Promoting specialty textile and fabrics: Marketing products from the art of weaving Jamdani and Jute diversified products (JDP) of Bangladesh in Canada Submitted by Nawshad Ali Khan CEO, JOYA and Subarno Rekha 620, Shahin Bagh, Lane-6 Tejgaon, Daka-1215 Dr. Rafat Alam Assistant Professor and Discipline Coordinator MacEwan University, Edmonton, Alberta Alamr2@macewan.ca (corresponding author) Submitted to Trade Facilitation of Office Canada (TFO Canada) and International Development Research Center (IDRC) September, 2016
Abstract Increased free trade and market-based policies have opened the door for export-oriented growth for developing countries. But the development of trade relationships with new export markets is complex and needs more than a general privatization and liberalization policy (Keegan, 1995), especially for the specialty textile products that are produced by small firms in the cottage industry which overwhelmingly employ rural, low-income and female workers. Many domestic and international market obstacles make it difficult for these unique products to be exported. This paper looks into the cases of two specialty textile products from Bangladesh - Jamdani and Jute diversified products (JDP) and investigates the export problems perceived by the sectors. The paper finds that JDP is export ready and well supported by government policies and institutions. The sector also has enough export experiences in European Union (EU) and North American markets. However, the sector faces fierce competition domestically and from Indian and Chinese firms. The sector also lacks in product design and has some weaknesses in quality. A vertical network is necessary to exchange information and cooperate in quality control, design and product development among the local trade association, government supporting institutions, local firms and designers, and foreign buyers and designers. Compared to the JDP sector, the Jamdani sector is not enough ready for export. As a high quality, niche cultural product it lacks the market access to western countries. There is high potential of the Jamdani sector to develop new designs and unique products to match the taste of western consumers. But the sector will need significant financial, human resource, and marketing help from government institutions. The paper finds that horizontal networks among the weavers to meet foreign demand, as well as vertical networks among weavers and local and foreign buyers and designers, will both be necessary to make the Jamdani sector successful in exporting to western markets. Both the Jamdani and JDP sectors will need low cost and easier access to financial resources and exportrelated human resource development. Government financial institutions and export promotion bureaus can take the lead in these areas. Jamdani and JDP sectors also need to establish brand image by highlighting their rich traditional and cultural value, eco-friendliness and social development aspect of reducing rural poverty and empowerment of women. Increased use of web marketing has to be a key to this branding. The Jamdani and JDP sectors can also be mixed with local tourism to create a unique cultural experience for tourists that will promote both the sectors as well as tourism. The main conclusion of this paper is that besides domestic policy and institutional supports, the development of horizontal and vertical network trade relationships is a necessary condition for accessing new export markets by specialty textile sector firms from i
Bangladesh. The Artisan Hub and roadshow projects of TFO Canada and other innovative marketing and promotional projects that can be initiated by bilateral and international organizations like TFO Canada, Global Affairs Canada and IDRC (International Development Research Centre) can provide support in these areas. ii
Table of contents Abstract... i Table of contents... iii List of tables... iv List of acronyms... v 1. Introduction... 1 1.1 Methodologies and objectives... 2 2. Bangladesh s textile industry... 3 2.1 Specialty textile industry in Bangladesh... 3 2.2 Jamdani sector overview... 5 2.3 Jute diversified product (JDP) sector overview... 7 2.4 SWOT analysis... 10 3. Business case and entry to Canadian market... 14 3.1 Results from the Jamdani sector... 14 3.2 Results from Jute Diversified Product (JDP) sector... 17 3.3 Policy recommendations and strategies for entry into Canadian market... 20 4. Summary of business strategy... 23 References... 25 Appendix 1: List of Jamdani entrepreneurs... 26 Appendix 2: List of JDP entrepreneurs... 28 Appendix 3: Survey of potential exporters... 31 iii
List of tables Table 1: Specialty textile products of Bangladesh with place of production 5 Table 2: List of jute diversified products 9 Table 3: Constraints for export of JDPs 9 Table 4: Importance of factors affecting the Jamdani sector 15 Table 5: Importance of factors affecting the JDP sector 20 Table 6: Business strategy for textiles exporters 24 iv
BRAC Bangladesh Rural Advancement Committee List of acronyms EU IDRC JDP European Union International Development Research Centre Jute diversified product JDPC Jute Diversification Promotion Center LDC NGO R&D TFO Least developed countries Non-governmental organization Research and development Trade Facilitation Office Canada v
1. Introduction Literature shows that concerned consumers are ready to pay more for the social responsibility features of specialty products, aimed at supporting the development and inclusion of marginalized producers from least developed countries (LDCs) in global markets (Becchetti, Leonardo and Camillo Rosati, Furio (2007). Bangladesh can offer two such products to Canada and other countries. The first one is the textile product made from the Traditional art of Jamdani Weaving recognized by UNESCO as the Intangible Cultural Heritage of Humanity. The second one is the product made of high quality organic Jute fabrics, which is an effective alternative to harmful synthetic fabrics. Both of these products are organic and eco-friendly and produced by the cottage industry in Bangladesh. Jamdani is produced from cotton or raw silk, while jute fabric is produced from a vegetable fiber known as jute. Raw materials for both items are available in Bangladesh. Cottage industry refers to the traditional artisanship of the rural people of Bangladesh, who produce various household items with locally available raw materials and unique artistic skill