The Bangladesh Textile-Garments Industry: Demand V Supply Chain flow : A Review

The objective of this research is to explore the demand side and supply side of the
textile-Garments industry of Bangladesh as a background study for further research. In
terms of the demand side aspects, we investigate demand forecasting, product design and
development, order management with distribution, and bilateral relations. For the supply
side components, we identify raw materials sourcing, cutting-making-trimming (CMT), and
delivery. We describe fiber, yarn, fabric, dyeing-printing-finishing, and accessories as the
backward linkages. Using input-output analysis, we discovered that the backward linkage
coefficient of Bangladesh was 1.86, which is 1.37 times smaller than China. Transport and
communication, public services, and port services, etc., can be identified as forward
linkages. The input-output-based forward linkage coefficient of Bangladesh is 1.45, which
is 22% lower than China. Comparatively, China is still unsurpassed among the Asian
textile-producing nations. Although Bangladesh is doing well in terms of contract-based
supply of clothing goods, the demand side needs to be developed. The demand side requires more concentration from firm owners and government to help it transition from assembly to full package production.

1).The Bangladesh Textile-Garments Industry: A Demand V Supply Review:

An analysis of the demand side of the textile-Garments industry is very important
because firms in Bangladesh produce manufacture garments  on customer contracts. These
customers are globally recognized brand retailers and distributors. These brand retailers
are responsible for demand forecasting and for the distribution of Bangladeshi products.
Firms in Bangladesh produce clothing with minimal knowledge about the ultimate users’
preferences. Therefore, a thorough discussion of the demand side is indispensable.
The supply pattern of clothing products is not the same as that of other products. This
is why a vast number of research studies have focused on the supply side of the industry
(Ahmed, 2004; Ali & Habib, 2012; Asgari & Hoque, 2013; Berg, Saskia, Sebastian, &
Tochtermann, 2011; Islam, 2013; Kader & Akter, 2014; Mather, 2004; Nuruzzaman, 2013).
The supply side of the clothing industry in Bangladesh is greatly affected by the time and
cost of production (Islam, Begum, & Rashed, 2012; Kaes & Azeem, 2009; Rahman, 2004;
Rahman & Anwar, 2006; Rashid, 2006; Saxena & Salze-Lozac’h, 2010; Tewari, 2006).
Globally recognized clothing retailers choose the suppliers who can offer products at the
minimum cost and maximum speed. Previous studies have mainly shown only the stages
of the supply chain, but the requirements of each stage are not specified.
The main objective of this research is to study the demand-supply chain of the
Bangladeshi textile-clothing industry. The research questions to be addressed are as
What is the demand-supply structure of the textile-clothing industry in Bangladesh?
What are the backward and forward linkages to the demand-supply structure?
The rest of the paper is organized as follows. In Section 2, we discuss the current state
of the clothing industry, including the industry’s contribution to the national economy,
product mix, product destinations, and emerging markets for the products, etc. In section 3,we elaborate the demand side of the industry including customer analysis, demand
forecasting, the design of the product, the order confirmation process, and the roles of
intermediaries between the distributors and producers. In section 4, we describe the supply
side of the industry. This section specifies the demand-supply flow of the raw materials and
the CMT activities of the clothing firms. Finally, in section 5, we conclude the paper with a
discussion of the future direction of related work.

2).Current State of the Textile-Garments Industry of Bangladesh: 

