[🇧🇩] Footwear, Rubber and leather Industry in Bangladesh

[Bilal9]

Date of Event: Dec 26, 2024

Source : https://www.tbsnews.net/economy/industry/craftsman-footwear-targets-100m-exports-next-5-years-746322 Short Summary: This thread will discuss Footwear and backward linkage related industry in Bangladesh

Craftsman Footwear targets $100m exports in next 5 years​

Craftsman Footwear and Accessories Ltd, an export-oriented shoe manufacturer, has set a target to export shoes worth $100 million by the next five years.

To achieve the goal, the company plans to introduce a double shift at its factory in Gazipur by next year. Currently, it operates three production lines, with the manufacturing of 4,500 pairs of shoes in a single shift daily.

"We want to export $100 million worth of shoes by the next five years," Craftsman's Managing Director Sadat Hossain Salim told The Business Standard.

The company has shipped $7 million worth of shoes in fiscal 2021-22, and has set an export target of around $10 million in the current fiscal year.

Salim added, "Initially, we want to introduce a double shift by the next year to increase the capacity. In addition, we have an expansion plan to build a green building to achieve our goals."

He further said that Craftsman intends to enter the capital market in the SME platform by raising Tk50 million from the public.

"We want to realise the fund from the market through offloading five million shares of Tk10, which will be spent on the company's modernisation, expansion, and bank loan repayment."

The company aims to raise the export volume sufficiently in the next two to three years. For this, it intends to construct new production buildings and separate warehouses.

"We owe a sizable sum to the bank as well. Furthermore, interest rates have lately increased at banks as well. Thus, we wish to arrange capital from the stock market," said Salim.

He mentioned that an application has already been submitted to the Bangladesh Securities and Exchange Commission (BSEC) for enrollment of Craftsman in the SME board, and Green Delta Capital Ltd is acting as the issue manager to bring the company to the capital market.

The journey of Craftsman

In 2017, the Craftsman started operation as a shoe manufacturer for the export market with 35 employees at a small factory unit in Joina Bazar of Sreepur Upazila in Gazipur.

Now, the company has a state-of-the-art manufacturing facility with a 1,00,000-square-foot factory with over 750 manpower.

Sadat Hossain Salim has been inspired to invest in the footwear industry from his professional experiences. Previously he served at several domestic and international companies, including Apex, Partex Group, HRC Group, Duncan Brothers.

Salim mentioned that skilled designers at the Craftsman factory produce a diverse range of shoes that adhere to global standards. The production unit has cutting-edge machinery from Italy and Germany, along with some technological support brought from China.

Shoes such as pami, formal, casual, oxford, moccasin, derby, and high heels are among the productions of the company.

Craftsman Footwear has already received two ISO certifications for product quality and factory environment. It also has C-TPAT and Amfori certifications, said the managing director.

He added that the company imports leather from some compliant tanneries in Asia to maintain compliance in shoe manufacturing.

However, some leathers are sourced by Craftsman from the Chattogram-based tannery Reef Leather, which has the worldwide Leather Working Group (LWG) certification.

"Though our nation is a significant supplier of raw hides, we are losing to China, Pakistan, and India in the competitive market because we do not have LWG-certified leather producers," said Salim.

Craftsman caters to local market too

Craftsman Shoes has already introduced its brand name in the local market and ensured its presence in the online space as well.

Shoes for local sales are produced at a separate unit of the company.

"We have a plan to set up a physical store for local customers," said Salim.

Around 80% of the shoes available in the country are made of synthetic or artificial leather, he said, mentioning, "There is a huge potential for manufacturing of leather shoes and products in the country."

 

[Bilal9]

Shoe City set to reshape Bangladesh's footwear industry​

Despite its potential, Bangladesh's leather product exports, including footwear, have stagnated at around $1 billion for nearly two decades, while Vietnam's footwear exports have skyrocketed from less than $1 billion to an impressive $25 billion. This stark contrast highlights the challenges hindering Bangladesh's leather industry from achieving its full potential.

A significant factor contributing to Bangladesh's export stagnation is its overreliance on imported materials for footwear production. This dependence has rendered the industry vulnerable to supply chain disruptions and exchange rate fluctuations, as industry insiders have pointed out.

In a bold move set to revolutionise the footwear industry, Bangladesh Shoe City Ltd (BSCL) emerges as a beacon of innovation and progress. This groundbreaking initiative, spearheaded by the visionary Jennys Group, consolidates the manufacturing of approximately 50 critical components for shoe production within a single, state-of-the-art facility.

Strategically positioned on a sprawling 35-acre plot in Mouchak union of Gazipur, BSCL stands poised to transform Bangladesh's position as a global footwear manufacturing hub.

