SWEDISH retail giant H&M is currently the largest buyer of apparel items from Bangladesh, sourcing garments from more than 250 factories in the country. It has 3,600 stores globally and operates six brands — H&M, COS, Monki, Weekday, Cheap Monday and Other Stories. Roger Hubert, H&M’s regional head for Bangladesh and Pakistan, discussed Bangladesh’s target to export apparel products worth $50 billion by 2021 and the sector’s capacity with The Daily Star on Saturday. Last December, garment makers and the government jointly announced the country’s export target for the end of 2021 at the Dhaka Apparel Summit. Following are excerpts from the interview. The Daily Star (TDS): Is it possible for Bangladesh’s garment exporters to achieve the target, given the country’s current capacity? Roger Hubert (RH): No, not with the current capacity and not with the available infrastructure.
TDS: What should Bangladesh prioritise to achieve the target?
RH: The government should provide competitive and low-cost financing for industry capacity building; provide adequate power connections to entrepreneurs who have already set up new factories and are currently sitting idle, losing money and are drifting towards bankruptcy. The government should also provide adequate power connections or allow shifting the existing connections to the entrepreneurs who planned and prepared to relocate from shared buildings into modern and compliant factory buildings. Also, the government will have to create a more FDI friendly environment.
TDS: Do you think workplace safety has improved in Bangladesh after the twin industrial disasters — the Tazreen Fashions fire and Rana Plaza building collapse?
RH: Yes, it has definitely improved, but only the groundwork has been done by identifying the safety risks. Now the remediation needs to be accelerated as less than 50 percent of the known issues have been fixed. It is mainly the small and medium enterprises in the sector that have not yet started or have a low percentage of remediation progress. A major portion of these factories are in shared buildings, working mostly with agents and importers as buyers and some larger exporters are still feeding them with subcontracting work. The focus should now be on assisting the SMEs and non-Accord/Alliance factories to improve, and the government and non-Accord/Alliance buyers, including agents, play a crucial role here. There is also a great need to define how the inspections and remediation of the industry will be handled after 2018.
TDS: How much of a threat are the new entrants like Ethiopia, Myanmar and Vietnam to Bangladesh’s garment sector?
RH: They are not yet a treat to the sector. But they are, or will become, competitors. As competition starts with basic products, Bangladesh needs to diversify its apparel portfolio, go for more complexity, fashion and speed. If the transformation that has started continues and the government provides the required support — competitive access to financing; adequate infrastructure and power supply; transparent, efficient building safety control mechanism; adequate labour law rules and mature industrial relations and efficient arbitration — the textiles and garment sectors will further grow and gain more global market share.If the transformation does not continue, yes, these emerging markets will eventually become a threat to the apparel sector in Bangladesh.
TDS: Do you have plans to increase the prices of the garment items you purchase from Bangladesh?
RH: H&M will continue to support its partners in the supply chain in increasing their efficiency; expanding their capabilities into more complex and complicated higher value products; improving their resource efficiency (water, chemicals and energy); and improving their labour management competency and capability. Hence, H&M will work together with its business partners to increase their margins and stay profitable and competitive.
TDS: What are H&M’s purchasing plans for 2015 and beyond?
RH: H&M will contribute to achieving the sector’s vision of exporting apparel items worth $50 billion by 2021, if conditions in the country and the industry permit. If the government support to the industry is provided timely, H&M will be able to continue to grow its sourcing from Bangladesh in double digits. It is important to know that — timely means now.
