International Business Report: Bangladesh Textile Industry

1. Objective of the report The objective of this report is to provide about how to expand our textile manufacturing business outside the borders of Pakistan. For that purpose our company namely New Look (Pvt.) Ltd is planning to make FDI in Bangladesh to utilize the opportunities. Currently Pakistan is passing through economic downturn. Energy crisis is the biggest problem faced to the economy. Large scale manufacturing sector has been seriously affected by electricity and gas load shedding. The increasing prices and high cost of conducting business have enforced the company to seek the investment opportunity that will be in the best interest of the company. Bangladesh has been selected for that purpose. This report considers the Bangladesh economy, its culture, its textile industry and incentives and facilities provided to foreign investors. It also explains the setting up process of our firm in Bangladesh and its business plan. 2. Company Mission and Vision The New Look Textile (Pvt.) Ltd. was founded in March 1986 in Pakistan with a vision to be a provider of innovative textile solutions worldwide. We are a manufacturer and supplier of distinguished fabric for apparel, home and industrial markets with clients all over the world. Our ability to create forward-thinking solutions that give our clients a competitive advantage is what sets up apart. Our core services include fiber manufacturing, Spinning, Weaving, Knitting, Dyeing and printing of woven and knitted fabrics, Designing, Cutting and Stitching. Now the company is going to establish its subsidiary in Bangladesh. At the initial phase fabric units will be installed to produce various fabrics.

3. Country information: Bangladesh

3.1. Country overview Bangladesh is a country in South Asia. It is bordered by India on all sides except for a small border with Burma (Myanmar) to the far southeast and by the Bay of Bengal to the south. The name Bangladesh means "Country of Bengal" in the official Bengal language. The borders of present-day Bangladesh were established with the partition of Bengal and India in 1947, when the region became the eastern wing of the newly formed Pakistan. Political and linguistic discrimination as well as economic neglect led to popular agitations against West Pakistan, which led to the war for independence in 1971 and the establishment of Bangladesh. After independence the new state endured famines, natural disasters and widespread poverty, as well as political turmoil and military coups. The restoration of democracy in 1991 has been followed by relative calm and economic progress. Bangladesh is the seventh most populous country and is among the most densely populated countries in the world with a high poverty rate. However, per-capita (inflation-adjusted) GDP has more than doubled since 1975, and the poverty rate has fallen by 20% since the early 1990s. The country is listed among the "Next Eleven" economies. 3.2. Geography & Climate Official Name The People's Republic of Bangladesh In Short: Bangladesh Acronym: BD or BGD North - India (West Bengal & Meghalaya)

International Boundaries

West - India (West Bengal) East - India (Tripura & Assam) and Myanmar South -The Bay of Bengal 147,570 square km. Dhaka (Metropolitan Area 522 sq km.) GMT + 6 hours Winter : November - February Temperature : Average maximum 290C Average minimum 110C Summer : March - June Temperature : Average maximum 320C Average minimum 210C Monsoon : July - October 80% of rainfall occurs during monsoon 3.3. Demographics Population Male-Female Ratio Religions 162,221,000 (2009 est.) 105.4 Muslim : 88.3% Hindu : 10.5% Buddhist: 0.6% Christian: 0.3% Animists and believers in tribal faiths : 0.3% -A substantial trained and skilled human resource with a lot of potentials. -Professionals include engineers, technicians, physicians, economists, accountants, administrative and managerial personnel

Area Capital City Standard Time Climate Variations

Human Resources

Labor Force

-Low-cost, easily trainable and adaptable, hard working, intelligent and youthful labor force. Total Labor Force : 44.30 million Male : 34.50 million Female : 9.80 million