With four factories, including one from Canada, already in operation, BSCL's momentum is undeniable. The project's allure has attracted the attention of 15 additional investors from diverse nations, including Japan and China, who are eager to join the venture.

Nasir Khan, chairman of BSCL, a subsidiary of the Jennys Group, reiterated the organisation's unwavering commitment to achieving 100% value addition within its state-of-the-art facility.

Acknowledging the setbacks caused by the pandemic and the ongoing Russia-Ukraine conflict, Khan emphasised the importance of self-sufficiency in the footwear industry.

Highlighting the challenges posed by an overreliance on imported materials, he said buyers often express concerns about the stability of supply chains heavily dependent on imports, underscoring the need for a more resilient and integrated approach.

To address these concerns and establish a robust footwear manufacturing ecosystem, BSCL has undertaken a comprehensive project to establish end-to-end infrastructure within its facility. This holistic approach encompasses the production of both raw materials and finished products, all conveniently located within a single, strategically positioned complex, he added.

Sonjoy Saha, project director of BSCL, envisions the company as a one-stop shop for footwear manufacturing, with an estimated cost of Tk800 crore. Anticipating the commencement of production by all companies by 2030, the project aims to generate around 25,000 new jobs upon completion.

Saha said currently, necessary equipment for shoe production is being imported from various countries, including China and India. Typically, around 50 items are required for shoe manufacturing, and importing these items can be a time-consuming process.

In an effort to streamline the process, Saha said foreign buyers often open Letters of Credit (LCs) for 40 to 50 days. Ordering products from China and awaiting their arrival takes time, leading production units in the region to meet the demand of local factories.

"Our initiative is expected to enhance efficiency, allowing production units in the area to fulfil the demand of both local and international markets. The goal is to have 28 establishments producing a variety of products," Saha said.

Saha emphasises that BSCL will not lease land but will provide leased buildings, with terms ranging from five to 15 years, tailored to the investor's needs. The aim is to facilitate an easy setup for production, where companies can focus on manufacturing products with the provided infrastructure.

Shoe City has a comprehensive plan for the diverse range of footwear and accessories that will be manufactured within its facility. These include leather shoes, sports shoes, jute or espadrilles shoes, safety shoes, children's shoes, ladies' fashion shoes, canvas shoes, school shoes, rubber shoes, Goodyear welted shoes, gags, wallets, and belts.

Shoe City will also foster the development of ancillary industries dedicated to producing essential footwear components, including outsoles, rubber, crepe, adhesives, synthetic materials, boxes, cartons, printing, labelling, tags, threads, moulds, dyes, toe puffs, counters, and tapes.

Shoe City said by using a shared services model, factories will be able to pool their resources together for the functions in the existing value chain to run cost-effective manufacturing operations.

The gap between manufacturers and suppliers will be mitigated as all the back-linkage industries will be located in one central location. By our estimates, the production cost of member factories will go down by 20 %, making their products very competitive in the world market, Sonjoy Saha said.

The project commenced in 2017 and has transformed the entire landscape, readying it for the establishment of factories. A new five-story building having over one lakh square feet is under construction. Five companies have already initiated production, and we have secured memorandums of understanding (MOUs) with an additional 15 companies from Europe, China, and Japan. These partnerships will facilitate the manufacturing of various shoe-making components, Saha said.

Shoe City moving forward despite challenges

"We are facing many challenges after the pandemic. The global economic crisis triggered by the Russia-Ukraine war has also impacted us.

Foreign companies that have expressed interest in setting up factories here are taking their time due to these uncertainties, including the upcoming Bangladesh national election. However, we are hopeful that several companies will commence production here by 2024," Saha said.

He said buyers in developed countries are emphasising transparent and sustainable supply chains. To meet these demands, foreign buyers are enforcing strict compliance standards across all organisations. They are particularly checking whether establishments possess Leather Working Group (LWG) certification.

"We are moving forward with our plans. Our Effluent Treatment Plant (ETP) is nearly 90% complete. We will provide ETP connections to any tannery or company that requires them. We will also establish a Green Resilience Zone, which will facilitate the acquisition of Leather Working Group (LWG) certification from the institute here. Additionally, we will maintain Renewable Energy Solutions," Saha added.

Companies in production now

Five-R Footwear Ltd: A full-fledged leather footwear manufacturing company producing approximately 2,000 pairs of leather footwear daily.

The company encompasses a leather finishing tannery with a capacity of 20,000 square feet per day and a sole manufacturing unit capable of producing 3,000 pairs per day. Five-R Footwear boasts an on-site bonded warehouse and an operational ETP that effectively decomposes various types of waste.

In addition, an Indian company is now manufacturing leather elastic, a Portuguese company is manufacturing shoe oil and a Canadian company is engaged in producing souvenir products incorporating cloth and leather.

