INDUSTRY PAPER:
THE LEATHER GOODS SECTOR (NON FOOTWEAR) OF
BANGLADESH
INDUSTRY PAPER:
THE LEATHER GOODS SECTOR (NON FOOTWEAR) OF
BANGLADESH
Prepared for:
Mohammad Saif Noman Khan
Assistant Professor
Prepared by:
Amreen Akhtar ID: 24
Md. Mushfiq Alam Arko ID: 34 (Group Leader)
01703803619
Nisa Nur Majumder ID: 36
Tapas Debnath ID: 40
Syeda Nawrin Huq ID: 41
Batch: MBA 52-D
Institute of Business Administration
University of Dhaka
January 2, 2015
iii
Contents
Executive Summary .............................................................................................................................. viii
1.0 INTRODUCTION ............................................................................................................................ 1
1.1 Origin of the Report ...................................................................................................................... 1
1.2 Objective of the Study .................................................................................................................. 1
1.3 Scope ................................................................................................................................................ 1
1.4 Methodology ................................................................................................................................... 2
1.5 Location of the Industry .............................................................................................................. 2
2.0 LEATHER INDUSTRY .................................................................................................................. 3
2.1 Global Market in Brief ................................................................................................................... 3
2.2 Global Leather Goods Market .................................................................................................... 3
2.2.1 Worldwide Leather Export and Import ............................................................................. 4
2.2.2 Recent Development ............................................................................................................. 6
2.2.3 Product Groups ...................................................................................................................... 8
3.0 BANGLADESH LEATHER INDUSTRY ........................................................................................ 11
3.1. History of Leather Industry in Bangladesh ......................................................................... 11
3.2. Leather Industry in Brief ........................................................................................................... 12
3.3 Market Structure .......................................................................................................................... 16
3.3.1 Demographic Concentration ............................................................................................. 16
3.3.2 Leather Goods Market Size in Bangladesh 2013 ......................................................... 16
3.4 Major Institutions involved in leather sector ....................................................................... 20
3.4.1 Leather Associations of Bangladesh .............................................................................. 20
3.4.2 Leather Institutions.............................................................................................................. 25
3.4.3 Leather Research Institutes .............................................................................................. 26
3.4.4 Government Bodies ............................................................................................................. 27
3.4.5 Private Organizations.......................................................................................................... 30
3.5 Leather Products in Bangladesh ....................................................................................... 30
3.5.1. Small Leather products ..................................................................................................... 31
3.5.2. Medium Leather Goods ..................................................................................................... 31
3.5.3 Heavy Leather Goods.......................................................................................................... 31
3.6 Marketing Leather goods .......................................................................................................... 32
3.6.1 Research ................................................................................................................................. 32
3.6.2 Strategies for Selling Products ................................................................................. 33
iv
3.6.3 Parameters ............................................................................................................................. 34
3.6.4 Marketing Tools .................................................................................................................... 34
3.7 Distribution Channel ................................................................................................................... 35
3.7.1 Raw Hide and Skin Collectors and Suppliers ............................................................... 35
3.7.2 Importers of Chemicals ...................................................................................................... 35
3.7.3 Leather Processing Units or Tanneries ......................................................................... 36
3.7.4 Wholesaler of Leather and Accessories ........................................................................ 37
3.7.5 Handmade Footwear Manufacturers ............................................................................... 37
3.7.6 Industrial Footwear Manufacturers ................................................................................. 38
3.7.7 Semi-industrial Footwear Manufacturers ...................................................................... 38
3.7.8 Handmade Leather Goods/Crafts Manufacturers ........................................................ 38
