Capability

Capability

The contribution of the leather industry to the Bangladesh economy was about US$500 million, accounting for 3% of country痴 exports6 in 2010-11. Recent export trends indicate that the footwear sector (value added merchandise), is growing the fastest. Exports of leather products and footwear have been rising in recent years on the back of diversified products and markets and skill development initiatives in the sector.

Continuing its good performance, leather industry as A whole closed first quater achieving 99% of the exports target for the period according to the local Leathergoods and Footwear Association. Leather footwear surpassed its target.

The leather industry in Bangladesh closed its first quarter of the new fiscal year (July-September, 2017), with exports earnings just slightly below the strategic target for the period (99%). It had been set a 328.11 million US dollars earnings goal for the first quarter, but the industry achieved an export earnings of 324.62 million US dollars.

Total earnings from exports of the leather segment reached 47 million US dollars in the period, which compares to 57 million US dollars established as target for the first quarter. A decline was also registered compared to similar period in the previous year.Exports of leather goods reached 111 million US dollars, below the 128 set for the period.

However leather footwear segment showed a robust performance, continuing with the a positive growth trend, and totaling earnings from exports of 166 million USD dollar, 17% above the target for the period (142 million US dollars).

Export performance can be anticipated to increase in the next five years with at least 12-15% growth in turnover per annum. In the next two years the existing footwear factories are likely to export more shoes. The new capacity [expanded and new factories] that will come on stream will give increased growth. The Export Processing Zones (throughout Bangladesh) at present have 18 shoe and leather goods factories and there are at least seven large factories under construction. Leather is the second-largest exporting sector of the country and it has set a target of exporting $ 5.0 billion by 2020.

A growth in the domestic market is foreseen that approximately 10% of Bangladesh’s
total population (around 15 million) is estimated to have an income level comparable to that of the developed countries. Hence, there appears to be a large unexplored domestic market for footwear and other leather products for Bangladesh with an estimated demand for 30 million pairs per year.

Global Presence & Product Portfolio


Bangladesh has carved a presence through its exports to important markets in the world. Major exports destinations are the European Union countries, the USA, Italy, France, Germany, Canada, Poland, the UK, Belgium, and Spain. New and emerging markets of the sector include Turkey, South Korea, Brazil, Mexico, South Africa, Australia, Russia, China and UAE.

International brands like Adidas, Aldo, Timberland, Marks & Spencer, Clarks, Espirit, ABC Mart, Nike, Wal-Mart, K-Mart Sears, and Nine West, Gucci, Reebok, Michael Kors, Picard, Sportcraft, Max&Co R.M. Williams etc. are sourcing from Bangladesh

About 95% of leather and leather products of Bangladesh market is abroad, mostly in the form of crushed leather, finished leather, leather garments, and footwear. The export of finished products such as shoes, slippers, leather jackets, hand gloves, bags, purses, wallets and belts also earn a sizeable amount of leather products to penetrate new market segments.

Why Source from Bangladesh ?


It has a reputation for high quality of fine grain, uniform fiber structure, and natural texture, coming from domestic farming. Raw material source of 310 million sft of leather produced annually. Bangladesh is already world’s 2nd largest sourcing destination for apparel products. Raw materials needed for Leather goods and Leather Footwear production all available locally.

International brands like Adidas, Aldo, Timberland, Marks & Spencer, Clarks, Espirit, ABC Mart, Nike, Wal-Mart, K-Mart Sears, and Nine West, Gucci, Reebok, Michael Kors, Picard, Sportcraft, Max&Co R.M. Williams etc. are already sourcing from Bangladesh. Tariff and quota free access to the European Union (GSP), Canada, Australia and Japan. Integrated production chain from raw materials to footwear & Leather goods available. Shipment facilities-both by frequently available air and large sea port. Containerized shipment is available from the industry site.

In Bangladesh the leather industry is well established and ranked fourth in terms of earning foreign exchange. In consideration of being a value added sector the (Government of Bangladesh (GoB), Ministry of Industry (MoI) has declared it as a priority sector.