and creativity inherited from past generations. It is a method of production where the members of the family learn the know-how and the process of production from the skilled older member of the family from their early life. They work in a cluster for their specific production. This makes a positive effect on the production by minimizing the cost and ensuring keen supervision on each step of production. Cottage industry in Bangladesh is playing a vital role in developing the national and the rural economy. The appeal of buying from a cottage industry manufacturer is that the consumer can receive a unique, one-of-a-kind, hand-made product that isn't mass produced. Many consumers also appreciate the individual creative aspect of home-based products and services and feel that the majority of these cottage industry services produce a higher quality product than one that is mass produced. Jamdani weaving and jute crafts and textile are two of the most precious cottage industries of Bangladesh. Small weaving businesses in these sectors can produce a world class product for local and international markets. But many domestic and international market failures and distortions make it difficult for these unique products to be exported. This report will look into these obstacles, as well as the opportunities and strengths of the sectors, and suggest measures to overcome the barriers for export. 1
1.1 Methodologies and objectives The report used the following methods to achieve the desired study objectives. Provide a brief overview of the specialty textile/ fabrics sector: Sections 2, 3 and 4 provides a brief overview of the sectors. These sections were written based on academic, industry, nongovernment and government literature. Provide export profile of small producers: Using a primary survey, exporter profiles were collected for 13 JDP companies, 18 Jamdani companies and 7 other specialty textile companies (3 silk, 3 Nakshi Katha and 1 Comilla Batik). The exporter profile survey was provided by TFO Canada. The profile was used to select 13 companies for a visit by a Canadian buyer to collect samples and bring those to Canada for a roadshow. Provide a detailed business case strategy for entry into Canada: Surveys were conducted to collect data on the characteristics and composition and factors that affect Jamdani and JDP sectors. The sample size for the Jamdani sector was 37 and JDP sector was 34. Seven expert and stakeholder interviews were conducted to identify the opportunities and obstacles of both the sectors. The analysis of the quantitative survey data and qualitative interview data are used to write the SWOT analysis, business case and strategies. Provide a series of recommendations: Using the results of survey, expert opinion and literature review, the authors provided policy recommendations and actions for producers, local authorities, and Canadian partners in order to promote entry into Canada. 2
2. Bangladesh s textile industry 2.1 Specialty textile industry in Bangladesh The specialty textile industry of Bangladesh incorporates mostly the significant handloom industry present in the country which has been producing fine quality clothes for over centuries. History and archeological discovery suggest that Bengal was famous in the distant past for its textile production. Many fabrics of Bengal were noted for their fineness of texture, beauty of design, intricacy of weave, lightness of weight, and durability. Textile of many varieties made the principal item of export of Bengal during the Mughal rule. The dominant status of textiles in export began to decline when Britain began to manufacture fabrics soon after the Industrial Revolution. Britain imposed heavy duties on Bengal textiles, thus raising its prices in Britain. On the other hand, at the same time Britain was exporting textiles to the Bengal market duty free. Bengal textiles thus lost the world market (Islam, Md. Khairul and Hossain, Md. Elias (2012). During the British rule, though the export market shrunk, movements for wearing domestic handloom products and rural demand for homemade cloth helped the handloom industry survive. After independence, the Bangladesh Government set up a new Handloom Board in 1978, which took over the development of the handloom industry from the Small and Cottage Industries Corporation. Since its formation, the Handloom Board has taken some policy measures to develop the industry. Handloom is considered as a priority sector for development because of some of its characteristics such as labor intensity, female employment, product demand and profitability (Bangladesh Cotton and Textile Convention, 2006). As the Bangladesh Handloom Board (2010) states: Currently, Handloom sector in Bangladesh consists of more than 0.183 million handloom units with 0.505 million handlooms and about 1 million handloom weavers of which about 50% are female workers. A manpower of about one million weavers, dyers, hand spinners, embroiderers and allied artisans have been using their creative skills into more than 0.30 million active looms to produce around 687 million meters of fabrics annually. Production of these handloom fabrics is diffused in numerous production centers all over the country which are linked up by a network of primary, secondary and central markets. Among the different types of looms - Benarosi looms are concentrated in Mirpur area, Dhaka. Zari work called brocade is also famous in Mirpur. Jamdani looms are specially operated in Rupgang (Taraboo) area of Narayangang District and Kamer, while waist loom is found in the Hill Tracts of Chittagong. The Tribals of the Chittagong Hill Tracts, Borguna and Sylhet produce colourful tribal 3
textile products. The vast majority of Bangladeshi handlooms are engaged in weaving cotton and blended fabrics, although handloom cloth of silk earned a good reputation. Famous areas for silk weaving are Rajshahi, Tangail and Nobabgonj. Rajshahi produces mainly silk sarees. Tangail also produces silk saree named Tangail Muslin. The weavers of Comilla produce Khadi. It is a material that involves the spinning of cotton manually by hand into yarns for the production of handwoven cotton weaves. Nakshi kantha, a type of embroidered quilt, is another centuries-old Bengali art tradition of Bangladesh. The basic material used is thread and old cloth. Kanthas are made throughout Bangladesh, but the greater Mymensingh, Rajshahi, Faridpur and Jessore areas are most famous for this craft. 4