The term Made in Bangladesh is a sign of pride for workers, businesses, and
consumers in the textile-Garments sector (Baumann-Pauly, Labowitz, & Banerjee, 2015).
Bangladesh is the second largest Garments exporter in the world (Masum & Islam, 2014).
The contribution of this sector accounts for 80% of the country’s export earnings (Masum &
Inaba, 2015). This sector accounts for 23% of the country’s gross domestic product (GDP).
The economy has grown nearly 6% per year since the mid-1990s. This growth has
contributed to a young workforce. Since the arrival of the garment sector in the late 1970s,
the country’s poverty rate has fallen from 70% to less than 25% in 2015. 2 There seems to
be a strong positive correlation between Garments export growth and poverty reduction
(Labowitz & Baumann-Pauly, 2015). All these contributions are, more or less, linked to the
country’s clothing industry.
Labowitz and Baumann-Pauly (2015) stated that there are about 7,000 (3,200 direct
sourcing and 3,800 indirect sourcing) factories producing clothing for more than 200
foreign brands with a sales volume of 1.57 billion units in 2014. They employ 5.1 million
workers capturing a 5.1% market share 3 after China’s 38.6% (Labowitz & Baumann-Pauly,
2015). The country exported $25.5 billion worth of clothing in 2015 with a 49:51
combination of knit and woven Garments. In Bangladesh, 75% of total manufacturing
employment is in the textile-clothing sector, of which 85% are women. On the other hand,
60% to 75% of the benefits of this value added amount goes to retailers and producers
(Oxfam International, 2016). However, the value addition in the country is steadily
increasing in this industry (Quasem, 2002).
The production processes of textile-Garments in Bangladesh mainly fall into three
types: i) vertically integrated, i.e., they buy fiber and then process the fiber into finished
apparel; ii) semi-vertically integrated, i.e., they buy yarn and then convert the yarn into
finished clothing; and iii) horizontally integrated, i.e., they buy fabric and then convert
fabric into finished clothing. Textile clothing is an export-oriented industry. The output
includes knit Garments and non-knit/woven Garments, which are mainly described as HS code 61 and 62. Garments export growth was 12.4% on average over the last 10 years, while knit and non-knit growth was 12.5% and 12.3% respectively. Table 1 shows that 2010, 2012, and 2015 were particularly shocking when it comes to export growth.

Garments export growth has been supported by the European Union’s (EU) generalized
system of preference (GSP) facility, a relaxation of rules of origin, and a duty free quota
facility from Canada, Australia, Japan, and members of the European Free Trade
Agreement. Moreover, the global financial crisis in the late 2000s eventually boosted the
Bangladeshi clothing sector because buyers worldwide switched to less expensive clothing
products, which is known as the Wal-Mart Effect 4 globally. The Garments export growth rate has been consistently higher than Bangladesh’s overall export growth except in 2010.
An analysis incorporating two-digit export data over the last 10 years shows that the
share of knit and woven Garments export in the export basket was 39% and 39%
respectively. On the other hand, the average contribution of Garments exports in Bangladesh was 82% in 2015.

3). Demand Side of the Textile-Garments Industry of Bangladesh: 

The Garments product has a limited life cycle (summer products, winter products, etc.),
incredible variety, volatile-unpredictable demand, and a long-inflexible supply process. The
demand side activities of the textile-Garments industry include knowing the expectations of
users, the trends of the age, upcoming events, and seasonal variations, etc., which are
linked to demand forecasting and subsequently the ability to design the right product.
These activities arise from the research and development divisions of firms. The demand
side of the textile-Garments industry is shown in Figure 1 and is described in the following

3.1. Customer Analysis:
The Bangladeshi Garments industry’s customers are the brand retailers and
distributors. Bangladesh sells knit and woven Garments to these customers as finished
goods. After buying Garments products from Bangladesh, retailers sell through outlets
located in different corners of the globe. Bangladeshi firms do not produce goods based on
demand forecasting. They produce goods after receiving orders from retailers and
distributors. Therefore, the manufacturing process is order-driven. To know the demand
scenario for the textile-clothing output under prevailing circumstances, it is important to
analyze the retailers and their selling destinations. An analysis of clothing importing
destinations demonstrates, Table 2, that the regions currently demanding the most
clothing are the European Union with 44% of Garments imports, followed by the United
States with 21%, Japan with 8%, Hong Kong with 4%, and Canada with 2% (World Trade
Organization, 2013). Whereas, Bangladeshi firms exports 59% of total clothing products to
the European Union and 26% to the United States in the same period 5. Emerging export
markets of Bangladesh, including Australia, Brazil, China, Japan, account for 15% of total

  An analysis of the five-year export data related to knit Garments shows that the top-ten
export destinations or demanders of Bangladeshi knit clothing are Germany, the United
States, the United Kingdom, France, Spain, Italy, the Netherlands, Canada, Denmark, and
Belgium. Figure 2 shows that 21% of the total knit products are demanded by Germany,
12% by the United States, 11% by the United Kingdom, and 9% by France over the last five years.
Exports to established markets such as the United States and the Netherlands are
steady or occasionally decline for knit products, whereas exports to newer destinations such as Russia, Australia, China, and South Korea, etc., are soaring.

