Bangladesh has potential to earn huge foreign exchange from exports of footwear and leather products globally and contribute largely to job creation and thus boost the economy. But presently, Bangladesh’s penetration in the global footwear market is very meager and last year the country fetched only $0.5 billion, and total export from footwear and leather products amounted to $1.0 billion. In this sector, the country can add 80 to 85 percent value to the products because it has affordable but good quality leather. The wages of the workers are also surprisingly low. The cost of electricity is also the lowest in this subcontinent, compared to its neighbors.Ruhul Amin Mollah, Chief Executive Officer (CEO) of Orion Footwear Limited shared this in an exclusive interview with daily sun Business Editor Golam Shahnee.Local footwear market is a big market in terms of volume. About 397 million or about 40 crore pairs of shoes are being sold annually and it is growing by 10 percent every year. In terms of values, the size is Tk 162 billion. But the interesting thing is that, the organised industry is yet to occupy significant share of the domestic market. By organised sector we mean the big marketer like Bata, Apex, Orion, Bay Emporium, Jenny’s etcetera. In terms of volume, only 123 million pairs are being contributed by this organised sector, which shows that in terms of value only Tk 30 billion is coming from this organised sector annually.So, unorganised sector is playing the vital role. Almost 66 percent of business is coming from the unorganised sector. Bata is the market leader, particularly in the Bangladesh shoe industry. Around 20 percent of the market grabbed by the organised sector is coming from Bata. Apex shares 10 percent and the others occupy remaining 34 percent of the overall local footwear market. In the unorganised sector, the basic footwear like the ‘chappal’ is the dominating factor. Sandals, chappals are the most sold footwear. Most users of these kinds of footwear are basically in the rural areas, said Rumul Amin, an experienced young professional in the footwear industry. Besides these, there are a good number of items imported from the neighbouring countries, namely, China, India, Burma and Thailand. Even so, most demands for basic footwear is met by the local industries. “India is becoming a threat to the local entry-level market. A good number of smuggled shoes are entering Bangladesh, which does not bid well for the local industry. As these goods arrive through illegal channels, they get more price benefits,” he added. “In order to protect the local emerging footwear manufacturing industry and allow it to grow further, smuggling of shoes should be dealt with,” he stressed. In context of the global market, I can say that China is still the marketing leader. The country is exporting footwear worth $54 billion annually. The second position is held by Vietnam, and the 3rd by Italy. About 40 percent of the global footwear demand is met by China-made footwear, while 12 percent by Vietnam. “When we look into the garments industry, we see that 83 percent of the export basket is ready-made garments products. Along with garments, footwear is also a part of lifestyle products. Many of the buyers are demanding to have top quality shoes from Bangladesh,” he added. “We are already exposed to the global market for garments. The buyers who are buying from China, Vietnam, Cambodia and other countries, should also buy good quality shoes from Bangladesh. Buying shoes from Bangladesh would be an advantage for them, since they would be able to procure their shoes within the same office costing,” he further said. Large retailing companies like H&M have come to Bangladesh for sourcing and importing shoes. Puma and a lot of other noteworthy buyers invest in the goods produced here in our home country. As of now, H&M is directly importing shoes from here whereas many of them are importing shoes indirectly through third parties. Since Bangladesh’s shoe industry is still at its initial stage, many buyers are yet to start directly purchasing from Bangladesh.Deichman of Germany, one of the global giants, has bought footwear manufactured in Bangladesh-so it is apparent that the demand is slowly rising on a global level.Since China has already declared this sector as a cottage industry, the government isn’t putting much thought into this anymore. Therefore, the next destination is Bangladesh and there is no other alternative. “World footwear manufacturing is notorious for its pursuit of so called “cheap” labour. In the 1960’s Japan was the main source of supply of low cost footwear. The industry then moved to Taiwan as labour costs in Japan grew. It in turn moved to China, then to Indonesia, Thailand and Vietnam. As a matter of fact, low labour costs, supplies of good quality leather and a long tradition of shoemaking will certainly make the Bangladesh a global destiny for sourcing of shoes in the coming days”, as Ruhul Amin further stressed and remarks. The Bangladesh footwear industry will be the next to the garments sector in terms of exports within the next ten years.
“What do you think about the capacity that the industry at present has to cope with the growing demand both locally and globally?
To what extent does it need to be enhanced?”, he was asked. Capacity building is not possible over the night. The footwear sector is a complicated industry unlike the garments sector. The main obstacle for this industry is the shortage of skilled manpower. The footwear manufacturers association has been working to enhance the capacity. Besides, the investors are coming forward. The shoes industry is now being led by young and educated talented professionals and entrepreneurs. The encouraging thing is that the new investors who are now coming to this sector are not laymen-rather they are educated and more advanced. Many of the successful garments entrepreneurs are setting up footwear industries and they have the advantage as they already have their existing set up suitable for running the business, and alternatively they can initiate footwear industry. At the beginning of any industry, the entrepreneurs maintain the compliance issues as per the standard of Accord Alliance, which was not there earlier.
“Regarding skill manpower, what level of potentials is there to engage more people in the industry that would widen the scope for employment?”
Since the footwear sector is a labour-intensive industry, there is huge demand for a large number of skilled workforce. For example, for a medium size industry that produces 5,000 pairs of shoes a day requires 1,500 to 1,800 workers.This is mostly a labour-intensive industry. In regards to operational level, there are four segments, such as cutting, stitching, lasting and finishing. The most critical operation is lasting operation. And skilled manpower is mostly required at this stage. The labours generally have skill in stitching and cutting. So, we need to develop a set of skilled workers for lasting and finishing. There is leather technology institute under the University of Dhaka and they are producing good quality engineers who are serving the industry. The number of engineers who are coming out annually is quite good to meet the demand for the local industry. However, they need further training on designing to meet the global standard of footwear trend. The University of Dhaka authority must stress on a highest level to instate a world class laboratory facility in the institute with some global accreditation to facilitate this second largest export earning sector. While sharing the main focus of the business of Orion Footwear Limited, he said “Our main focus is the local industry with the slogan – Orion Knows Your Taste.” Though there are trusted brands – the customers still do not find shoes of their desired tastes and designs for their family members and themselves- they feel as though they are being deprived. Being a marketer in this sector, we know this gap and so we came forward to mitigate it by competing with each other. Our vision is very clear: we want to grow as the leading footwear brand. We want to become a number one brand by the year 2020. We have already opened 20 outlets so far in less than one-and-a-half years’ worth time and that shows how aggressively we are progressing with our marketing drive. Among 20 outlets, 11 are in Dhaka while the rest are in other major cities like Chittagong, Sylhet, Khulna, Faridpur, Moulovibazar and Hobiganj. We are going to open five outlets this year – one each in Dhaka, Chittagong, Mymensingh, Bogra and Barisal. When setting up a new outlet, the big challenge is the location, as the footwear is a product that cannot attract customers if the outlet is set at a rather dull or inconvenient place. Outlets should be in the prime locations, but here, we’re faced with yet another obstacle- real state are becoming more pricey, so finding a fitting location within our budget can be a little stressful.
Do you face any policy barrier for proper growth of the industry?
The government has done a lot for the industry. It has declared the footwear industry as a thrust sector in 2009 and they are giving 15 percent cash incentive on exporting leather shoes and products. Even so, further supports are required, such as for boosting foreign trade, a one-stop service centre must be set up where the foreign investors would find all sorts of solutions in one sitting.
