Editorial
RMG exporters navigating a rough patch
While they need assistance, they can also help themselves
THERE is an apparent contradiction in the type of international business environment the garments manufacturers and exporters are having to face. It is a strange mix of the negative and the positive. Set against the backdrop of a change in the demand pattern brought on by the global financial meltdown and a high cost of doing business, the garments sector is on the one hand confronted with a buyer pressure to reduce prices and on the other blessed by a set of new buyers' leaning towards Bangladeshi RMG products.
It seems to us that we have to depend and concentrate more on new buyers who are arriving in Dhaka to place orders for our products, because it is learnt that they find RMG prices in other competing countries higher than ours. So, there is a competitive edge as far as the new generation of buyers goes.
That is only a new potential awaiting further tapping, the real issue however remains the general pattern of a good ten percent cutback on our export prices and these have been consistently in decline. Does it mean we have lost some of our bargaining power? This is inexplicable when there is an effective demand for our low- or middle-end products which the buying houses have leaned towards in the on-going recession.
Besides, the rise in raw material prices and freight charges is difficult to explain given the drop in oil prices in the not-too-distant a past, even though lately these have shown an uptrend. It is evident, however, that the exporters have failed to pass the higher costs to the buyers by convincing them of the need to share costs in order for their demands to be met on a sustained basis.
We see here a potential leverage for Bangladesh to be exploited in relation to foreign buyers to try and obtain better business terms from them. We agree with what we believe to be a representative view of the garments sector that it needs to build negotiating capacity and skill to roll back the ebb in the export prices to be securing the profitability they deserve. Our diplomatic missions in the buying countries should try to supplement the efforts. Also we should reinforce our pursuit with the US government to accord us quota- and duty-free access.
In fine, let's remind the garments industry owners that the workers are their asset so that it will be good business for them to cater to their basic and working needs adequately.
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