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Made in Bangladesh

Still More from Legacy Footwear Ltd.but this time for women and children.
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Fresh funds pour into shoemaking
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People work at a factory of Apex Adelchi Footwear Ltd in Gazipur. Photo: Amran Hossain, by Sohel Parvez

Significant export prospects bring a growing number of local and foreign entrepreneurs into the shoe and leather goods industry.

In the past several years, more than a dozen new local firms have signed up for making footwear and leather goods.

The investors put the money in the sector as international buyers have flocked to Bangladesh, a low-cost source, due to rising costs in the world's biggest footwear exporter -- China, industry operators said.

Foreign investors, especially from Taiwan, have also established factories in export processing zones (EPZs) to cash in on Bangladesh's cheap labor and a duty-free export opportunity to Europe and Japan.

Already, exports of shoes and leather goods are on the rise.

"Many are investing in shoe and bag making business amid rising production costs in China. Exports will be huge within 10 years," said Tipu Sultan, managing director of Bengal Leather Complex.

Some 11 Taiwanese groups have established factories in EPZs in the last three to five years, said Sultan, also a former chairman of Bangladesh Finished Leather, Leather Goods & Footwear Exporters Association.

Taiwanese firms control around 60 percent of shoe trading business globally, he said.

Since 2006, the association has awarded memberships to 13 new local firms, mostly shoes and leather goods makers.

Sultan said his firm also opened shoe and bag units a year ago after making finished leather for a long time.

Bengal Leather has been exporting shoes and bags for the last eight months, he said, adding that accessories factories are also being set up to support the shoe industry.

M Fayaz Taher, managing director of Fortuna Leather Craft Ltd, said many tannery owners are now going for further value addition.

"Future is very bright," he said.

New footwear ventures are coming up and Bangladesh will be the next footwear destination, he added.

Their optimism came at a time when economic turmoil in Europe has slowed down demand for footwear and leather goods.

However, rising inquiries from buyers give them the hopes that the fall in demand would be short-term.

"We are all under stress. Buyers are getting more and more interested in our products. We are trying to upgrade our factories to meet their requirements," said Ziaur Rahman, managing director of Bay Footwear Ltd.

In fiscal 2011-2012, export growth of the entire leather industry slowed to 17 percent from 41 percent a year ago, according to Export Promotion Bureau.

Exporters bagged $765 million in fiscal 2011-2012, up from $651 million in the previous year.

The leather industry, which has grown on local hides and skins, now emerges as the third largest sector to contribute to exports after garments, and jute and jute goods.

Rahman said small and new entrants might find some difficulties due to the sluggish global demand.

"But future looks bright. We may have to struggle in the current year only," he said.

Footwear and leather goods accounted for one-fifth of the total export earnings of the leather industry a decade ago.

The share of the two sub-sectors rose to 56 percent in fiscal 2011-2012.

The rise was due to buoyant growth in footwear exports and a recent surge in exports of leather goods such as bags, purses wallets and belts, according to the EPB.

Saiful Islam, a former president of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh, said improved quality has helped win confidence of more buyers.

He said the customs authority should cut time in giving clearance to imported raw materials for shoes and leather goods.
 
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The following 2013 story in Forbes Asia tells the story of Incepta Pharmaceuticals - one of the local Pharma industry majors. The sales and profit figures have since risen dramatically. For plant photos - refer to my earlier posts a few posts back.

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Bangladesh has gotten off the economic mat in recent years with a big push into cheap apparel, a mixed blessing whose downside was horribly brought home in November when a Dhaka garment factory caught fire with 112 workers trapped to die inside. The misery brought unusual global attention but only reinforced notions of a sweatshop land.

Yet there is another growth sector in the world’s eighth most populous nation. Its rise has surprised even those close to its pioneers. In 1999, when U.S.-trained pharmacist Abdul Muktadir decided to set up a pharmaceutical company in Bangladesh, his friends and relatives got worried. “No one in our family had ever been in business before,” recalls his wife, Hasneen, daughter of a professor-turned-government-worker and a pharmacist herself. Moreover, the country’s pharma industry was tiny, less than $300 million in sales, with 150 companies competing for business.

But Abdul, with 15 years in the field already, was confident: “There weren’t too many new and advanced drugs in the market. There was clearly an opportunity.” Quitting his job as chief operating officer at Beximco Pharmaceuticals, a leading local firm, he took the plunge. With backing from his friends, owners of the Impress Group, a garments and media empire, he raised the equivalent of $600,000 and started Incepta Pharmaceuticals in a 2,000-square-foot office in the heart of Dhaka city. Within a year he’d persuaded wife Hasneen, then Beximco’s head of research, to join him.

