support their initiatives. ‘At least, for discouraging them psychologically, the EPB can check unit prices that don’t meet even the basic costs of production.’
   The executive director of the Centre for Policy Dialogue, Professor Mustafizur Rahman, says export price war in Bangladesh is a very critical economic behaviour, which is difficult to rule.
   ‘Buyers usually take this opportunity when competition on price cut goes on in a sourcing market like Bangladesh that has several thousands of suppliers,’ he says.
   Mustafiz, however, suggested that the government could strictly monitor the labour right and environment compliances and should ensure that a non-complaint exporter cannot compete with a compliant exporter.

Source: The Daily New Age, 22 June 2009


2 thoughts on “RMG EXPORT: Unhealthy competition threatens growth”

  1. You Are Right. Have Any Organization Who Monitoring This Kind Of Thing !
    If No Than We Have To Build Up Now. If Aby Have Then Why Not Work Properly !

  2. Dear Mr. Kamrul Hasan, Thanks for your valuable comments. I think, there have not any organisation to conduct regular monitoring in this issue. May be BGMEA could conduct such monitoring, but it never shared with others. Monitoring of pricing and competition is important for formulating strategy to keep current pace of growth of RMG export. But persons outside from RMG sector never assess the situation due to unavailability of authentic information. Only RMG owners association like BGMEA have an opportunity to conduct such monitoring effectively. But unfortunately, BGMEA have not visible in such work.
    If you have any idea to conduct such monitoring, please share it in this forum; so that people could take initiative to conduct such monitoring. I have keen interest, but I have not any idea to generate authentic information to do this.

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