3.4. Air, Sea and River Ports International Airports Domestic Airports Sea Ports Inland River Ports Zia International Airport, Dhaka, Shah Amanat International Airport, Chittagong Dhaka, Chittagong, Sylhet, Syedpur, Coxs Bazar, Rajshahi, Jessore and Barisal. Chittagong and Mongla. Dhaka, Chandpur, Barisal, Khulna, Narayanganj, Sirajganj etc. 3.5. Governance and Policies Bangladesh is a democratic country where people live from different religions and faiths in harmony. It is a constitutional republic with a multi-party parliamentary democracy. Regular free and fair parliamentary election is held under a neutral and non-partisan caretaker government system. The President is the head of the state elected by the members of the parliament for a five year term while executive power is exercised by the cabinet headed by the Prime Minister. The President appoints the Prime Minister, and on the recommendation of the Prime Minister, other Ministers. Bangladesh has a four tier local government system. Following table presents administrative units at different levels. Administrative Units Number 6 Divisions 64 Districts 482 Sub-districts 4500 Unions 4. Economy and Business 4.1. Economic Performance Bangladesh is in the process of transition from a predominantly agrarian economy to an industrial and service economy and here private sector is playing an increasingly active role in the economic life of the country, while the public sector concentrates more on the physical and

social infrastructure. Notably, state-owned enterprises have been undergoing to rapid privatization. In line with the development priorities, the Government has been providing necessary incentives and assistant to selected sectors of the economy. Government has been pursuing an export led economic development strategy to stimulate export earnings. Promotional campaign and industry assistance are being given under Export Diversification Program. Three more EPZs have also been established in Dhaka, Comilla and Chittagong. In South Asia, Bangladesh offers the most liberal FDI regime with no prior approval requirements or limits on equity participation and repatriation of profits and income. Macro economic highlights are

A steady average annual GDP growth of 5% over the last decade. Inflation has been kept in low single-digit. Exports have been gradually shifted from traditional goods to more profitable items. Emphasis has been put on manufacturing sector.

4.2. Economic Indicators GDP GDP growth GDP per capita Inflation(CPI) Population below poverty line Labor force by occupation Main industries $228.4 billion (2008 est.) 6.5% (2008 est.) $ 1500 (2008 est.) 5.4% (2008 est.) 36% (2009 est.) Agriculture (45%), industry (30%), services (25%) (2008 est.) Jute manufacturing, cotton textiles, garments, tea processing, paper newsprint, sugar, light engineering, chemical, cement, fertilizer, food processing $18.36 billion (2009-2010) garments, textiles, jute and jute goods, leather, produce, frozen fish and seafood US 31.8%, Germany 10.9%, UK 7.9%, France 5.2%, Netherlands 5.2%, Kuwait 4.9%, Japan 4.5% Italy 4.42% (2000) $20.205 billion (2008) machinery and equipment, chemicals, iron and steel, raw cotton, food, crude oil and petroleum products, China 11.4%, India 9.1%, Singapore 8.5%, Hong Kong 7.1%, Japan 6.5%,(2008)

Exports Export goods Main export partners

Imports Import goods Main import partners

5. Bangladeshi Culture & Business Etiquettes 5.1. Bangladeshi Culture

a) Languages The official language is Bangla, also known as Bengali. It is the first language of more than 98 percent of the population. Many people in Bangladesh also speak English and Urdu. b) Hierarchical society Bangladesh is a hierarchical society. People are respected because of their age and position. Older people are naturally viewed as wise and are granted respect and asked to make decisions that are in the best interest of the group. c) Religion The majority of Bangladeshis (about 90%) are Muslims, and a small number of Hindus, Christians and Buddhists are also in the country. People of different religions perform their religious rituals with festivity in Bangladesh. d) Festivals Islam defines many of the festivals in Bangaldesh. These include two Eids (one after Ramadan and one after the Hajj) Shab-e-Qadr (the night of power), Milad un-Nabi (birth date of the Prophet Muhammad) and Shab-e-Barat (the night of the fortune). Hindu influences festivals include Durga Puja and Kali Puja (community worshipping of Goddess Durga and Kali).
e) Cuisine

Bengali cuisine is rich and varied with the use of many specialized spices and flavors. Boiled rice constitutes the staple food, and is served with a variety of vegetables, fish and meat preparations of beef, mutton and chicken.
f) Dress

Bangladeshi people have unique dress preferences. Bangladeshi men wear panjabi (Kurta) on religious and cultural occasions, lungi as casual wear and shirt-pant on formal occasions. Sari is the main dress of Bangladeshi women. g) Customs and Etiquette in Bangladesh Meetings & Greeting Greetings usually take place between members of the same sex. The hand shake is common although they may feel rather limp. The traditional greeting for Muslims is Asalamu alaikum to which the response is wa alaikum salam.