  As with knit Garments, the top demanders of woven garments are Europeans and
Americans except for Japan in Asia (Figure 3). The United States buys 37%, Germany buys
14%, the United Kingdom buys 10%, and Japan buys nearly 3% of the total exports of nonknit Garments.

The Bangladeshi textile-Garments industry has grown into a 100% export-oriented
industry. The government facilitates this industry through the duty-free importing of raw
materials, cash incentives, duty drawbacks, back-to-back credit, and bonded warehouses,
etc. A total 100% of export-oriented firms do not sell their finished products in the local
market. The importing of finished clothing is used to satisfy local demand. Figure 4
demonstrates that the volume of the finished clothing import was $3.68 billion in 2014–15
with 7.85% growth during the last decade to meet the clothing demand of 160 million local

 The above analysis gives an idea of the destinations of Bangladesh’s Garments outputs.
The retailers and distributors have their outlets in the above-mentioned destinations.
Retailers and distributors also forecast demand and buy Garments from Bangladesh.

3.2. Demand Forecasting:
Demand forecasting refers to the predicting of future demand based on factors that
affected demand in the past. The fashion industry relies heavily on accurate forecasting of
future demand (Liu, Ren, Choi, Hui, & Ng, 2013). Rodrigues and Figueiredo (2012) stated
that demand for each fashion product has a short and well-defined selling period
corresponding to one selling season (20–30 weeks). Fashion trends, seasonality, the
influence of exogenous factors, seasonal data, end-of-season sales, sales promotions, and
the purchasing power of consumers all affect the ability to forecast demand (Nenni,
Giustiniano, & Pirolo, 2013; Thomassey, 2014). Inaccurate forecasts significantly influence
the performance of the supply chain in terms of increased inventory costs, back orders or
loss of sales, and customer goodwill throughout the supply chain (Aksoy, Ozturk, & Sucky,
Local firms mostly get contracts from Western brand retailers based on low-cost and
high lead-time considerations. Sen (2008) stated that Western retailers and buyers choose
Far East contractors for high lead-time (90 days or more) contracts. Bangladesh specializes
in high-volume, low-cost production of technically simple garments and utilizes the world’s
largest low-cost labor pool, which allows subcontracting from lead contractors to complete
orders on time at a lower price per unit than lead contractors (Padmanabhan, Baumann-
Pauly, & Labowitz, 2015).
The activities of textile-Garments factories in Bangladesh do not begin with demand
forecasting based on information from the point of sales or research office. Demand comes
either from the brand retailers directly or the agents or franchisees. Foreign firms represent 75% of the agents or franchisees, known as intermediaries. These intermediaries
earn a commission ranging from 1% to 4% from the export proceeds upon successful
negotiation and finalization of contract performance. Therefore, firms in Bangladesh are
not forecast-driven, because the retailers and distributors are the ones who perform the
demand forecasting and play the key role.

3.3. Design and Development:
Design is the first step in developing new products in the fashion industry; this is
followed by modeling/prototyping, detailed engineering, material sourcing, production, and
distribution (Bandinelli, Rinaldi, Rossi, & Terzi, 2013). Clothing firms in Bangladesh do
not themselves engage in design, distribution, or retailing. The first step in design is to
analyze the targeted consumers/users. The design process is influenced by the works of
other designers presented in collections in cities like Paris, Milan, and New York, or trade
shows from earlier seasons (Sen, 2008). Design is either completed in-house or is
commissioned to small design companies.
Firms in Bangladesh receive the product design at the time they sign the contract
with the retailers-distributors. Retailers sell the product using their own brand name. The
brand company earns the lion’s share of the profit from the total supply chain. Retailers
and brand companies multiply their cost by 2 to 2.2 times as a general rule in setting
prices (Sen, 2008). Brand retailers also play the role of distributor in the clothing business.

