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The recent influx of orders into Bangladesh have been an absolute sign of recovery for the RMG sector- Ehsan Haq, Director, Knittex Industries Ltd

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Textile Industry is the main foreign remittance earning sector for Bangladesh. This industry suffered a lot during the COVID -19 pandemic. Now the industry is trying to recover the gaps. According to many sources it is evident that most of the export-oriented garments factories are packed with business orders up to April 2022. Team Textile Focus talked with different factory owners regarding how to capitalize on this situation and what is the way forward to ensure maximum profit out of it. Ehsan Haq, Director, Knittex Industries Ltd. shared his views-

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Photo: Ehsan Haq, Director, Knittex Industries Ltd

Because of the demand post covid worldwide Bangladesh is blessed with an influx of orders. Power and energy shortage issue in China is also a worrying situation for buyers so they are looking at Bangladesh. But the reality is that raw material price increases have wiped out our nonexistent margins even more. Most factories are losing money doing orders in the current scenario. It’s time as an industry we work on pushing prices up so that we can sustain. Retailers all around the world have increased their selling prices for clothing. It’s time factories also increase their selling prices so that they can also sustain.

The recent influx of orders into Bangladesh have been an absolute sign of recovery for the RMG sector. We still remain the most competitive in terms of price globally and right now with the present China situation, it works mostly in our favor which has resulted in this flow of business into the country.
However with this comes the main question of profits. How to sustainability make and retain profits, especially at a time when global costs have gone up significantly. If you assess general costs such as gas, electricity, logistics, water, human resource, cotton and other raw materials etc, you will notice that everything has gone up in terms of cost. The best way to offset this is to genuinely account for these costs and incorporate them into our prices.             

If we charge the same prices and CM as a year back even, we would not retain healthy profits, nor can we reap the benefits of economies of scale. At the same time, simply raising the price to an illogical level is also counterproductive. As our current BGMEA president Mr. Faruque Hassan pointed out in our latest BAYLA roundtable discussion, our main strength is our competitive prices. So, we must retain that edge in Bangladesh at all times. This means that we must stay vigilant and aware of other RMG prices globally in our rival nations such as Vietnam, Cambodia, India, Turkey, Egypt and so on. We need to ideally find a new “sweet spot” for pricing where we can get a higher price than previous years but remain ahead of our competition as well. Cost saving and production efficiency are both important as well as better mod management training. But it’s increasingly difficult to lower costs when globally all costs have risen.
One thing is for sure, Bangladeshi RMG factories need to share a unified vision about demanding a higher price from our customers that is both reasonable and equally sustainable.