 In general, age dictates how people are addressed. If people are of the same age, they use first names. If the person being addressed is older than the speaker, the person is called by their first name and a suffix that denotes respect and the level of closeness between the two people. h) Gift Giving Etiquettes When visiting a Bangladeshi's home, it is more common to bring pastries, sweets or good quality chocolates. If bringing flowers avoid frangipanis as they are used at funerals. Similarly white flowers indicate mourning. Do not give alcohol or products containing non-halal meat to Muslims. It is considered bad form to open gifts in front of the giver. i) Dining Etiquettes If invited to a meal it is rude to flatly turn the invitation down. One should always use less direct language to suggest that it may be difficult such as "I will try." or "I will have to see". Guests are generally served first. Do not start eating until the oldest person at the table begins. You will constantly be urged to take more food. Simply saying "I'm full" will be taken as a polite gesture. The left hand is considered unclean so only eat, pass dishes or drink with the right hand. 5.2. Business Etiquettes a) Communication Styles Bangladeshis are quite implicit/indirect communicators. They tend to communicate in long, rich and contextualized sentences which only make sense when properly understood in relation to body language. Personal space is less of an issue in Bangladesh than many European cultures. Bengalis stand close when speaking to someone of the same gender and touch is common. However, when speaking with a woman the space is often increased. b) Business Meetings & Greeting Business etiquette in Bangladesh is reasonably formal. Proper behavior is expected. Men greet each other with a handshake upon arriving and leaving. Handshakes tend to be on the light/limp side. Men should nod to a Bangladeshi woman unless she extends her hand.

 Businessmen should be addressed by the term "Bahadur" ("Sir"), while women may be addressed as "Begum" ("Madam"). This may be used with or without the surname. Meetings in Bangladesh are usually led by the most senior present who sets the agenda, the content, and the pace of the activities. Completing a meeting fully takes priority over time and may extend well past any scheduled end time. Meetings may commence with some small talk. c) Business Card Etiquettes Business cards are exchanged after the initial introduction. Educational qualifications are valued so include any university degrees. Present your business card with the right hand. 5.3. Comparison of Bangladesh and Pakistan cultures Basis Language Bangladesh Bangla (official, also known as Bengali), English and urdu are also spoken Pakistan Punjabi 48%, Sindhi 12%, Siraiki10%, Pashtu 8%, Urdu (official) 8%, Balochi 3%, English (official) and other 11% Muslim 83%, Hindu 16%, Muslim 95%, other (includes other 1% Christian and Hindu) 5% Men: Pant-shirt, Men: Pant-shirt, shalwar Panjabi(Kurta), Lungi (casual kameez, Lungi (casual wear) wear) Women: Sari is the Women: Salwar kameez main dress of Bangladeshi women. Boiled rice constitutes the Wheat bread, rice, vegetables, staple food, and is served with beef, mutton and chicken a variety of vegetables, fish and meat preparations of beef, mutton and chicken. Old family persons are highly Old family persons are highly respected and considered to respected and considered to make decisions. make decisions.