3.7.9 Industrial Leather Goods Manufacturers ....................................................................... 39
3.7.10 Semi-industrial Leather Goods Manufacturers .......................................................... 39
3.7.11 Wholesaler of Footwear ................................................................................................... 40
3.7.12 Retailers of Footwear, Leather Goods, and Leather Garments ............................. 40
3.7.13 Export Agent ....................................................................................................................... 40
3.8 Value Chain ................................................................................................................................... 41
3.8.1 Financial Analysis of Value Addition .................................................................................. 44
3.9 Brief of Top Industry Players ................................................................................................... 48
3.9.1 APEX Leather ........................................................................................................................ 48
3.9.2 Bata Shoe Company (Bangladesh) Ltd. ......................................................................... 49
3.9.3 Leatherex Footwear Industry ............................................................................................ 50
3.9.4 Picard Bangladesh Limited ............................................................................................... 51
3.9.5 Ramim Leather & Finished Goods Corporation ........................................................... 51
3.9.6 Fortuna Bangladesh ............................................................................................................ 52
3.10 Legal Environment .................................................................................................................... 52
3.10.1 Bangladesh Environment Conservation Act, 1995 ................................................... 52
3.10.2 Relocation of Tanneries ............................................................................................... 53
3.10.3 Related Tax and other issues ..................................................................................... 54
3.10.4 Price Control ................................................................................................................... 54
4.0 INDUSTRY RISKS ............................................................................................................................ 55
4.1 Political Situation ........................................................................................................................ 55
4.2 Diseases and accidents ............................................................................................................. 55
v
4.3 Cheap Chinese Products (Dumping) ...................................................................................... 56
4.4 Smuggling of Leather ................................................................................................................. 56
4.5 Lack of Technical Knowhow in Designing ........................................................................... 56
4.6 Low investment in R&D ............................................................................................................. 56
4.7 Foreign Currency Fluctuation .................................................................................................. 56
4.8 Small Market ................................................................................................................................. 57
5.0 CRITICAL SUCCESS FACTORS .................................................................................................. 58
5.1 Competitive Pricing .................................................................................................................... 58
5.2 Quality of Products ..................................................................................................................... 58
5.3 Strong Distribution Channel ..................................................................................................... 58
5.4 Cost Control .................................................................................................................................. 58
5.5 Meeting Ecological Standards ................................................................................................. 59
5.6 Ensuring Government Support ................................................................................................ 59
6.0 OVERALL MARKET SCENARIO .................................................................................................. 60
6.1 Business Opportunities ............................................................................................................. 60
6.2 PESTEL Analysis ......................................................................................................................... 66
6.3 SWOT Analysis ............................................................................................................................ 68
6.4 Limitations Faced by the Industry .......................................................................................... 70
7.0 SUMMARY OF THE FINDINGS ..................................................................................................... 72
BIBLIOGRAPHY ...................................................................................................................................... 73
APPENDICES........................................................................................................................................... 74
vi
List of Figures
Figure 1: Export trends of countries in 2012 .................................................................................... 5
Figure 2: % Contribution to GDP ....................................................................................................... 13
Figure 3: Export Growth Rates of Leather and Leather Goods for the Years 1998-2005
