Home ›› 12 Jun 2022 ›› Front
When the Covid-19 pandemic disrupted the global supply chain, it created good opportunities for Bangladesh’s accessories makers, prompting them to expand and make fresh investments.
Some 100 factories were set up and around Tk 1,500 crore was invested in this sector in the last two years, Mohammad Moazzem Hossain Moti, president of the Bangladesh Garments Accessories & Packaging Manufacturers & Exporters Association (BGAPMEA), told The Business Post.
Besides, around Tk 1,000 crore was invested in machinery imports, he said.
Many entrepreneurs expanded due to the high demand for accessories while many planned to do so. The sector also attracted new entrepreneurs.
Indet Group manufactured apparel accessories worth around $24 million last year. The demand for its products has been increasing, thanks to the production of environment-friendly goods, and that is why it has planned to expand.
Its Managing Director AL Shariar Ahmed told The Business Post he would invest around Tk 30 crore in expansion.
“I have planned to convert my factory into a green one. Now I am not manufacturing zippers and buttons, but I will when the new factory starts operation,” he said.
He expects the new factory will be completed by 2023 and will annually manufacture products worth a minimum of $40 million.
The entrepreneur said factory owners should focus on manufacturing environment-friendly and technology-based goods, which would help them get more orders and better prices.
Ensuring 100 per cent compliance was the key to doing well in this sector, said Shariar, also the BGAPMEA director.
He further said accessories buyers were not giving compliance too much importance yet but they would in the future.
Accessories are part of the backward linkage industry. Accessories makers manufacture goods for local and export-oriented industries, such as apparel, pharmaceutical, leather, ceramic, food and beverage, vegetables, frozen food, and handicraft.
Industry insiders said they annually produce accessories worth around $8 billion, which are mostly sold to local businesses. They also export accessories to many countries while export earnings are increasing gradually.
In 10 months of the current fiscal year, accessories of $960 million were exported, up from $715 million in the same period of the 2020-21 fiscal year, according to the Export Promotion Bureau.
But production costs had gone up due to increased prices of raw materials and profit margin slightly reduced as a result, manufacturers said.
They also said the lack of skilled manpower was a key obstacle to expansion. They are trying to train new workers, but there is a shortage of such human resources as well.
“We are hiring novices in our factory. We will skill them,” Shariar said.
Britannia Label BD invested around $1.5 million in the last two years in expansion and set up high-tech machinery, including radio-frequency identification (RFID) systems. It exported around $13 million of accessories last year.
Its Managing Director Jamil Ahmed said the company’s earnings had risen by 17 per cent last year.
“Everything is now technology-based, and that is why I invested in manufacturing RFID tags. I also expanded my regular accessories unit,” he said.
He further said accessories manufacturers were not getting fair prices yet and a few were even incurring losses. But he hopes fair prices will be ensured by this year.
“Foreign buyers are also aware of the hike in raw material prices, causing our manufacturing cost to go up. They will raise prices if we can increase our bargaining power,” Jamil added.
Union Label & Accessories Director Md Moniruzzaman Molla said his export earnings had grown despite the Covid-19 fallout.
“But production cost has also increased due to higher raw material prices. We are adjusting prices gradually, and business is going well overall,” he said.
SAB Weixing Manager (marketing) Edison Gu told The Business Post the company’s sales were growing fast.
“When Covid-19 struck, we got more work orders compared to any other time. I think the main reason why Bangladesh has received more work orders during the pandemic is that China, Vietnam, and Myanmar failed to meet buyers’ demands,” he said.
He further said his company was not making good profits due to increased raw material prices.
Nilorn Bangladesh Managing Director Mohammad Abdul Quyum said he had planned to expand but everything would depend on the global economic situation.
He also said he would expand if the global economy recovered from the pandemic impacts.
There is no official data on the accessories market size and the investment this sector has received so far. The BGAPMEA says this sector currently has an investment of around Tk 35,000 crore and some 1,200 factories are in operation, meeting around 95 per cent of the demand. This means Bangladesh still imports some accessories.
“If a garment is sold for $1, it contains accessories worth around $0.15-0.20. As apparel exports are rising, so will the accessories market’s size,” former BGAPMEA president Md Abdul Kader Khan told The Business Post.
Bangladesh still lags in manufacturing buttons, with imports meeting around 60 per cent of the demand for this item. Moreover, around 30 per cent of the demand for zippers is met through imports.
However, local manufacturers meet almost the entire demand for items like hang tags, cartons, poly bags, and hangers, industry insiders said. They also said the value added ratio in this sector was above 30 per cent.