Religion Dress

Cuisine

Hierarchical society

6. Investment opportunities 6.1. Why invest in Bangladesh?

Bangladesh enjoys broad popular support for market economy reforms and offers the most investment-friendly regulatory regime in South Asia. The people of Bangladesh irrespective of race and religion have been living in complete harmony and understanding for centuries. Bangladesh owns a trainable, enthusiastic, hard working and low-cost (even by regional standards) work force suitable for any labor-intensive industry. Even though Bangladeshs per capita GDP is low, the present domestic consumption is significant. However, there is a growing middle class with significant purchasing power. In a country of 145 million people, a middle class may constitute a significant market and even though Bangladesh has large poor population, its growing middle income group constitutes about 50 million with adequate money to spend. Bangladeshi products enjoy complete duty and quota free access to EU, Japan, Canada, Australia, Norway and most of the developed countries. However, for apparel export to USA and Canada, Bangladeshs trade volume is increasing. The recent years have witnessed tremendous interests of foreign investors to invest in different sectors in Bangladesh. In FY 2005-06, major foreign investors include Dhabi Group of United Arab Emirates, Singtel of Singapore, Orascom of Egypt, YKK of Japan and Microsoft of USA. Besides, a number of large investment proposals worth about US$ 10.5 billion are at negotiation and / or approval stages. These include investment proposals from Tata Group of India, Toray of Japan, Indorama Group of Thailand, Luxon Global of South Korea, Delta Pacific Mining of United Kingdom, Dawood Group of Pakistan, Kingdom Group of Saudi Arabia and other proposals from China, Malaysia, India, Taiwan, UK, USA, Australia, Singapore, Thailand, Saudi Arabia, UAE and Kuwait. The govt has taken proper measures to make the industrial growth trend sustainable. 6.2. Facilities and incentives

Tax holiday from 5 to 10 years depending on location of industries. 15 years tax holiday for private power generation companies. Exemption of tax on interest on foreign loan. Tax exemptions on royalties, technical know-how & technical assistance fees. Avoidance of double taxation on the basis of bilateral agreements. Six months Multiple Entry Visa for the Investors. Taka, the nations currency, is convertible for international payments in the current account. Re-investment of repatriable dividend treated as new investments. Working capital loan as well as term loan from local commercial banks allowed to the industries set up with foreign capital. Citizenship by investing a minimum of US$ 500,000 or by transferring US$ 1,000,000 to any recognized financial institution (repatriable). Permanent residence by investing a minimum of US$ 75,000 (repatriable) 100% Foreign Equity allowed. Unrestricted Exit Policy. Investment in Bangladesh is well protected by law and by practice. Major laws related to private investment-both foreign and local-are: o The Foreign Private Investment (Promotion and Protection) Act of 1980 o The Bangladesh Export Processing Zones Authority Act of 1980

The Investment Board Act of 1989 The Companies Act 1994 The Bangladesh Private Export Processing Zones Authority Act of 1996 The Industrial Policy 2005 The Import Policy Order 2003-2006 Bangladesh Export Policy 2003-2006 Private Sector Infrastructure Guideline 2004 In addition, Bangladesh is a signatory to Multilateral Investment Guarantee Agency (MIGA), Overseas Private Investment Corporation (OPIC) of USA, International Center for Settlement of Investment Disputes (ICSID) and a member of World Intellectual Property Organization (WIPO) permanent committee on development cooperation related to industrial property. Bangladesh ensures adequate protection for intellectual property rights, such as patents, designs & trademarks and copyright. Separate bilateral agreements for avoidance of Double Taxation, Treaties (DTTs) were also signed with 23 countries including Pakistan. Negotiations on DTTs are also progressing with the other 21 countries

o o o o o o o

Following sub-sections present a overview of each incentive scheme in a nutshell. Exact information on these incentives may be collected from respective agencies.

6.3. Natural Resources and other facilities

Bangladesh, the largest deltaic zone of the world is richly endowed with natural resources like vast easily trainable, low cost manpower, abundant supply of Gas, Coal, Stones, huge water bodies etc. Strategic geographical locations as the gateway to South East Asia (Asian Highway). Easy and preferential access to a market of about 1.45 Billion people of South Asia under South Asian Free Trade Area (SAFTA) from 2006. Duty free/ quota free access to all export items of LDCs like Bangladesh under Everything but Arms (EBA) initiative of E.U. Preferential market in EU, USA, Japan, Canada, Australia, ROK, Thailand, China etc. Bangladesh has eight Export Processing Zones (EPS) and further are in plan. The export processing zones are located in Dhaka, Chittagong, Uttara, Adamjee, Comilla, Ishwardi, Karnaphuli, Mongla. Bangladesh offers adequate banking facilities to the investors for establishment of industries and to facilitate their business transactions. 14 private and 13 foreign commercial banks, 10 financing institutions and 3 nationalized commercial banks having network of correspondent and branches operation all over the country and abroad.