Table 1: Specialty textile products of Bangladesh with place of production Sl. Name of the Products Place of Production i. Jamdani Rupgonj and Sonargaon of Narayangonj district. ii. Benarasi Mirpur of Dhaka, Iswardi of Pabna district and Gangachara of Rangpur district. iii. Tangail Sharee (Cotton sharee, Half Silk, Soft Silk, Cotton Jamdani, Gas-mercerised Tangail Sadar, Delduar and Kalihati, Nagorpur, Basail of Tangail District. twisted cotton sharee, Dangoo sharee, Balucherri) iv. Handloom Cotton share Shahjadpur, Belkuchi and Sadar of Sirajgonj district, Narsingdi and Pabna districts. v. Silk share Sadar and Shibgonj of Chapai Nawabgonj and Rajshahi district. vi. Check Fabrics Belkuchi of Sirajgonj district. vii. Rakhine Special Wear (Wooling Shirting, Taltoli of Borguna district, Kalapara, Rangabali Woolen Bed Sheet, ladies chadar, of Patuakhali district and Cox s Bazar district. Bag,Lungi and Thami for tribal ladies) viii. Tribal Fashion Wear (Thami for tribal ladies, Khati (Orna), Ladies Chadar & Lungi. Rangamati, Khagrachari & Bandarban Hill districts. ix. Minipuri Fashion Garments (Monipuri Sharee, Punek for ladies like lungi, Lungi, Un-stitched cloth (three pieces), Innachi(Orna) & Vanity Bag Source: Bangladesh Handloom Board Sylhet and Moulivibazar districts. 2.2 Jamdani sector overview Among all the different specialty textiles described above, Jamdani is one of the oldest. The craftsmanship of famous Muslin of Dhaka has partially survived in the art of weaving Jamdani sarees and fabrics. Muslin was a brand name of pre-colonial Bengal textile (present Bangladesh) especially of Dhaka (present capital of Bangladesh) origin. It was handspun and hand processed by young women which attained worldwide fame as Dhaka Muslin. Bangladesh s fine white muslin s were known since antiquity until the 12 th century. The artisans of Dhaka Muslin weavers used to produce as many as thirty-six varieties of textiles. Muslin today is the historical heritage of Bangladesh and is no longer in process of weaving. Jamdani originated from the Muslin. Jamdani is a vividly patterned, sheer cotton fabric, traditionally woven on a handloom by craftspeople and apprentices around Dhaka (Sonargaon, Rupganj and Shiddirganj of the district of Narayanganj). Jamdani textiles combine intricacy of design with muted or vibrant colours, and the finished garments are gorgeous. The patterns are generally geometric and designs can contain items such as flowers, plants, and living species like fish. The range and varieties of Jamdani are quite extensive and numerous, but there seems to be three basic layouts: jaal, the 5
most intricate, is an all-over design covering the entire ground, terchi denotes floral or geometric diagonal, and buti is a combination of individual floral motifs and springs scattered across the fabric (Ghuznavi, Sayyada R., 2006 and Gillow, John and Barnard, Nicholas, 2008). Jamdani is a time-consuming and skill-intensive form of weaving because of the richness of its motifs, which are created directly on the loom using the discontinuous weft cut technique. It takes about two to three months to finish one Jamdani saree. Weaving is surviving today due to the fabric s popularity for making sarees, the principal dress of Bengali women at home and abroad. The Jamdani saree is a symbol of identity, dignity and self-recognition and provides wearers with a sense of cultural identity and social cohesion. The weavers develop an occupational identity and take great pride in their heritage; they enjoy social recognition and are highly respected for their skills. A few master weavers are recognized as bearers of the traditional Jamdani motifs and weaving techniques, and transmit the knowledge and skills to disciples. However, Jamdani weaving is principally transmitted by parents to children in home workshops. Weavers together with spinners, dyers, loom-dressers and practitioners of a number of other supporting crafts form a closely knit community with a strong sense of unity, identity and continuity. It is part of Bangladesh s cottage Industries and is eco-friendly, and its creativity is intangible. In December 2013, UNESCO gave recognition to the traditional art of Jamdani Weaving as the intangible heritage of the people of Bangladesh. According to the Bangladesh Handloom Board, the handloom sector in Bangladesh consists of more than 183 thousand handloom units with 505 thousand handlooms and about 1 million handloom weavers. Among them, a smaller group is Jamdani weavers. The Bangladesh Small and Cottage Industries Corporation (BSCIC) has set up a Jamdani Industrial City and a research center at Noapara in Narayanganj for safeguarding the art of weaving and for the further development of the Jamdani sector. The sector is mainly comprised of independent, networked artisans and private entrepreneurs. A few large non-governmental organizations (NGOs) like Bangladesh Rural Advancement Committee (BRAC) also operate in the sector through their production units run for AARONG. Jamdani has survived hundreds of years of competition from mass produced textiles. There is strong local and regional demand for Jamdani that has helped the sector to flourish. The value addition of the product is high and it can provide substantial income to the artisans a significant number of whom are female. Growth of the sector can positively contribute to saving tradition, heritage, and cultural values; to increasing social inclusion; to reducing poverty; to empowering women; and to enhancing tourism. So far, local and regional demand has helped the sector, but 6