(Source: Bangladesh Bureau of Statistics and Export Promotion Bureau) ........................... 14
Figure 4: GDP Growth Rate of Bangladesh (Source: BBS) ........................................................ 60
Figure 5: Minimum Wage Rates (Source: China Labor Bulletin).............................................. 62
Figure 6: Leather Goods Manufacturers in Bangladesh (Source: Bangladesh Bureau of
Statistics) ................................................................................................................................................. 64
vii
List of Tables
Table 1: Imports and Exports of Leather and Leather Goods Worldwide (Source: UN
Comtrade)................................................................................................................................................... 4
Table 2: Major Exporting Countries in 2012 (Source: UN Comtrade) ........................................ 5
Table 3: Importing countries 2012 (Source: UN Comtrade) .......................................................... 6
Table 4: List of Leather Product Groups and Products ................................................................. 8
Table 5: List of Leather Goods Produced in Bangladesh ........................................................... 15
Table 6: Footwear Sector Growth (Source: Bangladesh Bureau of Statistics) ..................... 18
Table 7: Leather Goods Subsector Growth (Source: Bangladesh Bureau of Statistics) .... 18
Table 8: Employment in the Leather Sector Value Chain (Source: GTZ) ................................ 19
Table 9: Distribution of Value Addition across all Value Chain (Source: GTZ) ..................... 19
Table 10: Major Associations in the Leather Sector (Source: GTZ) ......................................... 20
Table 11: List of Major Leather Institutes (Source: GTZ) ............................................................ 25
Table 12: List of Major Leather Research Institutes (Source: GTZ) ......................................... 26
Table 13: List of Government Bodies Working in the Leather Sector (Source: GTZ) .......... 27
Table 14: Distribution of Value Addition across Different Stages of the Value Chain ........ 43
Table 15: Cost Analysis of Leather and Leather Products of the Entire Industry in BDT
(Source: Bangladesh Bureau of Statistics) ..................................................................................... 48
Table 16: Export of Leather, Leather Footwear and Leather Goods (Source: EPB) ............ 61
Table 17: Sectoral Employment and Investments in EPZs (Source: BEPZA, Ministry of
Finance) .................................................................................................................................................... 63
Table 18: Employment, Output, Tax and Salaries Provided by Leading Industries (Source:
Bangladesh Bureau of Statistics) ...................................................................................................... 64
viii
Executive Summary
This report collected all the information available of the leather industry, concentrating upon the
non-footwear product segment that is important for all the stakeholders of the industry. The
leather sector has been declared a “thrust” sector by the government which lead to a number of
incentives provided by the government along with the regular incentives provided for the
industries, including:
7% interest rate for commercial loans as declared by the central bank.
15% cash incentives for exports.
Full repatriation of profits for foreign investors, and that too without prior permission from
the central bank.
Duty free import of capital machineries during primary set up.
Relief from double taxation.
GSP facilities
Furthermore, EPZs in the country provide the following major incentives:
10 years of tax holiday for industries set up before 1st Jan, 2012.
For those set up after 31st Dec 2011:
Tax Exemption Period Rate of Tax Exemption
First 2 years 100%
Next 2 years 50%
Next 1 year 25%
Duty free import of construction materials, machineries, office equipment, spare parts,
raw materials and finished goods.
Relief from dividend tax.
Duty and quota free access to EU, Canada, Norway and Australia.
The leather industry in the country starts with the collection of raw hides by the tanneries that
process it using mostly imported chemicals and machineries into finished leather. Currently
there are restrictions upon export of unprocessed or semi-processed hides. Major portion of the
finished leather is exported to EU countries, while the remaining are used to produce leather
footwear and leather goods majority of which is exported as well.
Leather goods market is very minimal in the country, most of which is comprised of corporate
gift items like leather book cover for diaries, cardholders, wallet etc. Consumer items include
wallet, side bags for women, belts etc. Major segment of the leather market consists of micro
and small enterprises at 54% of the total number. These enterprises mostly sell directly to
corporate clients and to major consumer brand shops like Aarong, Deshal, Jatra etc. The major
brands then sell these products to the consumers under their name. To increase the profit
margin and cut off the intermediaries, some small business set up a brand, Leather Cave,
together and sells all their products under the same brand name directly to consumers.
The country has seen strong growth at over 5% over the last decade and enjoyed strong growth
in the exports of leather, leather footwear, and leather goods. Exports of leather goods
increased from USD 3.43 million in 2002-2003 to USD 129.16 million in 2010-2011 and ended
ix
up at USD 186.6 million in 2013-2014 despite high political turmoil, natural disasters, global
recession in the recent past.
The country enjoys major advantage in this labor-intensive segment, as the wage rate of
Bangladeshi workers at about 85 USD is far lower than that of the Chinese, Vietnamese and
Indian competitors. Furthermore, the leather from Bangladeshi hides is of superior quality due to
environmental factors like humidity. This allows for the products to be priced at higher rates,
bringing in extra revenues.