Potential areas for investment

Textiles and Clothing Leather and Leather Products Industry Electronics Industry Light Engineering including Automobile Industries Agro-based and agro Processing Industries Pharmaceuticals Hotel and Tourism Industries Energy sector Telecommunication

7. Textile our investment sector Our purpose of investment is to install textile plants in Bangladesh. Initially weaving units will be installed to produce different types of fabrics that will be sold in domestic market and exported to other countries. Later on business will be expanded through backward and forward integration. Reasons: Due to favorable investment opportunities and incentives and greater market access provided in Bangladesh the company has decided to avail the opportunity and expand its business. Other reason that enforced the company to take that step is the worsening business condition in the home country Pakistan. Energy crisis, high inflation and increasing costs of conducting business in Pakistan are affecting company profits. 7.1. Bangladesh Textile industry Highlights: The fastest growing industry in Bangladesh with RMG accounting for more than 75% of total exports. The Ready Made Garments industry experienced an export boom in the 1990s because of the excellent negotiation with the U.S in 1984-85. Bangladesh is best placed in the region for textiles and garments because of low cost labor, preferential trade status and advantageous global market access especially with EU. Government incentives for the spinning and weaving industries include a 15% cash subsidy of the fabric cost to exporters sourcing fabrics locally. There is a huge fabric demand supply gap in the RMG industry which is being me by imports. Thus the potential for backward linkage industry is enormous. 7.2. Bangladesh Textile Industry Outlook The phenomenal growth in RMG was experienced in the last decade. In 1984-85, no of Garment factories was 800 RMG jointly with knitwear accounted for more than 70% of total investments

in the manufacturing sector during the first half of the 1990s. At present with about 4000 factories and a workforce of two million, 80% of which are women, employing over 50% of the industrial workforce and having 75% of the total exports earning of the country. Multi-Fibre Agreement (MFA) and Generalized System of Preferences (GSP) of the EU are the main actors behind acquainting Bangladesh RMG products to global market ensuring assured market access. Bangladesh is now a significant RMG supplier to North America and Europe. Due to phasing out of MFA, many are doubtful about Bangladeshs ability to maintain the fast growth of the recent years in this sector but Bangladesh has taken a better position in the U.S.A market through competition. However, on a more positive note, Bangladesh is expected to maintain its tariff-free access to EU under the European GSP, since the GSP is not covered by the Uruguay Round Agreement. Recently, Canada has also provided tariff-free access of all the items from Bangladesh. Meantime, Bangladesh RMG industry has earned strong competitiveness as a global standard RMG source. Marketing network has been spread over the economies of the continents. End users could well recognize and differentiate the products confidently. Till today, Bangladesh RMG industry largely depends on the imported yarns and fabrics. Bangladesh produces only 10% of export-quality cloth used by the garments industry. The need for establishment of backward-linkage industry has become an immediate concern to the government and the exporters. There are enormous opportunities in setting up composite textiles industry combining textile, yarn and garments. 7.3. Investment Opportunities in Bangladesh textile RMG and textile sectors have enormous investment opportunities. Government provides highly favorable policy framework for investment in these sectors. Investors have the following choices:

Establishment of new textile / RMG mill in the private sector. Joint ventures with the existing textile / RMG mill. Acquisition of public sector textile mills that are being privatized. Indirect investment through financial services and / or leasing.

8. SWOT Analysis of Bangladesh Textile and RMG industry Strengths Adequate supply of labor force of both sexes, attributed with less attitudes problem (less absenteeism and, aptitude for learning, and loyal) and high morale Cheaper labor cost Low cost of captive power generation using gas as fuel GSP facility up to 2015 Easily accessible infrastructure like sea road, railroad, river and air communication FDI is legally permitted and incentives are provided to them. Moderately open Economy, particularly in the Export Promotion Zones Looking forward to Duty Free Excess to US, talks are on, and appear to be on hopeful track Investment assured under Foreign Private Investment (Promotion and Protection) Act, 1980 which secures all foreign investments in Bangladesh