The leather products sector has huge opportunities in generating employment , entrepreneurship and investment by increasing export of higher value added products rather than finished leather and by utilizing locally made raw materia(finished leather) to convert into more value added leather products (including footwear and other leather goods).

Bangladesh produces and exports quality bovine, ovine and caprine leathers. It has international reputation for high quality of fine grain, uniform fiber structure, and natural texture, which mostly comes from domestic farming. Raw material source -310 million sft of leather produced annually. Goat skins are of exceptional quality (special quality of cow calf/goat), which is very well known around the world. 27% annual average export growth rate over the last 4 years. A young, industrious workforce growing by roughly 2 million per year and one of the world’s lowest wage rates.

Bangladesh has a competitive edge as a sourcing country that is commercially competitive and beneficial for buyers and brands: Products at very convenient price.
Integrated production chain from raw materials to tanneries and footwear available. Containerized shipment is available from the industry site. Increased linkage industries – Packing, Lasts, Adhesives, Outsoles. Local supply of footwear components and leather accessories for producing hi-fashion products . Tariff and quota free access to the European Union (GSP), Canada, Australia and Japan . Shipment facilities-both by frequently available air and large sea port.

Proactive Steps taken by the sector

Training : The sector is focusing on welfare and skill development as it is a labor-intensive sector. The entrepreneurs and exporters of the industry had established Centre of Excellence for Leather Skill Bangladesh Limited (COEL) to create skilled workforce for the sector. COEL provided training to about 30,000 workers by national and international experts, which have been playing a significantly role in making the sector more productive.

Bangladesh has a limited or small share (~0.56%) in the global business, so there is a tremendous opportunity to grow to capture more market share around the world. Vietnam can be a benchmark for Bangladesh which imports 70% of raw materials and exports Shoes and footwear products: USD 6.549billion, Bags & leather handbags: USD 1.28 billion.

A deeper, more widely held understanding of market trend in terms of quality, fashion, leather product prices, competitors, importers and consumers’ preferences, and anticipated regulations and restrictions would help the country increase its share in global exports and help it to generate employment and earn all important foreign exchange.

A strong Policy Support
Sensing the potential of the sector, Hon’ble Prime Minister has declared the Leather, Leather Goods and Leather Footwear to be the ‘product of the year-2017′ and asked all involved to take steps for the betterment of the sector. Sector seeks that Prime Minister’s declaration of the product of the year to translate into some policy support as well. In the last few years, entrepreneurs ramped up capacity of the factories, diversified products and markets while focusing on the skill development of workers, the factors, which have started paying dividend.

There is an enormous scope for entrepreneurs and investors. The sector is still catering to the low-end export market. In order to advance it must move to the next levels. Developed countries are treating Bangladesh’s leather sector as secure for investment. The sector needs business friendly policy by Government to increase the investment.

Country’s leather factories were “purpose-built” buildings and now they were working to make the sector a model and going beyond the required compliance practices. Sector has taken a lot of initiatives to go beyond the country’s required compliance practices to ensure employees’ well-being, more growth and a global reputation for the sector. The sector employs around 70,000 people and all workers are covered by life insurance.

THINK AHEAD…. THINK BANGLADESH

The sector for an unified growth wants to lay emphasis on Establishing Common Facility Centre (CFCs) equipped with training facilities offering facilities for sharing machining facilities, increasing product quality , skill training, entrepreneurship training, including management and environmental issues, R&D for designing, innovations, process and product technology development, prototype developments. This action is to assist the most value added sub sector leather products (footwear and leather goods) cluster SMEs to add value in the chain and graduate to become direct suppliers to the local and international markets.

Establishing knowledge and research centre in BIOs with expert resources will enhance their technical and communication knowledge. Additional activities like Network linkages building events with EU based associations, institutes and effective policy for ensuring sustainable environment and waste management issues should take priority under this plan.

FDI in this sector along with the production of tanning chemicals appears to be highly rewarding due to the presence of basic raw materials for leather goods including shoes, a large pool of low cost, trainable labor, and a tariff concession facility to major importing countries under Generalized System of Preferences (GSP) coverage. Thus Bangladesh is an ideal offshore location for leather and leather products manufacturing with low cost but high quality.