There are a lack of ETP usage and control in the leather industry. As a result, the pricing of
leather goods get affected. The government is working on the shifting of the tanneries to Savar,
from Hazaribagh. This will allow for the products being marked as more eco-friendly, leading to
them being priced much higher. However, the shifting of the tanneries will affect the micro and
small enterprises producing leather goods as they will not be accommodated in the government-
sanctioned land and will have to avail expensive lands outside the tannery region.
1
1.0 INTRODUCTION
As a developing country in the third world nation, Bangladesh has a steady GDP growth at a
significant rate of 6 percent in the last five years. The leather industry is one of the driving forces
for the GDP growth rate of Bangladesh, ranking 4th largest export earnings in 20131
contributing about 6% of total export earnings last year.
Bangladesh has a long established tanning industry producing around 2-3% of the world`s
leather from a ready supply of raw materials, the leather is widely known around the world for its
high quality of the fine grain pattern uniform fiber structure, smooth feel with natural fine texture.
About 95% of leather and leather products of Bangladesh are marketed abroad, mostly in the
form of crushed leather, finished leather, leather garments, and footwear. Most leather and
leather goods are exported to Germany, Italy, France, Netherlands, Spain, Russia, Brazil,
Japan, China, Singapore and Taiwan.
The leather industry is perfectly suitable to Bangladesh with its abundance of labor and natural
resources at internationally competitive rates; the leather industry of this country provides a
strong stream of good quality leather and has all the potential to be one of the significant export
earners in the global leather sector.
1.1 Origin of the Report
The report “THE LEATHER GOODS SECTOR (NON FOOTWEAR) OF BANGLADESH” was
commissioned by Mohammad Saif Noman Khan, Assistant Professor, Institute of Business
Administration, University of Dhaka as a term paper for the course Financial Managerial
Communication (C-501). This report was written by, Amreen Akhtar (ID-24), Md. Mushfiq Alam
Arko (ID-34), Nisa Nur Majumder (ID-36), Tapas Debnath (ID-40) and Syeda Nawrin Huq (ID-
41) of the MBA batch of 52D of Institute of Business Administration, University of Dhaka.
1.2 Objective of the Study
This report will act as an industry paper, gathering all necessary information concerning all the
stakeholders of the industry.
1.3 Scope
This report has concentrated mostly upon the “non-footwear leather goods industry”.
1 (Technical Report: Leather Sector Includes a Value Chain Analysis and Proposed actions)
2
1.4 Methodology
The data illustrated in this report are both from secondary and tertiary sources and have been
cited where appropriate. Secondary data has been collected from UN Comtrade, World
Statistics Compendium from FAO, Future Trends of the World from UNIDO, Bangladesh Bureau
of Statistics, Bangladesh Bank, Ministry of Finance and the Ministry of Industries of the
Government of Bangladesh. Tertiary data has been collected from reports published by GTZ.
1.5 Location of the Industry
Bangladesh, with a population of about 152.5 million in a total area of 147,570 square kilometer,
is heavily populated country. The leather industry is concentrated at Hazaribagh in Dhaka, with
186 tanneries out of 207 is located in Hazaribagh. In an area of only 70 acres land, Hazaribagh
produces about 84% of the total supply of the processed leather.
Even though the accommodation of the tanneries provides many benefits such as raw
materials, sharing knowledge, spare parts by the investors, along with development of vertical
and horizontal integrations of the industry.
Apart from only these few benefits Hazaribagh is a not the perfect place for the leather industry,
as the area lacks of proper sewerage facilities as it was previously built for residential area and
the number of Tanneries are increasingly exponential, this causes the land area to be limited,
making it not possible for effluent treatment2.