Jamdani has the potential to attract multicultural consumers around the world. Jamdani can move beyond the production of sarees only. Jamdani weaving can be done in cotton, silk or mixed cotton-silk. The textile can be used for clothing and clothing accessories. New and innovative products such as home decorations, bags, artwork, and cushion covers can be produced using Jamdani. It can be marketed as a comfortable, skin-friendly, non-allergic synthetic textile that is also socially responsible. This sector has started initiatives to export their products to western markets, but the pace of growth is slow as the sector faces many obstacles and limited access to the international market. This project may help them to bridge the gap between the producers and the international market, which would be very inspiring for the Jamdani art of weaving. 2.3 Jute diversified product (JDP) sector overview Jute manufacturing sector is one of the oldest traditional manufacturing sectors of Bangladesh, which emerged in erstwhile East Pakistan in the early 1950s. During the 1960s and 1970s, major share of the manufacturing output and employment was accounted for by this sector. Exports of jute and jute goods were the two most important sources of foreign exchange of Pakistan during the 1960s. However, both share and importance of jute and jute good manufacturing, export and overall foreign exchange earnings have gradually declined over time. The present share of Jute in total exports 2.73% (in 2013-2014). But in the past, jute had glorious position with 90% of export share in 1972-73 (Export Promotion Bureau, 2015). Bangladesh holds the 2nd position as a Jute producer in the world with the average production of Jute 1.08 m ton/year (Bangladesh Jute Mills Corporation report). More than 85% of world production of Jute is cultivated in the Ganges Delta & having the major portion of it; Bangladesh became one of the largest producer of Raw Jute or Jute Fiber in the world. With the decline in traditional jute products, new niche products are coming up based on jute fiber. Fabrics made of jute fibers are carbon-dioxide neutral and naturally decomposable. These properties are also why jute can be used in high performance technical textiles. Jute, as a natural fiber, has many inherent advantages like lustier, high tensile strength, low extensibility, moderate heat and fire resistance and long staple lengths. It is a biodegradable and eco-friendly. It has many advantages over synthetics and protects the environment and maintains the ecological balance. Diversified jute products are becoming more and more valuable to the consumer today. Supported by several technological developments today jute can be used to replace expensive fibers and scare forest materials (Vries, Johan de, 2007). Among these are espadrilles, floor coverings, home textiles, high performance technical textiles, Geotextiles, composites, and more. Jute has many 7
advantages as a home textile, either replacing cotton or blending with it. It is a strong, durable, color-absorbing and light-fast fiber. Its ultraviolet protection, sound and heat insulation, low thermal conduction and anti-static properties make it a wise choice in home décor. (Vries, Johan de, 2007). With the developed market (EU, Australia, Japan, US, Middle East and North Africa) becoming more sensitive to environment friendly products - with emphasis on bio-degradability, recyclability and carbon emissions (several EU countries including France, Belgium, Italy, UK either banning or limiting usage of plastic bag), JDPs have made it into the limelight. Not only opportunities exist as a substitute for the current synthetic alternatives, but also with consumers becoming more environmentally conscious, JDPs can ascend to a Life Style product. Some middle-eastern markets have opened up which will further increase demand for jute products. Bangladesh already enjoys duty and quota free access to major developed economies and will need to cash in to further expand their pie. Over the last decade, demand for jute products in international market has propelled for these factors. With availability of quality raw jute, Bangladesh sits at an advantageous position to tap into the growing market for Jute Diversified Product (JDP). According to recent Jute Diversification Promotion Center (JDPC) research, there are approximately 400 JDP producers in Bangladesh which mainly operate on sub-contract basis for the export market. JDPC research further estimates total turnover of JDP sector at BDT 1,540 M as of 2011-12, with export contributing BDT 1,232 million. The growth trend is encouraging with total market projected to expand by 20% over the next three years. In total, JDP constitute about 5% of all jute export earnings. Exportoriented JDP enterprises have the experience of both the direct and indirect export. Overall, JDP has overwhelming growth prospects and potential for higher value addition compared to export of raw jute. (Light Castle Partner Ltd, 2014). JDP value chain has several key players adding significant value to the end products. JDP mills wield significant control over the market due to their size and financial muscle. Mills normally prefer exporting semi-processed jute for reaping benefits of export incentives, rather than selling to local JDPs. Likewise, local JDPs are unable to secure competitive pricing which subsequently hamper their international standing. JDP normally export to international markets either directly or through buying houses. Currently, JDP SMEs face severe dearth of supply of raw materials as 8
many mills are unwilling to supply at low volume. Government needs to intervene to establish a raw material bank for supporting procurement of raw materials. (Light Castle Partner Ltd, 2014). JDP sector has a mix of different kinds of producers private small entrepreneurs focused on local and international market, small NGO s focused on social development and large NGO s (e.g. BRAC) focused on domestic and international markets. But in all three types, the predominant workforce is rural poor women. Like Jamdani, selling JDPs can play a major role in reducing poverty rates among rural and female populations in Bangladesh. Increasing worldwide interests matched with trade can lift the sector significantly in the future. There are already established trade links in this sector. Entrepreneurs are marketing the products with their own brand names and participating in international trade fairs. Table 2: List of jute diversified products Fiber Pulp, paper & paper products, jute composites, wood/plastic substitutes, nonwoven based products, wipes, medicare textiles, absorbents, insulation & bonding materials, cellulose products and its derivatives, micro crystalline cellulose, high-tech fibers, panels, floor tiles, etc. Fine yarn, bleached yarn, dyed yarn, de-haired yarn, polished yarn, woollenized yarn, Yarn blended yarn, other treated yarn, fire retardant/proof yarn, corded yarn, hammock, shikkas, based shoes, shoe uppers and soles, sandals, doormats, belts, tape, lace, braids, braided rugs, products door and window screens, sweaters, cardigans, jackets, mufflers, caps, carrying kits, etc. Light fabric, striped fabric, checked fabric, dyed fabric, bleached fabric, treated fabric, laminated