3.4. Order Confirmation:
The most important part of the demand side, which prevails in the Garments industry of
Bangladesh, is order confirmation. The apparel industry is identified as a buyer-driven
value chain that contains three types of lead firms: retailers, marketers, and branded
manufacturers (Gereffi & Memedovic, 2003). Bangladesh is the station of the order-driven
manufacturers. It is the marketers and retailers that place production orders. Olhager
(2012) stated that order-driven manufacturers produce goods responding to particular
customer needs, while others produce standard products. Textile-Garments factory owners in Bangladesh are not involved in marketing activities. They play the role of production hubs under partial supervision of the intermediaries or direct retailers. Retailers-distributors
dominate the demand side of the industry in the presence of the intermediaries. They
forecast market demand and place production orders for manufacturers. Below we discuss
the main tasks of the order management stage, where manufactures are involved.

before receiving the production order from the retailers,
an introductory talk takes place between the retailer and the producer about the
production order. If they can reach a verbal agreement in the negotiation stage, the first
party (the importer) visits the production facility including the condition of the building
and fire safety system. If the above-mentioned issues are in compliance, the deal goes into
the design confirmation stage. At this stage, the importer hands over samples to the
exporter for physical prototypes. After sample confirmation has been received from many
producers, the first party makes the final per-unit pricing decision. Based on similar
sample quality, the buyer confirms the order with the supplier that offers the lowest price.
After confirming the price, the buyer confirms the payment methods and terms. In
Bangladesh, maximum payments are done though documentary credit, which is popularly
known as letter of credit (L/C). Afterward, the producers in Bangladesh use this L/C as the
funding source for the production.

3.5. Bilateral Relations:
Bilateral relations is another emerging factor on the demand side. Due to the failure of
trade agreements, Garments export from Bangladesh is facing non-tariff barriers. Export
flows from Bangladesh have not benefitted from the preferential and free trade agreements
(Ullah & Inaba, 2012). Ullah and Inaba (2012) also stated that there is bilateral distrust,
political conflict, and a higher volume of illegal and informal bilateral trade. These factors
have affected the demand of clothing from Bangladesh, including the recently suspended
US GSP facility for Garments products from Bangladesh, which affected the demand to the
United States.

4).Supply Side of the Textile-Clothing Industry of Bangladesh:
Upon finalization of the production contract, the supplier prepares for the production
process. This is the beginning of the supply side in the demand-supply chain. Figure 6
depicts the components of the supply side of the textile-clothing industry. The supply side components include raw materials sourcing, clothing production, delivering the finished
goods, and maintaining a good relationship with the buyer-distributors.

4.1 Raw Materials and Backward Linkage:
The first stage of the supply side involves sourcing raw materials, also known as the
industry’s backward linkage. The raw materials are categorized as fiber, yarn, fabric, wet
processing, and accessories. Fiber producers at the top of the supply chain produce either
natural or man-made materials. According to the US Department of Agriculture (USDA),
Bangladesh imports 99% of its raw-cotton. A statistical sketch of demand and supply of
cotton is given in Table 1A in the Appendix A.

The textile-Garments industry imports fiber (raw-cotton and staple-fiber) and yarn
mostly. Figure 7 shows that, respectively, in 2014–2015, yarn imports increased 3.2 times,
staple-fiber imports increased 6.9 times, and raw-cotton imports increased 3.1 times from
the 2005–2006 fiscal year. Imports of raw-cotton are more or less stable, but staple-fiber
imports and yarn imports are soaring in terms of the export of clothing. Bangladeshi
private fabric manufacturing firms can mostly meet the industry’s knit fabric demand. The
woven fabric sector, on the other hand, continues to be dependent on imports.