2 H. L. PAUL
3
2.0 LEATHER INDUSTRY
2.1 Global Market in Brief
Global Leather industry dealing with raw leather, finished leather and leather products is
flourishing. Leather and leather products are widely traded globally and used universally.
Playing a prominent role in the world economy, the leather and leather goods industry chalks up
approximately USD 100 Billion3 trade per year (UNIDO, 2010).
With the world population increasing dramatically in the 20th century and the current economic
and population growth trend of developing countries will ensure the increase in the growing use
of leather and leather products (FAO, 2013). The growing population and the overall increase in
wealth leads to the increase in the consumption of meat and hence kept the supply of raw
material fairly constant4 . Predictions indicate that the supply of raw material will continue to
grow following the trend of population growth, though higher costs and decreasing pasturing
land and higher consumption of poultry and pork in Asia and Africa seem to exist.
These might eventually lead to sourcing of raw materials from alternate markets and animals
like camel, deer, kangaroo etc. (UNIDO, 2010). Globally, the supply of leather has increased by
0.8% per year between the years 1986-2003 from bovine, 0.3% from sheep and 3.6% from goat
and 38% of output of raw lather was traded globally in 2001-035 which exceed by over a third of
the figure in 1980s. However, goatskin exports have decreased as countries are holding on to
their raw materials for local industries for processing and production of finished goods (FAO,
2013).
2.2 Global Leather Goods Market
In the professional jargon of the leather industries, the term “leather goods” covers a wide range
of Items such as all kinds of handbags, attaché cases, luggage and other travel goods, flat or
small items(e.g., purses, wallets), belts, etc., but excludes other leather products, such as
leather upholstery and Leather clothing (UNIDO, 2010).
In most languages, this term simply means “items made of leather”, e.g., Indonesian,
“barangkulit,” in Arabic, “mewed min Jeld,” in German, “Lederwaren,” and in the French term
“maroquinerie” since it comes from the word “Maroc” (Morocco), where quality goats were
reared and source of the marvelous quality leather called “le maroquin.”
The history of leather industry is distinctive with the regular shifts in end uses and materials,
from the age of horse and foot transport to the automobile era, from the use of leather products
for specific functional purposes in the current market of luxury goods. Large amounts of leather
goods have been and are still made in small craft shops. Therefore, statistics are scarce, not
always reliable, or based on informal communications. Due to the wide variety of products, with
3 Future Trends in the World Leather and Leather Products Industry and Trade, UNIDO, 2010
4 World Statistical Compendium for raw hides and skins, leather and leather footwear, FAO 1993-2012
5 FAO
4
different functions, sizes, constructions, and material structures, available production and trade
statistics are expressed in value rather than in natural (volume) terms (UNIDO, 2010).
2.2.1 Worldwide Leather Export and Import
The value of the world trade in leather and leather products is expected at around US$100
billion, and the industry has been rapidly growing improving and developing countries. From
Table 1, it is seen that the import value increases from $13.9 billion to $22.7 billion in 14 years
period from 1998 to 2012 (COMTRADE, 2014), similarly the export value increases by $8.9
billion. This increase shows that the leather industry is becoming one of the word most
influential sector that is plays a vital role in improving the own country’s GDP.
Table 1: Imports and Exports of Leather and Leather Goods Worldwide (Source: UN Comtrade)
Global Export
During the last 4 years Italy remain the dominant player in leather products exports as table 3
and figure-2 shows that Italy earned the most export revenue by $ 4638.2 million, this shows
that Italy gives excellent service to its customers.
Even though the growth percentage has decreased by 1.2% in 2012 compared with 2008. But
Italy predominates the World share by 19.6% export revenue.
Year 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Values in
Bln US$
Impo
rt
13.
9
13.
2
15.
2
16.
4
16.
2
18 19.
8
19.
9
21.
7
23.
2
21.
6
15.
1
19.
7
23.
3
22.
7
Expo
rt
14.
8
14.
1
16.
4
17.
3
16.
8
18.