fabric, printed fabric, suitcases, briefcases, gift and jewelry boxes, pots, purses, Fabric bags, folders and files, beach products, denim, apparel, home textiles, furnishing fabric, based scrim cloth, quilts, ventian blinds, canvas, tarpaulin, carpet, blankets, different kinds of mats, products satranji, geotextiles, brattice, linoleum backing cloth, floor covers, different kinds of bags, travel kits, sacks, toys, decorative products, berets, nursery pots etc. Source: Value chain assessment for the jute sector in Bangladesh in Vries, 2007 Table 3: Constraints for export of JDPs Main constraints for JDP exports Quality issues Instability of pricing and delivery of raw jute Lack of support and poor implementation of policies and strategies from government bodies Weak image of the industry Lack of research and development (R&D) facilities Competition from other countries, including India Non-availability of export market information Lack of producers export experience High costs of participating in trade fairs Source: Value chain assessment for the jute sector in Bangladesh in Vries, 2007 9
2.4 SWOT analysis SWOT analysis for the Jamdani sector Following is an evaluation of the potential strengths, weaknesses, opportunities, and threats (SWOT) of the Jamdani sector. Strengths Strong cultural heritage and traditions to draw upon for developing unique designs and enhancing product differentiation. With the growth of tourism in Bangladesh, increased sales in local tourist markets will enhance the reputation and promotion of Bangladeshi products around the world. Availability of natural raw materials, and unemployed and underemployed women interested in training and production. Growing international interest in handicraft products, particularly handmade items by local women using local natural products who are paid fair wages. Low capital investment to get started, few barriers for market entry, and high ratio of value added to the local economy per unit of investment capital. Existing strong network of weavers serving the domestic and south Asian market. Weaknesses Shortage of next generation apprentices to learn weaving, spinning, dyeing, and product design skills, thus requiring expensive training. Most products produced to date have been supply rather than demand driven. There is lack of information on tastes and preferences of western buyers that restricts market access of potential products. Companies have little or no experience in exporting. Thus they require substantial training and technical assistance in business and marketing skills. Narrow product range and lack of new and innovative designs and/or products suitable for overseas markets. Absence of properly equipped design centres is responsible for some of the drawbacks in production, design, innovation and adaptation, combined to the lack of experts involvement such as textile engineers, fashion designers, etc. Lack of co-ordination between government bodies and private players. 10
The industry is still confined to rural areas and small cities which contributes to transportation problems. Lack of financial support and incentives for Jamdani producers and exporters. Opportunities Jamdani has the potential to attract multicultural consumers around the world. Jamdani can move beyond the production of sarees only. Jamdani weaving can be done in cotton, silk or mixed cotton-silk. The textile can be used for clothing and clothing accessories. New and innovative products like home decoration crafts, curtain, bags, art work, pillow and cushion covers etc. can be produced using Jamdani. It can be marketed as a comfortable, skinfriendly, non-allergic synthetic textile that is socially responsible and eco-friendly. There is a growing interest in many of the western countries including Canada for high quality handmade products using local natural resources produced under fair-trade labour standards. Jamdani producers can take advantage of that. This niche market is not being adequately supplied by any groups or organizations at the current time within Bangladesh. It provides an opportunity for Bangladeshi artisans to earn a decent wage while not competing in markets dominated by low cost products from countries paying poverty level wages. Jamdani producers should benefit from an increasing volume of domestic and international tourists. E-commerce and Internet may be promising as distribution channels to market and sell the Jamdani products. Threats If existing Bangladeshi Jamdani companies become financially viable, it will likely encourage others to try and work in the sector. The sector can at least partially protect their market niche by developing strong brand and protect it through international copyright laws. Hand-crafted products have to compete on price, design and adaptability with modern machine made products, which make it hard for traditional products to be competitive in international markets. Artificial automated product produced by competing countries, such as Indian Uadhaya Jamdani or Chinese embroidery machine products are competitors. Sometimes, these competing countries are enjoying better terms of trade. Some competing countries are offering better technological support for R&D. 11
SWOT analysis for the JDP Sector Following is an evaluation of the potential strengths, weaknesses, opportunities, and threats (SWOT) of the JDP sector. Strengths Higher profit margins for JDPs than for traditional jute goods Market share of JDPs offer room for expansion compared to other (traditional) jute products Quality of jute fibers is among the best in the world A high share of people are familiar with the processing of jute Labour costs are amongst the lowest in the world Government s strong interest to revive the jute sector Increasing worldwide interest for environment friendly jute products Weaknesses Lack of information from government bodies Lack of R&D facilities and product development Instability of pricing and delivery of raw jute Lack of support from government bodies, as well as poor implementation of policies and strategies Lack of development of the domestic market for JDPs Quality issues Lack of export experience for small JDP producers Opportunities Increasing international interest in environmental friendly products from developing countries Increasing market for gift items from developing countries Marketing JDPs as eco-friendly, socially responsible alternatives for synthetic products Because of low wages, Bangladesh can be competitive with other less developed countries The history and experiences in the jute sector The quality and supply of raw jute in Bangladesh Threats Competition from India, which has more experience with JDPs and a greater product range and depth 12