The output of fiber is yarn. Natural and synthetic fibers of short lengths are converted
into yarn by spinners, throwsters, and texturizers (Sen, 2008). The average growth rate of

 raw-cotton fiber imports was 17% during the last decade, whereas the staple-fiber import
growth rate was 29%. While the raw-cotton import reduced by 22%, the staple-fiber import increased by 138% (see Table A2 in the Appendix A). The yarn import growth rate was below average because local yarn production began to replace the importing of yarn.
Therefore, in the raw-material import chain, staple-fiber substitutes for raw-cotton. The
compound average growth rate (CAGR) was 12.8% for raw materials and 12.4% for
clothing. The ratio of imported raw materials to exported finished goods was 19%.

Fabric segment of the production chain transforms yarn into fabric by weaving,
knitting, or a non-weaving process in cloth mills and handlooms. In knitting, yarn is interlooped by means of latched and spring needles. The process may generate rolls of knitted fabric that are used for particular apparel such as sweaters or hosiery. Non-woven
processes involve compression and interlocking fibers by means of mechanical, thermal,
chemical, or fluid methods (Sen, 2008).

Fabric may not be standard for clothing production until it is dyed and cleaned.
Dyeing-printing-washing firms carry out this job through wet processing. Accessories
subsector produces $28 billion equivalent accessories. A total of 100% of raw materials for
plastics-based accessories and 80% of raw materials for paper-based accessories are
imported (Faruque, 2014). In the textile-clothing export market, garments-accessories, and packaging (GAP) are significant, although GAP constitutes an insignificant percentage of the cost of products and occupies the most important position in terms of production
economics (Khan & Molla, 2014). This subsector satisfies 90% of domestic demand. While
the country has more or less achieved self-reliance in terms of its supply of accessories,
progress is less noticeable in fabric manufacturing, especially when it comes to woven
fabrics (Quasem, 2002).

Backward linkage.: The above-mentioned supply side issues are known as the
backward linkage to the clothing industry. The term backward linkage is used to indicate
the interconnection of a particular sector with the upstream sectors from which it
purchases inputs (Miller & Blair, 2009). Industrial sectors depend on each other for inputs;
this dependence can be called backward linkage (Hara, 2008). Backward linkage is also
known as the output multiplier effect, which is also known as the sector’s pull power. (Ilhan
& Yaman, 2011). The larger the backward linkage indicator, the more inputs that sector
receives from other sectors. If the output multiplier is high, it means that an increase in
final demand increases the total production, i.e., it activates the other sectors by receiving

Bangladesh’s input-output table for 2012 has been used for backward linkage analysis.
The production process of the textile-clothing industry is subdivided into fiber, yarn, fabric,
wet processing, and clothing in the input-output table for 2012. Fabric is described as cloth
milling and handloom cloth. In the table, clothing is further subdivided into knit clothing
and woven clothing.

The total backward linkage coefficient of yarn subsector is 1.46 points which includes
domestic backward linkage index 1.25 keeping a import leakage of 0.21. Factual
information of this industry shows that there are as many as 407 yarn manufacturing
firms in Bangladesh. The domestic firms can meet up to 70% of the total demand of the
fabric manufacturing firms, and the other 30% of the yarn is mainly imported from China
and India (Table 1A in the Appendix A gives more details).

Handloom cloth, among the production process components, has the highest degree of
total production repercussions. The backward coefficient of this subsector is 2.09, which
means that if demand for one unit of handloom cloth increases in the economy, there will
be 2.09 production units of handloom cloth in the industry. Out of these 2.09 units, 1.94
units will be produced domestically, and 0.14 units will be imported (leakage). Statistics of
this backward linkage show that there are 787 fabric-manufacturing mills in Bangladesh.
Fabric manufacturing mills may be knit-fabric-producing firms and woven-fabricproducing
firms. Local suppliers meet 90% of the demand for knit fabrics and 40% of the
demand for woven fabrics for export-oriented clothing firms. As per the USDA data, shown
in Table 1A in the Appendix A, Bangladesh imports 38% of its fabric and, on average,
domestically supplies the other 62%.