5
20.
5
20.
6
22.
8
25 23 16.
4
23.
4
24.
1
23.
7
As a
percenta
ge of
World
Trade
Impo
rt
0.3 0.2 0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1
Expo
rt
0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.2 0.1 0.1
5
Table 2: Major Exporting Countries in 2012 (Source: UN Comtrade)
Value (Million $)
Average
growth %
(08-12)
Growth % (11-
12) World share
World 23718.7 0.8 -1.5 100
Italy 4638.2 -1.2 -8 19.6 China, Hong Kong
SAR
2321.1 3.1 -0.3 9.8
Brazil 2071.5 2.6 1.4 8.7
Nigeria 1129.8 13.5 44.9 4.8 India 1071.8 7.9 6.1 4.5 USA 982.5 2 -3.9 4.1 Rep of Korea 923.7 2.4 8.2 3.9
Germany 849 -1.2 -8.5 3.6 Argentina 825.8 -2 -10 3.5
Other Asia 713.2 -3.3 -0.1 3 Spain 555.6 -0.2 -5.9 2.3 Thailand 511.1 4.3 2.5 2.2 Pakistan 457.2 4.5 -2.1 1.9 Austria 445.8 -7.5 -0.2 1.9
Figure 1: Export trends of countries in 2012
Similarly China earned
the second most
revenue of $2321.1
million. Particularly
footwear, because of its
high capacities
installed, infrastructure,
and component supply
industry. Nigeria on the
other hand shows
exceptional exponential
growth to 13.5% over
the last 4 years, by earning 1129.8 Billion, even more than India.
There is a decline of leather export trend in Western countries, the export earnings from 2008-
2012 of Argentina, Germany and USA. All though, Europe and USA have vibrant leather
products machinery, but there is a contracts between Classy Italian shoes in with cheap
Chinese footwear. These make Europe to loose share in the global market. In Asia China is the
most dominant followed by India, who has an average increase of 7.9% form 2009-2012.
05000
10000150002000025000
Export Amount
Export Amount
6
Global Import
Table 3: Importing countries 2012 (Source: UN Comtrade)
China is the undisputed leather
in the import of Leather products
and the biggest import market in
the world 13.2% in 2012. China
imports cheap quality shoes and
high quality designer leather
goods. The size of the markets
also varies due to population and
consumption trends, and fashion
plays a big part in the mass
market.
Similarly the EU partners, Italy,
Germany, Romania, Spain, there
import of leather materials has
declined drastically December
2008 to 2012. The biggest
consumers of footwear and
leather goods in the world are
China and Vietnam. EU nations
like Germany in particular, and
France, Italy to some extent, have had depressed economic climates and hence has limited
growth potential. USA on the other hand is one of the biggest individual market in the world for
leather products, with earnings of $651 million in 2012.
2.2.2 Recent Development
During the last 25 to 30 years, the leather goods industry has undergone major changes due to
factors such as:
• The overall rise of the standard of living along with labor costs in most leather and
leather goods producing
• Gradual development of marketing and brand strategies by businesses, both at national
and international arena, mainly due to the emergence of new advertising instruments
(e.g., television);
• The segmentation of the production process allowing outsourcing and transfer of know-
how to developing and least developed countries;
• The massive development in tourism with the advent of modern modes of transportation
including air travel;
• Modern production technologies and automation;
Country or
area
Value
(million
US$)
Avg. Growth (%)
World share
%
08-Dec 11-
Dec
China, Hong
Kong SAR 2989.3 4.2 -1 13.2
Italy 2547.7 -1.1 -13.2 11.2
Viet Nam 1583.6 15.8 75.9 7
Germany 810.4 -1.4 -16.4 3.6
Mexico 716.7 8 19.4 3.2
USA 651 -0.7 11.8 2.9
Romania 631.6 -5.3 -13.4 2.8
Spain 611.2 -1.6 -13.8 2.7
France 572 4.7 1.5 2.5
Poland 467.3 -3.2 -11.2 2.1
Portugal 466.2 2.5 -8.9 2.1
Rep. of Korea 443 4.3 -4.7 2
Thailand 422.8 5.6 1.9 1.9
7
• High quality production and efficiency with an overall increase in productivity with the
advent of modern high-tech machineries;
• The use of leather and leather goods in the automotive industry.