Competition from other similar eco-friendly gift items from other developing countries which have more support from their government The constant competition of natural jute fiber and products with other artificial fibers and products Fierce domestic competition and fear of copyright infringements in design 13
3. Business case and entry to Canadian market 3.1 Results from the Jamdani sector A sample of 37 companies from the Jamdani sector were surveyed. They are located in greater Dhaka in Rupgonj, Narayangonj, Sonargaon, Tarabo and Gazipur. The companies mainly serve the domestic market. The surveyed Jamdani producers have been in business for an average 30 years which shows that the sector is well established. Though many of the surveyed producers have their own factories, more than half do not have their own showroom. Many of the producers are suppliers to larger companies. Irrespective of size, most producers use a network of weavers to meet the demand. The family based weavers are located in greater Dhaka, Tangail, Manikgonj, Munshigonj, Jamalpur and Kushtia. Though Jamdani have been around for a long time, there is not much export from the sector. Exports are mainly for south Asian countries and south Asian consumers in Europe and North America. They have neither explored nor penetrated into the western mainstream markets. The government also never considered Jamdani as a prospective exporting good and it did not receive enough government support like other sectors in Bangladesh. As mentioned earlier, Jamdani is eco-friendly and has huge positive social impacts in communities. The majority of the workers in our surveyed companies are women. The weavers are located in rural areas and are usually low income households. Increased export would therefore directly empower female workers and reduce rural poverty. The surveyed companies produce the following products: Jamdani sharee, gents wear, kids wear, household items (hand embroidery), jewelry, salwar kamiz, tops, skirt, ties, gown, frock, Halloween dress, cushion cover, maxi, other ladies wear, curtain, yardage, household item, décor materials, lamp shade, wall mat, show pieces etc. There is limited export experience of few firms to India, USA, Canada, UK, Greece, France and Germany. The survey categorized different types of issues and factors that may have impact on the Jamdani sector. The respondents identified the importance of each factor on a scale of 1 to 5 where 1 was not important at all and 5 was extremely important. The majority of the factors that were identified as highly important (a mean score of above 3.5) were domestic in nature. As identified earlier - Jamdani as a sector is not much export oriented though the sector has enormous potential to serve niche markets in the western world. Domestic policies and incentives will be needed to transform Jamdani into successful export goods. Financial obstacles (high cost of capital, strict credit requirements, high interest rates, inability to self-finance export), training and learning weaknesses (lack of HR in export, lack of knowledge about export procedures), lack of 14
government export support (lack of government assistance to pass export barriers, lack of export promotion) were identified as the most important factors affecting the sector. Table 4: Importance of factors affecting the Jamdani sector Low importance (Mean below 2) Medium importance (Mean from 2.1-3.5) High importance (Mean above 3.5) Language issues Lack of information about High cost of capital (problem to foreign contacts Strict credit requirements from communicate) Lack of pricing knowledge banks Quality concerns Lack of knowledge of High interest rates Lack of quality raw buyers expectations Inability to self-finance export materials Lack of export experience High freight costs to foreign Strong competition Lack of skills to adapt markets from foreign producers products for export Size prohibits export Can t meet importers Political instability Lack of HR in export product quality Strong competition from Lack of knowledge about foreign standards domestic producers market opportunities Red tape in public High-value of domestic Lack of knowledge about foreign institutions currency market and business culture Insufficient foreign demand Lack of knowledge about export procedures and practices Lack of government assistance in passing barriers Lack of export promotion program from government Lack of export promotion from international organizations Source: Authors analysis following data collection The sector has a long history of serving the domestic market and can rely on an extensive weaver network to meet an increasing export demand. It is reflected in the survey as the identification of product quality, the inability to meet foreign demand or expectations, and raw material quality are identified as least important factors. International factors are identified as very important by the survey respondents. Lack of knowledge about foreign market opportunities and business culture, insufficient foreign demand and lack of promotion from international organizations are identified as most important international obstacles for the sector. Bi-lateral and international organizations like TFO-Canada or Global Affairs Canada can provide support in these areas. Aid and support in these areas can create long-lasting, sustainable and socially responsible trade promotion for countries like Bangladesh. Most of these high important factors were also identified as very difficult to solve by the survey respondents. There is unique possibilities and capabilities in the Jamdani sector if proper support and initiatives are provided domestically and internationally. 15