 Low Bank interest for financing exports Growth prospects of textile industry on the basis of increasing demand. Weaknesses Bangladesh produce mostly basic products- which are low cost items; the share of fashion products i.e., high value added product is very low. Bangladesh does not produce the basic raw materials (only a negligible quantity of cotton but no manufactured fiber) and as such has to depend totally on sensitive global market. Because of inadequate backward linkage, lead-time happens to be long, nearly 3 months. Public power supply is erratic. Bank interest rate is still high enough, particularly of private sector bank, for investment of export oriented high value project. HRD facility, productivity and quality support, testing and accreditation support, design support and compliances are yet to be enhanced. Cost of doing business is high because of under table money Lack of marketing tactics Absence of easily on-hand middle management A small number of manufacturing methods Lack of training organizations for industrial workers, supervisors and managers. Fewer process units for textiles and garments Sluggish backward or forward blending procedure Incompetent ports, entry/exit complicated and loading/unloading takes much time Opportunities Bangladesh has now a scope to go for more fashion oriented products deserving high price in the global market. With the help of further increase of productivity & quality and design support, Bangladesh can minimize cost and maximize profit and export value.

 Bangladesh, as a proven experienced RMG & Textile manufacturer, can expand share in the existing market (USA, EU, Australia, Canada, etc.) and can also explore opportunity in Japan & CIS countries. In the long run, Bangladesh has a scope to target huge populated country like China and Indiawhere demand as well as cost of manufacturing will be wider. EU is willing to establish industry in a big way as an option to china particularly for knits, including sweaters If skilled technicians are available to instruct, prearranged garment is an option because labor and energy cost are inexpensive. Threats Unless new strong market is explored in home or abroad, any non-cooperation from USA & EU may jeopardize the whole Bangladesh RMG export business and consequently the textile manufacturing. Sudden price hike of cotton and yarn in the global market may push Bangladesh to a very awkward situation to devastate the business. The type of labor and political anarchies of the recent days if prevails in the future, Bangladesh may lose the business in the way Sri Lanka has lost. 9. Business Plan 9.1. Setting up business We are going to setup a fully owned textile private company in Bangladesh. Implementing a private sector industrial project in Bangladesh either local, joint venture or 100% foreign follows a rather simplified process. The entire process could be divided into 5 (five) major steps as presented the following diagram. BOI supports are available in Step 1 through 4.

9.1.1. Selecting a Business structure To know the appropriate procedures for doing business in Bangladesh, it is important to select the type of business operation. These could either be: Operating as a Branch/Liaison Representative Office or Buying House or Establishing Industrial Projects We will establish an industrial firm in Bangladesh.

9.1.2. Type of Company Business in Bangladesh may be carried on by a company formed and incorporated locally or by a company incorporated abroad but registered in Bangladesh. The incorporation or registration is done by the Registrar of Joint Stock Companies and Firms (RJSC&F) under the provisions of the Companies Act 1994. Companies could be classified in following categories: 1. Limited Companies: a. Company Limited by Shares i. Public Limited Company and ii. Private Limited Company b. Company Limited by Guarantees. 2. Unlimited Companies Unlimited companies and companies limited by guarantees may or may not have share capital. Our company will be registered as private limited company. 9.1.3. Incorporation Options for Foreign Investor Incorporation options to a foreign investor include: a. Setting up a 100% foreign-owned company in Bangladesh; b. Setting up a Joint Venture with Bangladeshi company / investor;