In this context, in order to survive in the competitive market and ever changing industry, it was
necessary to look for lower production costs in labor-intensive industries such as textiles,
footwear and leather goods. Moreover, and forced by competition, a great number of companies
started to brand themselves in order to make them better known by customers, requiring
massive expenditure on marketing along with even lower production costs to cope up. A Major
portion of the production companies shifted their production base to countries offering lower
labor costs and cheaper raw materials (UNIDO, 2010).
Destination countries were selected by assessing certain set criteria: proximity to market and
raw material, economic and political, efficient and highly productive labor and their
corresponding costs, the official language of the locality or destination country, quality of life and
living conditions (for expatriate production supervisors).
EU countries, mostly chose North Africa while North Americans, favored neighboring countries
in Latin America (Mexico, Brazil, Nicaragua, Colombia, etc.). However, some did not hesitate to
go further – to Mauritius, for example, where a major French company moved its production
facility of wrist-watch straps long before 1980s. Early in the 20th century, long before all these,
the US glove business had shifted first to Puerto Rico and later on to the Philippines.
Analyzing this gradual transition, we can come up with the following features:
• In the early stages, these transitions were not always successful and yet the relocation
trend continued; continually expanding due to faster transportation at lower costs for
raw materials as well as finished products;
• The modern and efficient mode of communication let to lower costs;
• Industrial cooperation (e.g., through UNIDO, ILO, and bilateral technical assistance
programs) made possible the transfer of technologies and know-how to developing
countries;
• Lucrative incentives granted by some countries to lure in foreign investors, in the form
of bonded warehouses, tax exemptions, and the export of 100% profits to the home
country in foreign currencies achieved their objectives.
In the last 20-30 years, production bases of most of the leather goods companies moved out of
industrialized countries, resulting in the closure of a great number of factories, inducing jobs loss
and the gradual disappearance of know-how, disappearance of know-how and the diminishing
significance or shutting down of some vocational training centers are complemented by the
emergence of local manufacturers and induction of foreign direct investments in the leather
sector with modern institutes dedicated to the development of trained personnel for this sector.
8
2.2.3 Product Groups
The history of the industry explains the underlining diversity that characterizes the segmentation
of product groups. This rationalizes the use the term “leather goods industries,” as the products
and related manufacturing techniques are very diverse and the segments that were not
available even a decade ago are now holding a major share of the total industry. The
aforementioned diversity is illustrated by Table 1: Leather Product Groups Starting from leather
parts used in sports equipment to bookbinding, leather goods now include a wide range of
products.
Some product lines have disappeared due to the emergence of synthetic material, a much
cheaper alternative. Industrial products of leather are now produced in such small volumes that
they fit with parchments in a micro-niche and are difficult to classify. Nevertheless, they should
not be ignored.
Table 4: List of Leather Product Groups and Products
Product Group Description Trade
Hand Bags Handbags with or without shoulder straps Leather Goods
Pocket or small
leather goods
Wallets, purses, coin purses, billfolds, key pouches,
credit card cases, pen cases, and other small articles
Travel goods Trunks, suitcases, travel bags, beauty cases, toilet kits,
and other travel articles
Sports bags Sports bags, casual travel bags, rucksacks
Briefcases and
portfolios
Portfolios, document bags, briefcases, attaché cases,
School articles School bags, rucksacks, and other school cases
Saddles Saddles, collars etc
Cat and dog articles
(Pet articles)
Leashes, collars, tags etc.