Besides the surveys, a small number of expert and stakeholder interviews were completed for both sectors. The experts and stakeholders identified few more obstacles and opportunities. A group of weavers re-iterated the niche market status of Jamdani even at the domestic market. Jamdani sarees are labour and time intensive product and the demand is exclusive not for regular use. Despite steady demand in the domestic market, it is not high enough. Because income is low with long hours of work, the sector is not attracting new weavers and off-springs are leaving the profession. It is getting harder to find local apprentice workers and weavers and often they must be found from other regions which is driving the training cost higher. Raw material prices are also increasing. The experts confirmed that export can significantly help in the revival of the sector. The following statement from Jacques Nadeau, the Canadian entrepreneur sent by TFO Canada to visit Bangladeshi producers, highlights some of the weaknesses and possibilities for the Jamdani sector: Jamdani draws its name from the fact that the fabric is always offered in traditional patterns. The patterns I have seen will not automatically raise the interest of Canadian buyers or interior designers. Also, the making of Jamdani fabric is a costly operation which requires a high retail price thus making products as high end products. The making of one single Jamdani Sari (six yard fabric) requires 6 weeks to 3 months. Consequently, the development and marketing of new products can only be achieved if unique and exclusive products are offered to foreign markets. The following statement from a local company shows the possibilities and optimism for the sector: Jamdani is a beautiful traditional product. Jamdani fabrics with thin and soft cotton or silk can be used for making any type of products following modern Canadian demand. Design, color and texture of Jamdani products suitable for the Canadian market needs to be developed. Research on developing such products in our region is ongoing and we have also joined that diversification effort. Both of the above statement identify the need for product and design development as a key to export Jamdani products. Other experts also identified the high potential of Jamdani as an exporting good. Jamdani raw material, machineries, technology, design and skills are local owned and the capacity and capability to meet export demand is already present. According to these experts, Bangladesh just needs to market the uniqueness, exclusivity, eco-friendliness and social responsibility of Jamdani in a better way. It will sell well in niche markets of the western world. Government can help to promote export through trade shows, funding, training and marketing. 16
The sector also needs help for design development that may be provided by importing countries. They can help to create a network of designers, entrepreneurs, and weavers to play with the thousands of available Jamdani designs to fit the western markets and consumption patterns. Pro-active measures are needed both locally and internationally to increase visibility of Jamdani textile products in the western markets. Proposals like the following stated by the visiting Canadian entrepreneur are examples of pro-active measures. We tested the ground with one weaver..as to whether he would be interested to develop new lines of muslin fabric and derived products enhanced with market-adapted patterns. The Weaving Factory is willing to develop new products as long as it does not technically change its way of making fabric. Therefore, I suggest to launch a pilot project with a strong involvement of a Canadian designer developing a few promising silk made products. A market test would thereafter be conducted to demonstrate if the approach is sustainable. A parallel avenue to explore would be to get some producers becoming Fair Trade certified which would then automatically establish a high value for their lines of products. This avenue may be difficult though considering conditions under which Jamdani fabric is often produced. 3.2 Results from Jute Diversified Product (JDP) sector A sample of 34 companies were surveyed from the JDP sector. The surveyed companies are mainly located in greater Dhaka. The JDP sector is significantly different from the Jamdani sector in terms of export readiness and government policy support. The companies currently mainly serves the domestic market, but are striving to become export oriented. The surveyed JDP companies are relatively new companies. On average, the companies have been in business for about 13 years. Many of the surveyed companies also sell other handicrafts products. 31 out of the 34 companies have their own factories, but more than half do not have their own showroom. The factory is also the showroom for these companies and they supply other handicraft companies. Besides greater Dhaka, factories are located in Jhinaidah, Goplagonj, Rangpur, Khulna, Tangail and Moulovibazar. Irrespective of size, most producers (68%) use a network of rural craftsmen to meet the demand. The family based craftsmen are located in greater Dhaka, Tangail, Manikgonj, Munshigonj, Jamalpur, Sylhet, Chittagong, Gaibandha, Rangpur and Panchogar. The availability of the raw material expanded the locations of JDP factories and craftsmen all over the country. Jute was the main export product of Bangladesh in Pakistan in the 17
post-independence era but started to lose its market in the 1980s. Recent Bangladeshi governments have been trying to revive the sector since then. More diversified products are an avenue for the revival of the sector, which explains why JDP is a high priority sector for the government. Financial and other incentives and policy supports have attracted many new entrepreneurs in this sector. Though Jute products have been around for a long time, jute diversified products are relatively new. Ongoing incentives and support are also geared towards export. This has made this sector more export ready. 