Home ›› 16 Feb 2023 ›› Opinion
The footwear industry in Bangladesh is a significant contributor to the country's economy and is a major supplier of shoes to the international market. It mostly produces low to mid-range shoes, sandals, and slippers. The industry has been growing rapidly over the last few years, driven by increased domestic demand, favorable government policies, and the availability of low-cost labour.
Despite the growth, the industry faces challenges such as limited access to finance, inadequate infrastructure, and competition from other countries. The industry has the potential to grow further, especially with continued government support and investment in technology and infrastructure.
The leather and leather goods sector in Bangladesh is a significant contributor to the country's economy, with exports accounting for 4 per cent of total exports and a contribution of 0.5 per cent to the GDP. In the fiscal year 2021, the total exports of leather goods were valued at 941.6 million USD, with over 900,000 people employed in the sector.
In the past six months (July to December 2022), exports of leather and leather goods reached 888.46 million USD, showing an increase in exports over the years. The demand for leather and leather goods in Bangladesh is not only high locally but also abroad, with the United States, China, Spain, India, Italy, Vietnam, Australia, Belgium, Germany, and Netherlands being the major countries importing these products.
The latest report by the Export Promotion Bureau (EPB) supports this trend. The growth in exports has been driven by factors such as the availability of low-cost labour, favourable government policies, and the continued expansion of the domestic market. The industry is expected to continue its upward trend, especially with further investment in technology and infrastructure to support growth and increase competitiveness in the global market.
The COVID-19 pandemic had a significant impact on the footwear industry in Bangladesh, as with many other sectors. The industry was hit by disruptions in global supply chains, reduced demand for products, and difficulties in accessing financing and raw materials.
Despite the challenges posed by the pandemic, the footwear industry in Bangladesh has continued to grow, with exports showing strong growth in the latter part of 2020 and into 2021. The industry is well positioned to weather future challenges and continue its upward trajectory, with a strong focus on innovation, technology, and improving competitiveness in the global market.
The footwear industry in Bangladesh faces several supply chain challenges that limit its growth and competitiveness in the global market, some of the major ones include:-
1. Limited access to finance: Many companies in the industry struggle to access the financing they need to expand their operations, invest in technology and equipment, and compete in the global market.
2. Inadequate Infrastructure: The industry is limited by a lack of modern and efficient infrastructure, including transportation and logistics networks, which makes it difficult for companies to transport raw materials and finished products to markets both domestically and abroad.
3. Competition from other countries: Bangladesh faces intense competition from other countries in the region, such as China, Vietnam, and India, which have more developed infrastructure and a larger pool of skilled labour.
4. Shortage of skilled labour: The industry faces a shortage of skilled workers, particularly in specialized areas such as design, engineering, and technology.
5. Lack of technological advancement: The industry lags behind in terms of technological advancements, which limits its ability to compete on quality and cost with other countries.
To overcome these challenges, the industry needs to focus on investment in technology, training and development of skilled workers, improvement of infrastructure, and access to financing. With continued government support and investment, the footwear industry in Bangladesh has the potential to grow and increase its competitiveness in the global market.
The footwear industry in Bangladesh is gradually adopting modern technology to improve production efficiency and competitiveness in the global market. Some examples of modern technologies used in the industry include Computer-Aided Design (CAD) and Computer-Aided Manufacturing (CAM) systems. These systems are used for product design, prototyping, and manufacturing to improve the accuracy and efficiency of production processes.
The industry also uses automated cutting machines to cut leather and other materials accurately and efficiently, reducing waste and improving production speed. Additionally, companies in the industry use automated assembly machines to automate manual assembly processes, reducing the risk of errors and increasing production speed. These technologies are helping the footwear industry in Bangladesh to improve production quality, reduce costs, and increase competitiveness in the global market, and the industry is expected to continue to invest in technology and automation in the coming years.
The availability of raw materials is a critical factor for the growth and competitiveness of the footwear industry in Bangladesh. The industry primarily uses leather and synthetic materials to manufacture footwear products, and the availability and cost of these materials directly impact the industry's ability to produce quality products at competitive prices.
In recent years, the industry has faced challenges in securing consistent supplies of quality raw materials at competitive prices. This has been due to factors such as fluctuations in global leather prices, limited domestic production of raw materials, and difficulties in importing raw materials due to trade restrictions and other barriers.
To overcome these challenges, the industry is investing in the development of the domestic leather and synthetic materials sector, to reduce dependence on imports and secure a consistent supply of quality raw materials at competitive prices. The industry is also working with government and international organizations to remove trade barriers and improve access to raw materials from overseas.
Diversifying the supply chain and reducing risk is important for the growth and sustainability of the footwear industry in Bangladesh. This can be achieved through a number of measures such as developing multiple sources of raw materials, strengthening partnerships with suppliers, and improving supply chain management.
One strategy to reduce supply chain risk is to develop multiple sources of raw materials, both domestically and internationally. This helps to ensure a consistent supply of quality raw materials at competitive prices, even if one source becomes unavailable. Additionally, the industry can also invest in the development of the domestic leather and synthetic materials sector, to reduce dependence on imports and secure a consistent supply of quality raw materials.
Another strategy is to strengthen partnerships with suppliers, through long-term contracts, joint ventures, or other arrangements. This can help to ensure stable and reliable supplies of raw materials, and reduce the impact of market fluctuations or supply chain disruptions.
Improving supply chain management is another important step in reducing supply chain risk. This can include implementing best practices in inventory management, reducing lead times, and improving the efficiency of logistics and transportation.
Overall, reducing risk in the supply chain is essential for the growth and sustainability of the footwear industry in Bangladesh. By diversifying its supply chain and implementing best practices in supply chain management, the industry can ensure a consistent supply of quality raw materials, improve production efficiency, and reduce the impact of supply chain disruptions.
The footwear industry in Bangladesh has the potential to make significant contributions to environmental and social sustainability, through the adoption of ESG practices and the implementation of best practices in environmental and social responsibility. By taking these steps, the industry can build a more sustainable future for itself, its employees, and the wider community.
The writer is a management consultant. He can be contacted at [email protected]