The Muktadirs have since built their fledgling venture (they hold a 40% stake with Impress owning the balance) into the country’s fastest-growing pharma outfit, with revenues of close to $120 million. In the past five years sales at privately held Incepta have been expanding 25% annually on a compounded basis versus the industry’s 14% annual growth over the same period. In revenue the Muktadirs have passed their former employer. Incepta now ranks second in Bangladeshi drug-making, though it’s still half the size of the biggest pharma Square, founded by the late Samson Chowdhury, a sector pioneer.

Over a third of Incepta’s stable of 338 drugs are generic medicines that were introduced for the first time in the country, such as Pantonix, a drug for gastrointestinal disorders, which today figures among the country’s top three pharma products by retail sales. Similarly, its Osartil outsells all other antihypertension drugs in the market. “New products have been our platform for growth,” acknowledges Abdul, seated in Incepta’s 200,000-square-foot Dhaka headquarters. Tall and handsome, he cuts a striking figure. A plaque displayed in his office acknowledges him as Dhaka’s second-highest taxpayer of 2011.

Incepta’s dramatic rise has coincided with an ongoing expansion in the domestic pharma market. Buoyed by an economy growing at over 6% and improving access to health care for the country’s 160-million-strong population, notably in the rural heartland where state-owned clinics are sprouting, it has nearly doubled in size in the past five years to $1.1 billion. According to one estimate, pharma sales are expected to swell to $1.6 billion by 2014.

Once heavily dependent on imported medicines, Bangladesh is now self-sufficient; 97% of all medicines are locally made. The country has no patent regime currently, although patent protection is due to come into force in the next five years. A protectionist drug policy in 1982 that clamped down on imports, including from neighboring India, drove out multinationals that had long dominated the sector; some of them sold out to local firms.

Today the country’s top ten pharma firms are all locally owned and control two-thirds of the market. Their prowess in producing super-cheap, high-quality branded generics is an under-the-radar story in a country that has earned notoriety as the world’s garments sweatshop; ready-made garments account for nearly 80% of Bangladesh’s $24 billion annual exports and are the country’s biggest employer.

“This is prime time for Bangladesh’s pharma sector,” says Aminur Rahman, Bangladesh director of pharma research firm IMS Health. “It’s got the potential to become a global manufacturing hub for generics like India and China.” The country’s biggest comparative advantage is cost; prices of Bangladeshi generics are the lowest in the world: one-tenth the price of Western drugs and up to 20% cheaper than those made in India. This is partly due to a short supply chain. Companies have their own distribution networks with no intermediaries.

Despite the cost advantage, pharma exports are currently a minuscule $50 million annually, hampered by, among much else, the lack of certain drug-testing labs. While factories are required to adhere to the World Health Organization’s Good Manufacturing Practices standards and several have secured accreditation from various countries, including the U.K., not a single one has as yet got U.S. FDA approval. Bangladesh exports to 80 countries, mainly to semi-regulated markets.

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While local firms have thrived under a protectionist policy, the government has done little to encourage exports, maintains Kaiser Kabir, chief executive of drugmaker Renata (it was Pfizer‘s local arm in an earlier avatar). A bulk- drugs park, which the government had promised to set up five years ago, has still to be completed. Foreign-exchange restrictions don’t allow domestic firms to buy companies overseas. Unless this is relaxed, says Kabir, there’s no shortcut to global markets. He predicts that as Indian firms get expensive to acquire, Bangladesh will start looking attractive and big pharma may well discover that it is “the last peanut on the plate.”

At Incepta Abdul is preparing for the next big leap. “In five years’ time we’d like to be competing in global markets. We’ve built our factories with that goal in mind,” he avers. At Dhamrai, 30 miles north of Dhaka city, a drive that takes nearly two hours through traffic-clogged roads, is Incepta’s newest factory. Spread over 80 acres and built at a cost of $25 million, it opened in July even before securing electricity supply. The factory runs on diesel generators and currently makes oral and injectable hormonal contraceptives, which the Muktadirs plan to export to emerging markets. A new factory on an adjacent site is being built as per U.S. FDA standards. It will make advanced drugs aimed at the U.S. market.

Closer to Dhaka, in the suburb of Savar, is the company’s main manufacturing complex, which makes everything from pills to vaccines. Abdul discloses that a $50 million investment in the vaccines unit in 2009, the country’s first local one, has yet to see any returns. “This would be a killer for any company. But I’m confident it will pay off,” he says.

The youngest of 13 siblings, Abdul grew up in Magura, a small town 100 miles from Dhaka. After his father, a police officer, died when he was in third grade, he grew close to his nephew Salah U. Ahmed, who was three years older. The pair followed a similar path, opting to study pharmacy at Dhaka University, then going to the U.S. for a degree in industrial pharmacy; there Abdul studied at Long Island University.

