Monday, 9 March 2015

Shining future for Bangladesh leather sector as China shifts focus

They expect Bangladesh to be an attractive destination for leather sector entrepreneurs as China, the world’s largest footwear manufacturer, is shifting focus away from this sector.

The manufacturers believe Bangladesh’s annual $550-million footwear industry may grow to a $15-billion sector within a few years, if the opportunity is seized.

Leather sector businessmen say foreign entrepreneurs are interested in Bangladesh’s footwear, thanks to the availability of raw hide, processing infrastructure, low labour cost, and a slew of government incentives including duty-free machinery imports.Leather Goods and Footwear Manufacturers and Exporters Association (LGFMEA) President Syed Nasim Manjur said at least 51 foreign companies had already expressed interest in establishing joint-venture footwear units in Bangladesh.
“China, the world’s largest footwear manufacturer, is now withdrawing from the global market. And our country is ready with huge potentials to attract foreign investments in the sector,” he said.

According to a report on www.researchandmarkets.com, China’s annual leather footwear production had dropped by 5.29 percent in 2012 and 7.45 percent in 2013.

Bangladeshi manufacturers are planning to fill the vacuum in the international footwear market being left by China.

According to the Export Promotion Bureau (EPB), Bangladesh earned $ 1.29 billion from exports of leather, leather goods and footwear in the 2013-14 fiscal.

The amount accounts for 4.2 percent of the country’s total exports.

Footwear alone fetched $550 million in foreign exchange of the leather sector’s total export earnings.

In the 2012-13 FY, the footwear sector’s export earnings stood at $419.3 million.

Bangladesh has maintained the growth in the export of leather and leather goods in the current 2014-15 FY, too.

In the first eight months of the FY, the country posted a 7 percent growth in leather goods exports and 22.16 percent in footwear exports.

Nasim Manjur, also the managing director of Apex Footwear Ltd, says the country’s leather sector beats the RMG industry, the largest forex earner, ‘if their starting times are taken into consideration’.

He said China, Vietnam and Brazil, three big manufacturers of leather footwear, were cutting down on this sector.
“That’s why I think the leather industry is the most prospective sector after readymade garment for attracting foreign investments,” he added.

According to the LGFMEA, 110 export-oriented factories manufacture footwear in the country.

Of them, Apex, FB, Picard Bangladesh, Jenny’s, Akij, RMM Bengal and Bay have their own tanneries and leather processing units.

There are another 207 leather processing units in the country.

Asked about the reasons for China’s focus shift, Bangladesh Footwear and Footwear Accessories Association General Secretary Humayun Kabir said labour cost there had gone up.

He said footwear exports would grow if duties on import of shoe materials were cut.

The government has no specific information about the local footwear demand.

However, the footwear sector estimates it to be anywhere between 200 and 250 million pairs a year.

They said 92-95 percent of the domestic demand was met by local products.

Bangladesh is exporting raw leather since the early Seventies, but it got its first footwear exporter, Apex Footwear, in 1990.

Now Apex produces 20,000 pairs of footwear a day in its Gazipur factoryApart from catering to local demand, the company manufactures footwear for well-known known international brands such as Timberland, Aldo and ABC Mart.
Orion Group entered the leather industry last year after its successes in pharmaceuticals, power generation and infrastructure sectors.

Orion Footwear Chief Executive Officer Ruhul Amin Molla said Bangladesh’s footwear sector was poised for a big expansion.

Until 1990, Bangladesh used to export mainly raw hide, wet blue leather, and crust leather. But now it is concentrating on exporting finished leather and leather goods.

Bangladesh  Hide and Skin Merchant Association President Md Ali Hossain said the country annually produced 200-300 million square feet of finished leather, most of which is exported.

He said Bangladeshi leather is the best in the world after the French product.

Stakeholders believe the country’s leather industry would see greater potentials once the tanneries are shifted from Dhaka’s Hazaribagh to Savar.
http://bdnews24.com/business/2015/03/09/shining-future-for-bangladesh-leather-sector-as-china-shifts-focus

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