RSS Feed (xml)
added products, including footwear and leather bags and purses, amid
a demand decline in finished leather on global market because of the
ongoing recession. Industry people said major exporters are
concentrating on developing their own expertise to manufacture high
quality footwear that caters to the needs of the globally renowned
brands. These brands outsource from Bangladesh. The exporters say
this new development will help overcome the global crisis fallout to
some extent. Data from Export Promotion Bureau, the state- run agency,
shows over 10 percent rise in footwear exports in the immediate past
fiscal year, while the rise is more than 90 percent in the case of
leather bags and purses. The data point to the significant drop in
finished leather exports in FY 2008-09. Leather footwear exports rose
to $ 186.93 million from $ 169.60 million a year earlier, while
$16.89 million was earned from leather bag and purse exports in FY
2008-09 against $8. 87 million earnings in FY 2007-08. Industry
insiders see the declining global demand for fashionable and costly
leather items as an opportunity for the country to make footwear that
is ordinary but essential. In the last six months, around 40 percent
of the 120 companies opted for making value added leather products.
The number of such exporting companies was 80 just a year ago. Tipu
Sultan, chief executive officer (CEO) of Bengal Leather Complex Ltd,
said the demand decline has prompted local exporters to go for
manufacturing value added items. "The slump in consumption of finished
leather globally has led to the growth in exports of these value
added products," he pointed out. "We produce high quality finished and
crushed leather, which is used in producing footwear, bags and
purses," said Sultan, also former chairman of Bangladesh Finished
Leather, Leather Goods and Footwear Exporters Association.
"Simultaneously, we have offered competitive prices, which has
increased demand for our products in the global market," he
elaborated. The cost of production of quality leather shoes is lower
in Bangladesh than in China and India, and this is the main reason for
getting more orders from European countries, according to industry
people. China, India and Vietnam were the largest leather shoe
exporters in the world, but in recent years these countries are
failing to make and sell quality low-cost leather shoes due to WTO
anti-dumping rules. Sultan said now Bangladesh is getting more orders
from Germany, Italy, France, Japan and Canada. Earlier, these
countries used to go to India and China to meet their demand for
shoes. "Another big reason behind this growth is the technology we
have adopted now is from Italy, which creates trust about the quality
of our products among buyers," he added. The country started
exporting leather footwear in 1994 on a small scale to neighboring
countries, including India and Nepal. Currently, the market size of
locally made leather footwear stands at around Tk 1 ,700 crore, of
which at least 45 percent is exported. The country exports around
six million pairs of leather footwear a year. Bangladesh mainly
exports men's footwear, ladies sandals and shoes and sport shoes to
European countries, China, Canada, Saudi Arabia, Dubai, Iraq, Jordan,
India and Nepal. Along with the branded shoes, the country also
exports non-branded shoes. Apart from footwear, the country has
witnessed a huge growth in export of leather bags and purses. At
present, the annual market size for leather bags and purses stands
around Tk 100 crore. Reza Ashikur Rahman, managing director of
Rahman Leather Bangladesh, said his company went for manufacturing
value added products from November last. The company that was
earlier engaged in leather processing and exporting has now shifted
to produce leather bags and purses. "We already have started
exporting to Nepal on a very small scale from March, and have
received two orders from Japan and the Maldives," he said. Meanwhile,
exports of luxury leather items, such as photo frame, gift boxes,
puffee, jewellery boxes, footstool and floor cover have declined a
lot, which forces the entrepreneurs to find alternative ways for
survival. Tushar Kona Khandker, CEO of Colonial, an export oriented
company that manufactures leather home appliances, has recently
opened its showroom in Dhaka to reach out to domestic consumers.
Colonial produces a wide range of luxury items like wall mirror,
photo frame, gift boxes, puffee, jewellery boxes, footstool and floor
cover. These items are mainly exported to the USA, Canada and the
European Union. "Our company exports reduced to $.2 million from $1
million last fiscal, due to the financial meltdown worldwide,"
Khandker said. Rezaul Karim Ansari, the incumbent chairman of the
sectoral trade body, has sought government' s special incentives to
safeguard the leather industry. "Leather exporters have lost almost
half of their running capital in the face of global recession. So the
government should pay special attention to safeguard the industry,"
he suggested. Ansari also demanded 25 percent cash incentive for
finished and crushed leather exports. Earlier, the government
announced Tk 3 ,424 crore stimulus package in April to cushion the
blow of the global financial meltdown, where value added leather
products have received cash incentives to fight the recession fallout.
The stimulus raised such incentives to 17.5 percent from the
existing 15 percent. However the industry is faced with a dearth of
skilled people and quality designs, according to the industry
insiders. Sultan said the government should take initiatives to
develop expertise and train people in the sector that would help the
survival of the age-old industry.
