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Low price- a threat for Bangladesh RMG

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Sultana Rinky

Bangladesh is one of the top choice for the retailers for best quality products at a very low rate. The buyers are continuously pushing to reduce the cost and also the factories are to get nominations from so many certification. This this situation Bangladesh clothing manufacturers are facing tough times demanding fair price for clothing supplied by them. Additionally, they are in tremendous pressure from global buyers to improve conditions at workplace, after the Rana Plaza building collapse in 2013. Local apparel makers say, over $1 billion has been invested so far to renovate and retrofit their factories as per the demand of Western buyers, retailers and brands. Yet, retailers and brands have not increased the price. Buyers are still paying the traditional low prices for products and earning huge profits. A shirt costing $3 or $5 is being sold between $25 and $30.

screenshot-38The same is the case with high-end value added products, which is 30 per cent of the total volume of garment items exported per annum from Bangladesh. MNCs pay between $8 and $12 to local manufacturers for purchasing a piece of value added high-end shirt and retailers sell the same shirts at $100 sometimes even at $150, garment makers said. According to manufacturers and economists, the faulty global supply chain is to be blamed. Economist Rehman Sobhan, highlighting this very point says the current business model forces suppliers to squeeze their workers as much as they can because they have to produce the shirt at $5. There needs to be investigation into this matter to resolve issues faced by manufacturers.

low-price-from-buyersFrom the point of view European brands brands and store owners, “We do not always make profit as they can sell the highest 60 per cent of the items at tagged prices. Of the remaining 40 per cent, 20 per cent are sold at discount prices and the rest 20 per cent are sold at clearance outlets or donated.” Retailers have the target to sell 75 per cent of the RMG items at tagged prices and the rest are sold at discount prices.

This is one of the major issue which is a big concern of Bangladesh RMG industry. There needs to be an end to such a plight of manufacturers. The low price of garments will continue until manufacturers say no to it. Retailers are getting the products at lower prices because manufacturers are ready to supply them products at the said price point

According to the trade experts, apparel exports is buyer-driven and global brands dictate the market. If producers can come to an understanding they will sell a certain product at certain price, they can get a fair price. But that doesn’t happen due to intense competition. There are efforts at the international level to bring global brands under the fair trade system but it is not working well. Bangladesh RMG industry is moving very fast and infrastructure development, health & safety, compliance are practiced nicely. Also workers salary has been increased a lot. As a result the manufacturers are facing less profit margin. It’s good that some NGO, trade unions are working on to coordinate the gaps.