c. Establishing the Companys Place of Business in Bangladesh; d. Setting up a branch or a subsidiary of a foreign company in Bangladesh; e. Setting up a Bangladeshi Company or participate in a Bangladeshi Company already formed. Our objective is to establish 100% foreign-owned company in Bangladesh. 9.1.4. Company Formation Procedure To register a company with the Registrar of Joint Stock Companies and Firms (RJSCF), promoters have to undertake activities in following steps: Step 1: Selection of the Company Name. The name should not be identical with or closely resemble to the name of an existing company. Step 2: Memorandum of Association (MOA). MOA states the name of the company, whether it is public limited or private limited and the location of the registered office at the company. The MOA should clearly spell out the main objectives, the authorized capital, the division of this capital into shares of fixed amount and liability of its members. Step 3: Articles of Association (AOA). The AOA are the regulations governing the internal management of the affairs of the company and the conduct of its business. These articles are subordinate to and controlled by MOA. Step 4: Registration Application. Prescribed Application Form for registration has to be filled in, signed and submitted to the Registrar of the Joint Stock Companies and Firms. 9.1.5. Establishing Place of Business In establishing a place of business of a foreign company, the company has to be registered with the Registrar of Joint Stock Companies as the place of business. Such registration is required in respect of capital issue and obtaining clearance from the central bank i.e. Bangladesh Bank. We will establish our operation units in EPZ Chittagong. 9.1.6. Direct investment Direct investment would be made in order to establish a private limited textile firm. This mood of internationalization process is necessary in order to get benefits of low cost of production. Initially plants to produce finish fabrics will be installed and in later years investment in different textile units will be made. 9.2. Production strategy The firm will have three textile units.

Weaving unit Knitting unit Dyeing and printing of woven and knitted fabrics

These three plants will be used to produce finish cotton and knitted fabrics. Raw material will be purchased locally or imported depending on the production need. 9.3. Products Our products would be

Cotton fabrics Knitted fabrics.

9.4. Marketing Strategy In order to ensure high profits focus will be made on different market segments. Product differentiation strategy will be adopted. Focus will be made on the quality and variety of fabrics. The pricing of the products will be competitive set by considering the following objectives.

Maximization of profit To achieve the target return and targeted sales. To increase the market share.

Price of the products will be set by accounting for fixed and variable costs and profit margin. Pricing method for the export products will differ from the local pricing method. In the export, all the expenditure related to the export such as the custom clearance charges, port clearance charges, shipping line freight and other foreign agent commission will be added. Also the charges related to the transportation and bank handling expenditure will also be considered while calculating the price of the export items. Cotton fabrics will be sold in domestic market and to RMG manufacturers. Similarly knitted fabrics will also be sold to ready made garments (RMG) manufacturer. The fabrics will also be exported to EU and other countries to get the trade benefits. Products would be sold through direct contacts, wholesalers and local and foreign agents. In order to promote the goods Promotional tools will be used. The major tools of promotion would be

Advertisements in fashion and business magazines Textile exhibitions Internet website Incentives to customers and local and foreign sale agents

9.5. HR Strategy

The labor cost and management fringe benefits are lower in Bangladesh. The top level management will be from Pakistan whereas middle managers and operational staff will be from Bangladesh because of cheap availability of labor. 9.6. Financial strategy The balance of equity and debt financing will be used to finance the firm financial needs. Initially equity financing will be used to establish the firm setup in Bangladesh. Long term borrowings will be made for additional capital expenditure when required whereas short tern borrowings will be used for working capital requirement. Profits will mainly used in expansion of the business in Bangladesh and will be repatriated for business requirement as well. 9.7. Future Plans Future plan is to make further investment in textile sector in Bangladesh to achieve backward and forward integration. Backward integration will be in spinning and fiber manufacturing businesses. Whereas forward integration will be in the business of apparels i.e. ready made garments (RMG). In Bangladesh RMG sector is growing and this segment would be the next target of investment.

References:

http://www.epzbangladesh.org.bd http://www.boi.gov.bd/images/stories/PDFs/boihandbook2007.pdf http://www.cottonbangladesh.com/January2007/TextileIndustryBoom.htm http://www.manufacturebd.com/images/state_of_cotton_and_textile_industry_in_banglad esh.pdf http://en.wikipedia.org/wiki/Economy_of_Bangladesh http://en.wikipedia.org/wiki/Bangladesh http://www.kwintessential.co.uk/resources/global-etiquette/bangladesh.html www.lexmundi.com/images/lexmundi/PDF/guide_bangla.pdf http://ezinearticles.com/?Overview-of-Bangladesh-Garment-Industry&id=367773 http://bdembassybangkok.org/investingbd.htm