German certification firm plans expansion in Bangladesh

TUV Sud, a German testing and certification company, plans to expand operations in Bangladesh to exploit the rising business opportunities in the country, high-ups of the company said in an interview in Dhaka last week.

Reliable and trustworthy inspection, testing, and certification by a third party or agency are mandatory for export business and for the satisfaction of customers.

Sourcing companies or retailers sign agreements with third parties for testing, certification and inspection and the local manufacturing or supplying companies facilitate their activities.

Since the beginning of inspection and certification activities in 2008 in Bangladesh with just 30 clients, the company crossed the 1,500-client mark last year, said Ezhilan Neelan, country director of Tuv Sud Bangladesh.

“Bangladesh is one of our target areas for investments in the future and we have a lot of opportunities beyond testing facilities in Bangladesh. We are very committed to Bangladesh as our business is increasing here,” Neelan added.

The initial focus for the company in Bangladesh was on testing and certifying mainly garment and textile items as garments comprise more than 80 percent of Bangladesh's export business, the official said.

“So, we targeted the garment sector first and now we are also testing and certifying leather and leather goods, food, cement and utensils,” Neelan said.

The German company has a wide variety of testing facilities like chemical, electrical, raw materials, safety and environmental in the labs in its two offices -- in Dhaka and Chittagong.

Tuv Sud is also working on developing human resource, especially to employ local experts in the testing and certification business.

Currently, there are 248 local people employed at Tuv Sud, and the Bangladesh chapter is run by local skilled people except one or two Germans or Indians, he said.

“So, we have developed a pool of local skilled workforce in Bangladesh with a vision of long term business in almost all exportable goods testing and certification in Bangladesh,” Neelan said. The company has bigger operations in China and India, among Asian countries.

Among the South Asian nations, Tuv Sud operates in Bangladesh, India and Sri Lanka. “In Sri Lanka we have a smaller operation, as we are mainly focused in Bangladesh and India in the region.”

Neelan declined to disclose the annual turnover that the company makes in Bangladesh, but he said their combined earnings from Bangladesh, Sri Lanka and India were $50 million last year.

He also said his company has been expanding operations in environmental, power and energy segments for higher demand.

“We are now working on a project for wind mapping at Matarbari in Cox's Bazar as some power plants are being set up there,” he said. Tuv Sud has been working only as a consultant in wind mapping, not as an investor, he said.

Wind mapping is conducted with software which in fact assesses the probable impact of pollution of environment and forecasts the spillover of fire, duration and length of flame in specific factories, buildings and areas.

Regarding the prospects of Bangladesh in global apparel business, Neelan said, after the devastating Rana Plaza building collapse in 2013, people are now more aware of safety and working environment.

Bangladesh has improved its safety and working environment a lot after the industrial accident and exports have been growing even after the disaster, he said.

The higher export growth of garment items even after the industrial accident indicates that the international retailers and buyers are still coming with a lot of work orders as the safety and working environment has improved here, he said.

“Inspection and certification of automobile companies in Bangladesh are new areas of business. A lot of environmental assessment should be conducted in those new areas,” said Bratin Roy, vice-president (industry services) of Tuv Sud South Asia.

Tuv Sud also conducts performance and social audits as per the requirements by the sourcing companies, Roy added.

The company has started mobile van service recently, he said. In mobile van service, Tuv Sud experts go to factories and inspect and certify immediately, Roy said.

In traditional testing and certification system, the experts collect the samples and test in the labs, but in mobile van service, experts go, inspect and certify, he said.

Currently three or four major European companies are offering such certification services in Bangladesh, Roy said.

“In garment and textile segment the market share of Tuv Sud is more than 12 percent. We are relatively new in Bangladesh. We have big market share in other segments in Bangladesh,” he said.

The company logged about $2.2 billion in turnover from its 800 offices around the world in 2015, he said.