"In addition to footwear manufacturing, we have also opened up our facility for garment production. This facility will specifically cater to manufacturers of leather-based souvenir items, such as handbags and gloves," Saha said.

In addition to the state-of-the-art manufacturing facilities, the leather industrial park will boast an array of comprehensive central facilities designed to cater to the needs of its occupants and foster a vibrant and well-rounded work environment.

These facilities include a training centre, restaurants, a childcare centre, a medical centre, a library, prayer rooms, a central administrative building, a central display sales centre, a central inspection centre, tasting laboratories, a central bonded warehouse, a fire station, a logistic and transportation company, a central security system company, accommodations hotel, grocery shops, and a central wastage management.

Sonjoy Saha said, "We are ready to provide all facilities including utilities [gas and electricity] to investors. We have constructed a rainwater reservoir and even a helipad. The government is giving us the necessary support."

Bangladesh has set a target of $10 billion in leather product exports by 2030. Currently, about $1.7 billion in leather products are exported annually. Sonjoy Saha hopes that Shoe City will help the country meet the export target.

 

[Bilal9]

RFL Footwear looks to raise non-leather exports to Africa​

Workers inspect the quality of shoes at a factory of RFL Footwear in Danga Industrial Park, Narsingdi. Due to shifting global preferences for environment and animal-friendly products, consumers are switching to non-leather products. Photo: Collected

RFL Footwear, a concern of PRAN-RFL Group, wants to expand its non-leather footwear business in African markets.

"Africa can be a good market for us in the near future. Our progress depends on the skills of our workforce. But we have to further reduce our production costs so that we can compete extensively with China," said Ahsan Khan Chowdhury, chairman of PRAN-RFL Group.

"We are trying every day to export our shoes to different parts of Africa. Besides, we have the opportunity to do well in the Middle Eastern and Indian markets," he added.

While pointing to how the government has set an export target of $80 billion by 2024, Chowdhury said the export sector must be diversified.
And footwear, especially non-leather footwear, could be one of the most important products in this regard.

Besides, due to increasing global preference for environment and animal-friendly products, consumers across the world are switching to non-leather products, he added.

RFL Footwear's products are currently being manufactured at its factory in Danga Industrial Park, Narsingdi, Dhaka. The company's footwear industry was set up at a cost of about TK 138 crore and currently employs around 2,500 people.

RFL Footwear manufactures sneaker, ladies' shoes, ladies' sandals and various items for children, Chowdhury said.

RFL started exporting non-leather footwear products in 2021. It exported non-leather footwear products worth about $4.7 million in fiscal 2021-22 and $7.2 million in fiscal 2022-23.

According to the Export Promotion Bureau, Bangladesh exported non-leather footwear worth $478 million in fiscal 2022-23 compared to $244 million in fiscal 2017-18.

At present, RFL is exporting non-leather footwear products through buyers of different countries. Among these, the main buyer is H&M.

Other buyers include Kappa, Umbro, Airness and Redtape, said Rahat Hossain Roni, chief operating officer of RFL Footwear.

RFL's footwear products are currently being exported to 37 countries through these buyers.

The company's export unit has a monthly production capacity of around six lakh pairs, with 10 production lines at two units for four different processes.

RFL Footwear has already obtained GRS and RCS certifications, which will play an important role in exporting its non-leather footwear products.

Most of the raw materials used in RFL's non-leather footwear are imported from China. But, now RFL is working extensively on backward linkage to produce the raw materials itself. As such, preparations are underway to produce the sole, mould and synthetics used in non-leather footwear soon, Hossain said.

If the raw materials that are currently imported can be produced in the country, the lead time for exporting products will considerably decrease.

Also, if the government provides facilities similar to those for the garment industry in establishing backward linkages, then investors will come forward and only then the necessary backward linkages for non-leather footwear will develop.

And if the necessary backward linkages are developed, buyers will be encouraged to buy more products from Bangladesh as the lead time will be reduced, he added.

In 2023, the global shoe market grew to about $400 billion. This market will be worth about $500 billion in 2027, according to industry people.

In fiscal 2022-23, footwear exports from Bangladesh were worth $1,180 million. Leather footwear accounted for $700 million of the sum while non-leather footwear contributed $480 million.

Currently, Bangladesh ranks 16th in global footwear exports.

China is at the top in this regard, catering to more than 60 percent of the global demand.

Hossain informed that RFL will soon move into manufacturing high-value non-leather footwear because they have huge demand worldwide.

Additionally, it is possible to earn a lot of foreign currency through it, he said.

RFL Footwear markets 50 percent of its products domestically and exports the rest.

As there is huge potential for export, about 80 percent of its production is planned to be exported. With this in mind, the company will soon add six more production lines, Hossain said.

