Lessons to be learnt from 2021
The year 2020 was the toughest that I can remember as a business owner. Like many RMG manufacturers in Bangladesh, there were periods where I did not know how I was going to survive.
But what about 2021? While the past 12 months have also been very challenging, there at least seems to be light at the end of the tunnel this time. The dust seems to be settling amid the pandemic and one can begin to see what the future of our industry might look like as we learn to "live with" the coronavirus—rather than constantly battle it.
Around the world, millions of people are still suffering, and many businesses remain in uncertainty. Despite these challenges, it is also possible to look at 2022 with an air of cautious optimism as far as the garment makers of Bangladesh are concerned.
Lessons have certainly been learnt in the nearly two years of the pandemic, and I think from those lessons we can get an idea of how our industry might resume its journey towards the path of prosperity next year and beyond.
What have we learnt, and how can this insight guide us moving forward?
Lesson one is about resilience. If somebody had said in 2019 that all our orders could be stalled for months at a time—just like that!—and that we could somehow struggle on and survive, few would have believed them. And yet, here we are.
At the beginning of this pandemic, predictions were made that 50 percent of Bangladesh's RMG sector might disappear. While the capacity has dropped, it has only dropped slightly, and we have even begun to regain the pre-pandemic production levels as 2021 draws to a close. Ours is a resilient industry with ingenuity at its heart. The past two years have shown how strong we are, and we should take pride in that.
The second lesson is about the shifts in global production and supply chains. Prior to 2020, our industry at a global level was already re-thinking its sourcing strategies. Fashion retailers were reconsidering their "China plus one" sourcing strategy for a variety of economic and political reasons. The pandemic appears to have sped up that process, as the tension between China and the West has increased. Bangladesh, thankfully, remains politically neutral on the global stage and has not been drawn into the trade spats we have been witnessing between the US and China in recent months.
As an industry, we can capitalise on uncertainty elsewhere and continue to offer a safe, reliable, sourcing hub for fashion brands and retailers.
Lesson three is that size now matters more than ever. It is well documented that our buyers have been consolidating their global supply chains and are rationalising their number of suppliers. The idea is to create closer ties and partnerships with a smaller number of mid-sized and large operators. Only garment makers of a certain critical mass will be able to offer the economies of scale to compete successfully on the global stage moving forward. With this in mind, Bangladesh's RMG base might be forced to go through a period of mergers and acquisitions to improve cost bases and create increased efficiencies. In the short term, this might be challenging for some, but overall, such a process would likely make our industry more globally competitive.
Lesson four is related to transparency. One thing I have noticed over the past two years is a willingness of governments in the West to consider new regulations around due diligence in supply chains. What does that mean for us? Well, according to these laws, our multinational companies must have greater accountability around their suppliers, and will be held liable if there are social and/or environmental transgressions in their supply chains.
These new laws, which we will see more of in the future, puts the spotlight firmly on us as suppliers. We will come under the microscope like never before in the coming years, and be forced to jump through many compliance hoops in order to win and retain business. Already, many vendors request us to sign up for numerous compliance checklists in order to be considered as a supplier. Pressure to meet their standards will only increase as they seek to remove all risks from supply chains. It is up to us all to be on board with these demands, and this issue ties in with the point alluded to above about the growing importance of size and economies of scale.
The final lesson is about the need to move beyond competing solely on price. This pandemic has proven, yet again, that as garment makers, we remain price-takers. Even these past few months, when the order books have been solid, unit prices have remained on the low end amid fierce competition for orders. Moving forward, I believe we must do all we can as an industry to move beyond being price-takers—otherwise, we will always be chasing our tails.
How can we do this? In the usual ways—which I have talked about in my columns regularly. By moving beyond staple products and towards value-added areas which use man-made fibres as well as cotton. By innovating. By investing in sustainable production methods. By smart marketing and clever use of PR. And by working together as an industry, united under the umbrella of the BGMEA, which is leading the change in our sector, looking into new possibilities, exploring new markets, and plotting a path for our sector as we emerge from the pandemic.
Mostafiz Uddin is the managing director of Denim Expert Limited, and the founder and CEO of Bangladesh Apparel Exchange (BAE) and Bangladesh Denim Expo.