Whereas Ahmed stayed on to do a Ph.D. and worked for Barr Pharmaceuticals before founding generics maker Abon Pharma in New Jersey, Abdul returned home in 1984 to wife Hasneen, his college sweetheart, who had remained in Dhaka after being refused a U.S. visa. (Today the Muktadirs’ two children are both U.S.-educated.) Abdul says that on returning to Bangladesh after his U.S. sojourn, he sensed the country’s true potential for economic growth. “That gave me lots of hope,” he recalls.

Pursuing parallel careers in pharma, the Muktadirs worked their way up to senior positions. Being on the sales side, Abdul was well-known in the medical fraternity, and that goodwill gave his startup an edge. He was Incepta’s chief salesman, personally meeting doctors to get them to write prescriptions for its drugs. His brand equity helped not only in securing long-term credit from machinery suppliers but also in hiring staff.

Rather than poach from rivals, the Muktadirs sought out fresh pharmacy graduates. Marketing manager Ehsan Aziz, who was one of the earliest recruits, says that Abdul’s track record was a draw, plus his goal to make Incepta the number one company within five years. “It was more a dream than a target, but in five years Incepta was among the top five pharma firms,” says Aziz, who refers to Hasneen as “Apa,” a term of respect that means “elder sister.”

As a rank newcomer Incepta took on established rivals by smart pricing. Abdul cites the example of a cardiovascular drug that was launched at a price substantially cheaper than the imported equivalent available in the market. “While our margins were small, we made up in volume. It took a while for our competitors to match our price, and until then we had a free run,” he elaborates.

One of the biggest challenges, he says, was finding money to fund Incepta’s blistering growth: “Banks weren’t willing to give us loans.” Stuck for cash, he sought out a new bank that in 2002 agreed to extend a $2 million credit line. Thereafter, as banks became willing to fund Incepta’s expansion, the company piled on expensive debt. Realizing that paying interest rates of up to 17.5% risked making Incepta uncompetitive, Abdul tapped Islamic finance. In the past two years he’s been replacing conventional loans with Islamic loans, where the effective cost is 5.5% per year.

The Muktadirs have sought out partners to enter new markets and product segments. For example, Incepta has a marketing and manufacturing pact for insulin with India’s Biocon. It launched four years ago, becoming the first domestic insulin producer. “We were looking to bring affordable insulin to Bangladesh and found Incepta to be a very entrepreneurial company. Their commitment to quality is commendable,” says Kiran Mazumdar-Shaw, chairman and managing director of Biocon.

To enter the U.K. and European markets the Muktadirs have forged marketing partnerships with local generics firms, notably Intrapharm Laboratories and Blackrock Pharmaceuticals. A drug for rheumatoid arthritis has been launched in the U.K. They are also eyeing the U.S., which Abdul acknowledges to be “the next frontier but very challenging.”

Meantime, they’re grooming the next generation in son Saad Muntazim, an industrial pharmacy graduate student at New York’s St. John’s University. Says Abdul, “This is just the beginning.”

Bangladesh's Footwear Industry Is Making Tracks
This story appears in the September 2014 issue of Forbes Asia.

Blue Ocean Footwear’s four-story factory, designed by noted Bangladeshi architect Bashirul Haq, an expert on building safety standards, is located close to Apex’s factory site in Gazipur. It has 4,000 people producing close to 2 million pairs of women’s shoes annually for customers like Esprit and Germany’s Tamaris. The workers are supervised by a team of 65 Chinese technicians who stay on the factory campus but don’t speak either English or Bengali.

Instead, Bangladeshi workers are being taught basic Chinese, says Sam Yu, Blue Ocean’s managing director. Yu, who has been assigned to the joint venture by Green Land, says the company looked at Indonesia, Cambodia and Laos before settling on Bangladesh as an outsourcing base. While labor is cheap, other costs, notably that of land, are higher than elsewhere. Manufacturing shoes in Bangladesh is not about lowest costs.

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Blue Ocean Footwear’s factory on Dhaka’s outskirts

Still, the success of the partnership has spurred Green Land to close a factory in Vietnam and scale up here instead. Along with Apex, it plans to build a bigger factory that will have 5,000 workers producing 3.5 million pairs of shoes annually. (note: since the article was written - the factory has been close to completed).

Other foreign companies have come, notably to the south-eastern port city of Chittagong that is emerging as a shoe-making hub. Taiwan’s Zhongshan Glory has a factory producing Timberland shoes. Two other factories produce footwear for Armani and Hugo Boss.