If the total production repercussion in the economy is considered, the ranking of the
components of the production process is as follows: handloom cloth, woven clothing, wet
processing, knit clothing, yarn making, and cloth milling with 2.09, 1.93, 1.88, 1.84, 1.46,

 and 1.32 coefficients respectively. Table 3 below illustrates the total backward linkage and
domestic backward linkage.
Domestically, the wet processing (dyeing-printing-finishing) subsector is strong for
backward linkage with 1.63 coefficient, but leakage is very high (0.25). Bangladesh is 100% independent when it comes to this service, but 90% of service ingredients such as dyes and chemical are mainly imported. There are 236 dyeing-printing-finishing mills in Bangladesh with a service capacity of 1,700 million meters of woven fabric, 300 million kilograms ofyarn, and 600 million kilograms of knit fabric.4 An index comparing the productioncapacity in the year 2000 and that of the year 1996 shows that the dyeing and finishing sectors almost doubled their capacity during the same period (Quasem, 2002).

4.2 Clothing Production :
Clothing production units carry out a number of processes from order receiving (L/C
confirmation) to delivery of the finished clothing. The processes begin with the production
planning. Production planning includes raw materials planning, production capacity
planning, line planning, scheduling of jobs, and assigning duty-responsibility for each job,
Apparel manufacturing starts with the design of the product, which is designed by the retailer-distributor. Pattern pieces are created from the designs, which are then used to cut the fabric (Sen, 2008). Fabric is developed as per the buyer’s requirements. Fabric
development means sourcing or manufacturing customer-specific fabric with matching
properties such as dyeing and colors, etc. In the case of yarn-dyed fabrics, the merchants
develop a fabric sample with specific designs, whether stripes or checks. Other approvals
related to the print, embroidery, or art work associated with the fabric are also given by
the retailer. The pattern master then prepares the fit pattern, re-develops the pattern with
the buyers’ comments, and finalizes the fit sample.

After reaffirming the sample design with the buyer, the factory goes into bulk cutting
and ornamentation through printing or embroidery (if needed). The addition of sewing or
accessories is then done to prepare the complete clothing as per the design specifications.
The steps in clothing production are given in Figure 8.
Inspection is an ongoing process that begins with raw materials sourcing and
continues until the final shipment. Internal and external inspections are made. Internal
inspections are done by the producers. The buyer-nominated inspector performs external
inspections throughout the production process. Afterward, the products are washed, ironed,
and ultimately packed for delivery. Delivery is done as per the terms of the contract with
the buyer, e.g., if the delivery term is FOB (free on board), the products are sent to the
nominated board, whereas, if the delivery is EXW (ex-works), the product is to be made
ready at the factory premises for delivery, etc.

4.3 Delivery and Payment :
After making the product ready, the producer sends the goods to the port of shipment.
This process is done by the producer through clearing and forwarding agents. These agents
charge nearly 1% of the invoice value. From the producer to the buyer, it takes nearly 30–
35 days (Islam, 2013). The forward linking components under this stage include
transportation, port facility, and public services, etc. The transportation system is very poor
in Bangladesh. There is only one road linkage to the port city of Chittagong, and the
maximum production facilities are located in Dhaka. The rail communication system is
also quite poor. To deliver products to the port takes a full day. The distance is nearly 300
kilometers. Jochen Weikert, a program coordinator at German International Cooperation
Bangladesh, has suggested the importance of improving the physical infrastructure for
smoother communication and transportation of goods (Star Business Report, 2016).

There are two sea ports in Bangladesh. One of them, i.e., the Chittagong sea port, is
effective and is used for 95% delivery of textile-Garments products. This port handles more
than 80% of the country’s external trade. The business community has been very unhappy
with the performance of the port. 13 Most of the bulk ships have been replaced by container ships, and around 40% of world cargo is now carried in containers. The container mother vessels do not come to Bangladesh. They anchor at sea ports in Singapore, Malaysia, or SriLanka. The Bangladesh-bound container cargo is at first unloaded at these ports and is later carried up to the Chittagong and Mongla sea ports by feeder vessels. Similarly, the export cargo in containers from Bangladesh follows the same route. The turnaround time for the container vessels fell to 3.04 days in Chittagong port, which is above average. 14 Future sea ports (under construction) in Payra and Sonadia will be helpful for serving the sector’s export-import activities.

