The Ready-Made Garments (RMG) industry contributes to the Bangladesh economy in a distinctive manner. The last 20 years witnessed unparalleled growth in this sector, which is also the largest exporting industry in Bangladesh. It has attained a high profile in terms of foreign exchange earnings, exports, industrialization and contribution to GDP within a short span of time. The industry plays a significant role in terms of employment generation. Nearly two million workers are directly and more than ten million inhabitants are indirectly associated with the industry. In addition to its economic contribution, the expansion of RMG industry has caused noticeable changes by bringing more than 1.12 million women into the workforce. Hence it is quite apparent that this sector has played a massive role in the economic development of the country.
RMG’s contribution in terms of GDP is highly remarkable; it has reached 13 percent of GDP which was only about 3 percent in 1991. It also plays a pivotal role to promote the development of other key sectors of the economy like banking, insurance, shipping, hotel, tourism, road transportation, railway container services, etc.
One of the key advantages of the RMG industry is its cheap labor force, which provides a competitive edge over its competitors. The sector has created employment opportunities for about two million people of which 70 percent are women who mostly come from rural areas. Thus the industry helps in the country’s social development, women empowerment and poverty alleviation.
Currently RMG earns the lion's share of foreign exchange earnings.
The Readymade Garment (RMG) industry of Bangladesh marked the leadership of private enterprise and the country’s successful transition to a major export-oriented economy. The key products of this industry are Knit and Woven Shirts and Blouses, Trousers, Skirts, Shorts, Jackets, Sweaters, Sportswear and many more casual and fashion apparels. RMG industry has enjoyed an impressive rise from less than 50 factories in 1983 to over 3600 in 2006.
Garments sector’s continual success can be attributed to the following:
Quotas under Multi-Fiber Arrangement (MFA) in the North American market
Preferential market access to European markets
The country has a small textile industry, but the volume and quality of its output are unable to fully meet the demand of the garments industry. Most of Bangladesh’s garments exports are made from imported textiles. RMG exports have grown rapidly after extensive trade and other economic reforms were undertaken in the early 1990s. Exports increased by 16.5 percent per year during the past one and half decade. Knitwear sector has performed particularly well over time. The sector’s share in total RMG exports has grown from about 17 percent in 1995 to almost 40 percent in 2003. In context of Bangladesh’s total export, RMG’s contribution is approximately 76%. Excepting 2002, the industry has developed rapidly with significant positive growth. Over the years, it has experienced around 18% growth rate.
PORTERS FIVE FORCES ANALYSIS
Competitive Rivalry between Existing Players
Bangladesh is the 6th largest apparel and textile supplier in the US & EU market. It is shaping itself as a potential market player by providing the most quality with the cheapest price possible.
Whilst the market is controlled by the bigger players like China and India, the role of Bangladesh is still important. Among the very few suppliers, Bangladesh imports most of its raw materials, but utilizes other factors of production to produce in a cheaper manner. It offers investment friendly atmosphere for the brand names to outsource their production process in Bangladesh.
Bangladesh is putting up a show against other competitors like China and India. by providing available cheap labor. It has been facing tremendous growth even after the alleviation of the...
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