The evening’s crawling rush hour traffic came to a complete halt in Kazipara in Dhaka as hundreds of garments workers, most of whom are women, got out of their factories at the end of their shifts.
Their relentless hard work, albeit often underappreciated in the views of many, brought $32.5 billion to the coffer in 2018 alone representing 83 percent of total export earnings of Bangladesh. RMG sector is by far the top foreign currency earner of the country and has immensely helped Bangladesh maintain an over 6 percent annual growth since 2011. Being the sector accountable for the country’s over four-fifths of foreign income, RMG’s future is strongly linked to the overall health of Bangladesh’s economy. To that end, RMG has done remarkably well so far. The country’s overall income and share in global clothes exports have increased slowly but steadily over the years. Its global share in apparel export has reached 6.3 percent in 2016, a net 3.3 percent increase from 2009. However, as the global fashion industry goes through a seismic shift, many predict the country’s RMG is in for a wild ride in the coming years.
The world is spinning faster by the day. We live in a world where its largest taxi company doesn’t have a taxi of its own or its largest hotel company doesn’t have a hotel of its own. People’s tastes are rapidly changing, perceptions are evolving, and methods of availing products and services are shifting. In the process, the established old consumer norms are getting replaced by new alternatives.
The fashion industry is slowly but steadily getting rid of traditional fashion seasons because of a trend called “fast fashion”. Like fast food, fast fashion seeks a quick turnaround. Consumers are constantly looking for new designs and denying waiting until another fashion season begins. This trend, unsurprisingly, is driven by the Millennials and Generation Z, who, characterised as impatient generations by their older counterparts, seek instant gratification even in fashion. It is getting further amplified by the ubiquitous presence of social media and celebrity endorsements. For instance, when celebrities like Sophie Turner or Bella Hadid wore cropped hoodies, search for the item skyrocketed. Fashion houses are rushing to tap into these demands before they fizzle. Therefore, the brands are getting increasingly interested in stocks that are smaller, easy to manage and can be produced in a matter of a week or so. As a result, the traditional spring/summer and fall/winter divide is being blurred and now some of the “fast fashion brands may issue as 52-weekly “micro-seasons” per year”. To keep up, traditional apparel brands are now debuting around 11 seasons a year.
Far-stretched supply chains with minimum order requirements and production lead time provide little to no maneuverability to the fashion houses to serve fast-fashion hungry consumers. As a result, they are bringing manufacturing facilities closer to the home where they can have greater control over the production process. An array of inventions and developments are influencing those decisions which were not possible even just a few years ago – something that we will continue to discuss in this piece.
Fast fashion has the potential to result in a considerable decline in the number of orders for Bangladesh’s RMG in the future and create competing factories in continental Europe, America, and Australia. It is difficult to predict the extent of the actual impact of fast fashion as it gets rooted further in consumer psyche. But one thing is for certain – it is here to challenge the status quo and challenge it aggressively.
Many consumers nowadays are not happy with just what they buy. In this age of the “woke”, consumers are also interested in how a product has been produced, what’s its carbon footprint, whether it was produced through a process that is fair to workers and the manufacturing process is sustainable and environmentally friendly, and so on. One statistic shows that in 2018, today’s fashion consumers looking for “ethical and style credentials” have increased by 47 percent. Another research found that “nine out of ten Generation Z consumers believe companies have a responsibility to address environmental and social issues.” This goes a step further than the Millennials, who thought of environment preservation as the core issue. The opinions of these two generations are imperative as they account for an overwhelming lion’s share of global consumer spending.
And, the brands are listening. Manufacturers like Nike, Levi Straus, Gucci, Uniqlo, ASOS, H&M, Balenciaga and many more are stepping up to support social and environmental causes, which include, amongst others, responsible sourcing and manufacturing practices.
“Woke” mindset has and will continue to have a direct impact on Bangladesh’s RMG, which has gone through numerous tumultuous events of its own, including Rana Plaza, in the past. This implies Bangladesh’s garment factories will continue to be monitored by consumers and, therefore, by international brands. Safe, ethical, equitable and respectful production process and working conditions will continue to be a major consideration.
In the past, Bangladesh’s RMG could increase its global competitiveness by spending considerably less on improving worker safety, disaster preparedness, working conditions, etc than its Chinese or Vietnamese counterparts. However, as “woke” becomes an ingrained part of the bargain, Bangladesh, too, must work hard to avoid any negative limelight. For Bangladesh, this could imply a competitive edge lost and more competition to retain cost leadership.
A key selling point that helps Bangladesh attract many global brands as a manufacturing destination is the abundance of its low-paid labour. However, multiple trends are in motion that could jeopardise it.
Like the rest of Asia, labour cost is rising in Bangladesh. Minimum monthly wages have risen to Tk 10,700 or $127 recently and there could be more increases in the future. However, Bangladeshi workers’ average wage still remains lower than other RMG producing countries like China, Vietnam, Myanmar and Cambodia. But there are countries that can offer even lower wages than Bangladesh. The average monthly wage of a worker in Ethiopia is $50. As a result, many manufacturers are opening shops in Ethiopia. For example, H&M has started to import from the Ethiopian factory which it has set up with help from Bangladesh’s RMG player DBL.
As the African countries amass more expertise and experience while offering a lower cost, there could be a paradigm shift in the RMG manufacturing - something that could be substantially disadvantageous to Bangladesh.
Published On : 05-11-2019
Source : The Daily Star