65% of the surveyed companies have export experience and 30% has more than 60% of revenue generated through export. The surveyed companies have exported to EU, United-States, Japan, Australia, Thailand, United Kingdom, Sweden, Bahrain, Italy, Malaysia, Canada, Singapore, Germany, Spain, Switzerland, India, Ireland, China, South Korea, Poland, Lithuania, Netherlands, United Arab Emirates, Greece, France and Denmark. They also produce and export a wide range of unique and innovative products. It includes curtain, table cloth, runner, place mat, cushion cover, coaster, laundry basket, jute bag, laptop bag, ladies bag, shopping bag, wine bag, rice bag, lunch bag, beach bag, nursery bag, purse, coin purse, fruit basket, curtain, office folders, room slipper, show pieces, wall mat, pot hanger, doll, tissue box cover, photo frame, flower vase, jewelry box, watch box, shoe hanger, lamp shade, mail organizer, pen pot, note book cover, file folder, wallet, tab holder, jute rugs, pet house, punjabi, kurta, fotua, muffler, scarf, shawl, hat, jute tape, burlap ribbon, dyed burlap roll, wire edge burlap ribbon, Christmas sacks, draw string bags, jute tapestry, jute hammock, key ring, pouches, apron, tea towel, lamp shade, juton yardage (jute-cotton blend). Like the Jamdani sector, JDP is eco-friendly and has huge positive social impacts in communities. The majority of the workers in our surveyed companies are women. The craftsmen and factories are located all over Bangladesh and in rural areas. The craftsmen and workers are usually low income workers. Increased exports would directly empower female workers and help to reduce rural poverty. Compared to the Jamdani sector, the JDP sector identified fewer obstacles that are highly important. The majority of the factors that were identified as highly important (a mean score of above 3.5) were domestic financial obstacles (high cost of capital, strict credit requirements, high interest rates, inability to self-finance export, high freight cost). Jute as the umbrella sector has a long history of export and so JDP as a sub-sector can draw strength from the experience of Jute sector. JDP has a larger craftsmen network to meet increased demand from export. As mentioned earlier, the sector is way more export ready and it is reflected in the survey by the identification of 18
product quality, inability to meet foreign demand or expectations, raw material quality as least important factors affecting the sector. The only international factor identified as very important by the survey respondents is the lack of promotion from international organizations. In spite of greater export readiness, the sector has not yet fully penetrated the western markets. It is why bilateral and international organizations like TFO-Canada or Global Affairs Canada can provide support in the area of export promotion. Like Jamdani, export promotion support for JDP sector can also create long-lasting, sustainable and socially responsible trade promotion for countries like Bangladesh. All of these high important factors were also identified as very difficult to solve by the survey respondents. Jacques Nadeau, the visiting Canadian Entrepreneur, stated high optimism for the JDP sector. It is reflected in his statement below. I come out of meetings with producers with a high level of optimism as far as the potential for export of jute-made products is concerned. First of all, jute is a grass growing in huge volume in Bangladesh. From an economic structural point of view, it is being processed in so many ways that the potential for export becomes tremendous. Grass can be processed in raw yarns for the making of burlap being largely exported to Europe and North America as well as very fine yarns leading, in combination with cotton to the making of women and men garments. In between, we find the whole spectrum of yarns being processed in different ways for the making, among other things, of fashion products such as bags of all kinds, shoes, etc. Besides, at least one producer keeps developing exclusive yarns such as the wax yarn, unique to Bangladesh, leading to making even more fashionable jute products that we will showcase in Canada as part of the TFO Canada project. Consequently, the presence of many producers offers an enormous potential of export for the country. Most of the producers making handmade products told me they essentially rely on designs of foreign buyers to develop new collections. It can be seen as a strength to rely on foreign buyers to make products suitable to specific markets. However, it could also be a weakness if producers are not capable to develop their own lines of products to differentiate themselves from the competition. In the future, local designers should work closely with producers to develop unique lines of products for export markets. This would alleviate the pressure coming from the Chinese and Indian competition. 19
The experts and stakeholder interviews also identified other obstacles and opportunities for the sector. The experts appreciated the government training support, fiscal incentive for JDP as an agro product, and financial incentives. As JDP export can add more value to jute, product diversification is a priority in the government five year plan. Table 5: Importance of factors affecting the JDP sector Low importance (Mean below 2) Medium importance (Mean from 2.1-3.5) High importance (Mean above 3.5) Language issues (problem Lack of knowledge about High cost of capital to communicate) foreign market opportunities Strict credit requirements Product quality concerns Lack of information about from banks Lack of knowledge about foreign contacts High interest rates buyers expectations Lack of pricing knowledge Inability to self-finance Lack of skills to adapt Lack of HR in export export products for export Lack of export experience High freight costs to Can t meet importers Lack of knowledge about foreign markets product quality standards foreign market and business Lack of export promotion Size prohibits export culture from international Lack of knowledge about Lack of quality raw materials organizations export procedures and Strong competition from practices domestic producers Red tape in public Strong competition from institutions foreign producers Political instability Insufficient foreign demand Lack of government assistance in passing barriers Lack of export promotion program from government High-value of domestic currency Source: Authors analysis following data collection Stakeholders also identified the need for a one stop service center for JDP sector. An integrated service center for jute products may decrease export cost significantly. The sector is ready for export, as production capacity is there. Quality and skill wise, JDP sector is ready for export. The worldwide increase of demand for eco-friendly products will help in the revival of both jute and jute based products. According to these experts, Bangladesh just needs to market the exclusivity, eco-friendliness and social responsibility of JDP in a better way. 3.3 Policy recommendations and strategies for entry into Canadian market Following are some policies and strategies to facilitate entry into the Canadian market. The strategies and recommendations are for entrepreneurs, weavers, Bangladeshi domestic institutions and international buyers. 20