South Korea’s YoungOne, a maker of outdoor shoes and sportswear (note: major sportswear sourcer for Adidas), owns the Korean Export Processing Zone that sits on a 2,500 acre site. While the project is still awaiting key clearances from the government, the zone’s president, Jahangir Saadat, says that the first investment at the Korean EPZ is for a shoe factory that aims to be the largest in the region, producing 32 million pairs annually.

Note: The very large-scale YoungOne factory will produce athletic shoes (jogging, tennis, hiking, soccer etc.) and is an addition to already large production capacity at a score of other medium capacity factories at Chittagong EPZ, some owned by YoungOne itself.
 
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Renata Pharmaceuticals Lab campus built during the late 90's...

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Kamrangabithi Conference Zone - nice spot for an open-air alfresco meeting
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Distribution Depot in Sylhet
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More images of Renata's manufacturing campus.

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Sterile filling line
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Coating Machine at Cephalosporin Facility
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Rajendrapur Potent Product Facility. This factory was the biggest supplier of birth-control pills in Bangladesh in 2014
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Second Potent Product Facility at Rajendrapur outside Dhaka (Under Construction)
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Finished Goods Storage facilities meet GMPP guidelines
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Non-traditional item Made in Bangladesh - labor-intensive glass aspherical composite optical lenses for various uses

Projection Lens

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Fixed lenses

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CCTV / IP cam Lens
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CFL and LED bulbs. Miniature circuit breakers, Voltage stabilizers made by MEP Barisal. Mini CFL tubes (raw material for CFL bulbs) are sourced locally from large scale local supplier.

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ACS Home textile has a vertically integrated production set up in NarayanGanj (10 mi or 16 km South-East of Dhaka) with latest technology machinery. They are a ISO 14001 company certified to handle organic cotton products and have a license for Egyptian cotton. The Weaving section boasts all Air Jet looms with Dornier dobby and jacquard as well as Tsudakoma dobby looms.

The company was established in 2005 as a vertically integrated bedding and towel producer and now manufactures three million meters of fabric per month. Its finished towel capacity is 300 tons per month, and the mill uses dyes and chemicals certified by Oeko Tex.

ACS Textiles generated $90 million US in sales last year and expects to add another $10 million US this year.

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BFI - oldest fibreglass boat manufacturer in Bangladesh (since 1978) but probably not the market leader. Granted not the sleekest looking boats but they are cost-effective and fuel-efficient for local riverine use and for marine police, coast guard and Border Guard Bangladesh (BGB). Some product-line revamp and re-design are in the works...

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Video of their most popular model:
MFG 23C - B F International Limited | Facebook
 
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More BFI High Speed Boat images. This one is the baby of the product range - MFG-23DXC ...

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Their larger model for BGB and Coast Guard River Patrol - MFG29-XLC, notice the light machine gun on the pintle mount.
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This is the MFG33-XLC
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@Bilal9 Very Good thread.... Great to see Made In Bangladesh products!

You're most welcome Bhaisaab :-)

I think we each have individual manufacturing strengths in our countries and should trade between ourselves first before going to product sources outside our countries.

Just my humble attempt to present the face of Bangladesh that everyone may not be aware of.

Is there a similar thread for non-traditional Indian products (like maybe optical lenses) ?
 
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In an earlier post (#99) I mentioned that CFL lamps were a big item now locally as they help save 50% electricity. The electricity gain in this manner is cheaper than putting up new electricity generation plants (10% of the cost).

The CFL lamp tubes are being manufactured in a very large plant put up by Nasir Glass & Tube Industries Ltd. at Mirzapur, Tangail, Bangladesh. These tubes are the primary component of CFL lamps.
  • They are the leading lead glass & soda glass tube industries here in Bangladesh.
  • They have options to make lead glass tube and soda lime glass tube.
  • Their single line production capacity monthly is about 450 mt with
    • dia ranges for lead glass 9mm to 18mm & soda lime glass 10mm to 28mm(t-3 to t-8),
    • wall thickness 0.6mm to 1.2mm and
    • length:900mm to 1300 or as on buyer requirement.
Also they are producing & selling cfl burner 2u,3u,4u & spiral, half spiral etc.
• cfl burner –spiral, half spiral,2u,3u etc
• cfl burner with coating & without coating.
• lead glass tube-3.50mm to 18mm & wall thickness 0.65mm to 1.2mm
• soda lime glass tube-6.75mm to 28mm & wall thickness 0.65mm to 1.2mm

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Some old shots of the factory complex, don't have anything newer.

By the way the factory structure and cladding were designed by and sourced locally from PEBSL (Made in Bangladesh). I am really proud of how world-class their facility is.

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