There are two international airports in Bangladesh. Shipments are not usually sent through these airports. In the case of seasonal or trend emergencies, Garments
manufacturers sometimes use these airports, but the usage rate is less than 1%.
Payment. In the order confirmation stage, the payment method is also specified. In the
case of Bangladesh, 99% of the payment is settled through documentary credit or a letter
of credit (L/C). When this happens, it is the time to claim the payment from the importer.
After shipping the goods, the shipping documents and the payment-claiming document, i.e., the bill of exchange, are sent to the importer’s bank. The exporter ultimately receives the payment at this stage through the bank.

4.4 After Sales Service:
After sales service and customer relationship management have become important
parts of business success. Although the cycle ends when payment is received from the
buyer, the producer expects further orders from the same buyer in order to begin a new
cycle of production, as the industry is order-driven. To ensure the arrival of new orders,
producers tend to maintain warm relationships with the retailers, including the handling
of complaints from the end users. Therefore, in short, the Bangladeshi textile-Garments
industry follows the cycle of three activities depicted in Figure 9.

Conclusion :
This paper studied the demand-supply structure of the textile-Garments industry in
Bangladesh with backward and forward linkages. The findings showed that the demand
structure of the textile-Garments industry is order-driven, while retailers-distributors create
the order for production. Bangladesh is comprised primarily of branded manufacturers,
but the relationship between retailers-distributors and manufacturers in the demandsupply
structure is not direct. There is an intermediary who requires 1–4% of the invoice
value. Many of the intermediaries are controlled by foreign dealers. The profit calculation
statistics show that retailers-distributors benefit more than manufacturers. Bangladeshi
firms are dependent on retailers-distributors for demand forecasting and product design
and development. Initiative at the firm and regulatory level is unsatisfactory in making
the industry forecast-driven in order to reduce dependency on retailers-distributors. On
the other hand, cotton, as the top-tier supply for Garments production, is import dependent. Bangladeshi firms import 99% of their raw cotton. However, local firms can meet the maximum demand for yarn, fabric, dyeing, printing, washing, and accessories. The research also found that labor, as one of the most important components in the supply structure, is not nourished attentively, although the industry is labor intensive. Production-cost analysis in the industry showed that 80% of revenue is cost of sales, 63% of revenue is raw materials cost, and only 10% of revenue is labor cost.

Input-output analysis of the backward linkage of the industry demonstrated that
fabric plays most important role among the industry’s subsectors, with 2.09 times
production repercussions. A comparison of the Bangladeshi backward linkages to some
Asian countries revealed that the backward linkage of China is 37% stronger than that of
Bangladesh. India and Sri Lanka’s backward linkages are also stronger than that of
Bangladesh. The forward linkage of the industry in Asian countries tends to be standard
except for China, whose forward linkage is 1.2 times greater than Bangladesh. The policy
recommendations based on the findings of this research are as follows for sustainable
growth of the industry.

Artical by Md. Masum, This research is supervised by Professor Kazuo Inaba, Graduate School of Economics,Ritsumeikan University. The author is indebted to Professor Inaba for active supervision on every step of the research beginning from setting objectives to drawing conclusions. The author is also grateful to the anonymous referees for their invaluable contributions.

accessed on 6 January 2016.
report on October 16, 2015.
3 Market share of Italy, Germany, Hong Kong, Vietnam are 5.1%, 4.1%, 4.2%, 4.0%

6 The methodological aspects is explained in the Appendix B.
7 ibid
8 As the subsectors data in the input-output table are rare among the countries, the
comparison is based on compressed data on the textile-clothing industry. The data is
collected from the Asian Development Bank’s compiled input-output table.
9 (accessed on 19/10/2015)
11 Input-output tables of China 2005, Bangladesh 2006, India 2006, Sri Lanka 2006,


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