Because of that, there are plans to invest about TK 100 crore in the future, he added.

 

[Malang]

Sir do you also make Shoes with Snake’s skin? They are expensive and worth a fortune in western countries. Catch all snakes including your corrupt politicians and make shoes with their skin

Malang

 

[Saif]

Catch all snakes including your corrupt politicians and make shoes with their skin

Malang

 

[Saif]

Can leather industry exploit its potential?

That the country's leather industry had immense potential is universally agreed. Similarly, the fact that it failed to flourish due to policy flaws and a lack of decisive actions to overcome some infrastructural constraints bedevilling the sector is undisputed. Now that the leather industry is faci

thefinancialexpress.com.bd

Can leather industry exploit its potential?​

FE

Published :​

Feb 14, 2024 21:35

Updated :​

Feb 15, 2024 21:43

That the country's leather industry had immense potential is universally agreed. Similarly, the fact that it failed to flourish due to policy flaws and a lack of decisive actions to overcome some infrastructural constraints bedevilling the sector is undisputed. Now that the leather industry is facing a tough time globally, the fragility of the footwear and leather goods sector at home is badly exposed. Had it not been mired by the decades of foot-dragging on relocation of tanneries from the capital's Hazaribagh to Savar Tannery Industrial Estate and then the installation of a defective central effluent treatment plant (CETP) there, quite a few footwear and leather goods manufacturers would have by now received the much vaunted Leather Working Group (LWG) certification. Notably, this certification opens the opportunity to export leather goods and footwear to markets in Europe and America. With just three factories earning the coveted LWG certification--- Apex Footwear (gold), ABC Leather Ltd and Riff Leather Ltd (silver) ---the industry naturally could not achieve the desired position next to the RMG in terms of garnering foreign exchange.


As part of diversification of the export basket, however, this had to be on the priority list. The country's pharmaceutical industry and leather industry are two leading candidates for taking on the mantle of the RMG in case the number one forex earner faced a reversal for some reason. But at a time footwear and leather goods are bogged down by lower demand worldwide, leather factories -- particularly the smaller and the medium ones among them -- are witnessing a sharp decline in export. Already handicapped by their limited market with no access to the high-end destinations, these factories now find a daunting challenge for their survival. The export of leather and leather goods declined by 14 per cent but that of footwear declined by 26 per cent between July and January of 2023-24. Since footwear production is more than leather goods, a bigger market slump for the former means the value addition has also suffered in the process.

It is exactly at this point the Leather Goods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) has been looking for ways to tide over the current crises. As part of pre-budget proposals, it has asked for a unified tax rate of 1.0 per cent on import of raw materials. This will reduce the lead time by 20 days, triggering a 50 per cent increase in export of their products, it claims. Currently, the bond management stands in the way of easy access to industrial inputs.

The proposal certainly has its merit because the manufacturers and exporters of leather and leather goods are not asking for too much when they also seek rationalisation of tax at source by reduction of the 1.0 per cent freight on board (FOB) value to 0.5 per cent. In the context of the January 30 circular by the Bangladesh Bank to the effect of slashing cash incentives for export of some key exportable items, the demand for tax holiday may hardly be entertained. But synthetic and fabric footwear along with chemicals and spare parts for CETP certainly deserve special considerations. If the objective is to give the leather industry a competitive edge in the global market, such concessions ought to be granted at least for a reasonable period.​

 

[Bilal9]

Non-leather sports shoe mfr. in Bangladesh, will source Adidas shoes from Bangladesh

 

[Saif]

MK Footwear to raise Tk 55cr by issuing bonds

After raising funds from the SME board of the Dhaka Stock Exchange (DSE), MK Footwear is going to secure funds amounting to Tk 55 crore by issuing non-convertible fully redeemable bonds.

www.thedailystar.net

MK Footwear to raise Tk 55cr by issuing bonds​

After raising funds from the SME board of the Dhaka Stock Exchange (DSE), MK Footwear is going to secure funds amounting to Tk 55 crore by issuing non-convertible fully redeemable bonds.

The Bangladesh Securities and Exchange Commission (BSEC) yesterday approved the bond at a meeting.​

​

The tenure of the bond will be eight years and its coupon rate will be the Six months Moving Average Rate of Treasury bill (SMART) and additional 2 percent.

The bond will be issued to institutional investors and high-net worth individuals through private placement. The offer price of each bond is Tk 10 lakh.

With the proceeds, the footwear company will meet its working capital demand.

Community Bank Investment is the trustee of the bond, while Alpha Capital Management is the arranger.

Last year, the company raised Tk 10 crore by issuing one crore shares and got listed on the SME board of the DSE.

MK Footwear PLC was incorporated in 2015. It produces and exports several types of leather and synthetic footwear.​