The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) will announce a new president on April 4, as well as a new board of directors. Whoever wins the election and takes over as BGMEA president faces a mountainous challenge.
The past 12-months have turned the normal rules of business on its head, presenting RMG manufacturers from Bangladesh with the most difficult trading conditions in a generation. Billions of dollars' worth of orders have been lost due to the global pandemic, leaving some suppliers facing financial ruin, and many others being left to lick their wounds.
While a vaccination programme is now being rolled out in many parts of the world, we are not out of the woods yet—far from it. As I write this, reports suggest that large parts of continental Europe are new being badly hit with a third wave of the coronavirus, and further lockdowns are looking likely. More uncertainty lies ahead.
So what should the priorities be for the new board and president moving forward? What actions should they take to balance short-term needs of winning orders, with long-term necessities of operating in a more sustainable manner?
There are five areas I would like to see the new leadership team focus on.
Number one is to take stock of where we are. Amidst the turmoil we have seen in the global markets, now more than ever is the time for cooler heads. We need to look at where our RMG industry is at the present time in terms of orderbooks, business confidence and so on. How are manufacturers faring amid the pandemic, how many are close to the edge financially, how many are on the brink of closure, what kind of survival strategies are being adopted?
All signs suggest that the global business environment will remain in the doldrums for several months from now. What does that mean for our manufacturers and will more of them need access to finance? If so what, if any, are the financial options available?
Put simply, we need to gain a panoramic view of our RMG industry to see precisely where the land lies at the present time, a year on from the pandemic.
This leads us to point two which is to develop a strategy for the short to medium term. Point number one, identifying hotspots, should help with point two, which is to map out some workstreams aimed at consolidating our industry in the coming months.
Finance is obviously integral for the next few months. We know the industry has had government support since the pandemic started. The question is, are there any funds left and, if so, who holds the key to them? There was talk of the ILO leveraging money for our garments industry last year. What has happened to that money, has any of it been made available yet? Is there any more money available from international donors?
If cash is available, we need to think how best to distribute it, which should be our priority area. While there will be many very worthy causes, some difficult decisions may need to be made in the coming months. Nobody wants to see any businesses go to the wall but, at the same time, there is also no point in throwing good money away.
The third priority area would be marketing. Marketing experts often talk about marketing tactics versus marketing strategy. Marketing tactics include actions such as improving online presence, public relations campaigns of the courting of media partners. A marketing strategy is broader. It is about our overall marketing programme, why we are doing it, what it will involve and what it hopes to achieve. This all ties in with the overall business development strategy.
For me, Bangladesh RMG has lacked a robust marketing strategy in the past. We have had ad hoc efforts in this area but there has been no sense of overriding purpose, a lack of coherence and direction. Now, more than ever, we need to change this picture. The apparel industry, while very uncertain right now, also offers a wealth of opportunities. Brands are desperately seeking sourcing partners that can offer stability, reliability and low risk. Bangladesh can be that partner and how we promote ourselves to our global partners should reflect that. Marketing—winning hearts and minds—is key.
Number four priority should be to focus on the long term. Initially I talked about taking stock of where we are. In the long term we need to go deeper than this and do a complete SWOT—strength, weaknesses, opportunities, threats—of our RMG industry. Where are the growth opportunities for the future? Where should we be directing resources and which areas do we need to be cutting back on?
The global market is crying out for sustainably produced apparel, so what are we doing to provide that? Can we meet the requirements for closed loop and recycled production and, if not, why not? Do we have over-capacity issues—almost certainly—and what are we doing to address this issue? How do we rank in terms of social issues? We need to tighten up here as, moving ahead, supply chain due diligence laws in Europe mean brands will be under pressure to ensure high labour and environmental standards are maintained in supply chains. Will Bangladesh be ready to step up to the mark here?
My final point is: don't panic. The business picture looks tough right now, but if the new leadership team at the BGMEA has any doubts, it need only reflect on the achievements of our RMG industry over the past 40 years. Ours has been a story like no other, and it will take more than one difficult year of trading to derail the juggernaut that is Bangladesh RMG.
BGMEA's leadership will need to reflect and consolidate initially but they can do so safe in the knowledge that our future looks bright. The global apparel "pie" continues to grow and given the turbulent events happening in many of our key rivals' right now, there is no reason at all why we should not grow our share of a pie which is increasing in size thanks to an increasing global population and rising middle class.
In a world of uncertainty, Bangladesh RMG is a safe pair of hands. BGMEA needs to spread that message loud and clear.
Mostafiz Uddin is the Managing Director of Denim Expert Limited. He is also the Founder and CEO of Bangladesh Apparel Exchange (BAE).