Hunting and fishing Gun cases, cutlery cases etc.
Stationery articles
and special cases
Writing pads, book covers, camera cases, spectacles
cases, cigarette cases, jewel cases, mobile phone
holsters or covers etc.
Military equipment Various holsters and straps for fire arms, boots etc.
Belts Women’s and men’s belts, men’s suspenders
Watch straps Watch straps made of leather and synthetics
Sports articles Balls for football, rugby
Book-bindings Book covers
Belts, washers etc Various leather products for industrial use. Industrial
leather
products
9
Handbags: Women’s handbags represent a huge leather goods market. Bags are not only a
useful accessory; they are also a sign of social rank. The use of bags is very much influenced
by fashion and culture, which themselves vary from one country to another. There are many
price segments in the market and a wide variety of styles and designs. Consequently, the
market for handbags retailing at US$1,000 and above has been growing quite rapidly in the past
five years.
Small leather goods: These are less dependent on fashion. Pocket leather goods, which are
mainly made of genuine leather, follow societal trends and utilizations, such as size of
banknotes or credit cards. The last ten years have seen the rise in importance of holsters for
mobile phones, MP3 players, and iPods. The super-luxury leather goods related to electronic
equipment is a segment that is expected to grow.
Travel goods: This category constitutes a large market that has developed in step with
travelling and tourism. The emphasis is basically on usefulness and ergonomics. The major
trends over the last years have been the introduction of wheels to all kinds of luggage and the
search for lightness. This has worked against leather. There have been considerable changes in
the last decade with the arrival of budget airlines and continuously changing security rules.
Short-haul passengers not wishing to check in luggage have created a market for maximum-
size hand/cabin luggage of high quality.
Briefcases and portfolios: This market is linked to travel and business. Laptops have created
a great need for cases with a specific design – they are mostly made from high-performance
textiles and synthetic materials. Similarly, women’s and men’s briefcases made of genuine
leather and synthetic materials hold an important place in the market. Changes in travel are
affecting this market in the same way as they do travel goods.
School articles: This category corresponds to that of the old “leather satchels.” Trends
changed in 1980 with the appearance of new and fashionable lines of school bags in France
and Germany. Today, the trend is the rucksack made of canvas and printed with various logos
and brand names. A number of the better-known brands today were initially military packs and
evolved into school bags made of materials such as corduroy.
Saddlery: This is a specialized market with a very specific clientele. Saddles and harness items
belong to the luxury segment due to their time-consuming manufacturing process. They are
hardly affected by fashion, so they can easily be made in countries with low labor costs. There
is still a premium market for superior quality saddles, especially the “English” saddle; most
manufacturers of high-quality saddles are in France, Germany and the UK. Argentina, Pakistan
and Morocco are now important suppliers of saddles, and India is also making efforts to get a
share of this specialty market.
Cat and dog articles: A fast growing market in industrialized countries (USA, Europe), where
people are increasingly fond of pets. Many of these products (e.g., collars, leashes, muzzles)
are made predominantly in developing countries. The pet-food sector, which uses raw hides, is
a separate, but important market.
10
Hunting and fishing articles: This is a specific market that is not really influenced by fashion.
These products are generally purchased by well-to-do people with a wide variety of
backgrounds. Stationery articles and special cases articles such as desk pads and note-pad
covers are today in decline due to the use of computers. But other articles, such as mobile-
phone holsters, are booming. The fountain pen has made a comeback and, with it, the demand
for protective carrying cases has re-emerged. Some evolution at the luxury end of this market
can be expected, as the balance between paper and the computer continues to change.
Military equipment: Historically, leather and the military have been of great importance to each
other in terms of saddles, harness, belting, holsters, footwear, and at one time armor. Today,
this is a very specific market, which has been growing considerably in the last ten years. The
main products are footwear and gloves (as personal protective equipment), which are now
usually made of highly technical leathers.
Belts: This is a steady and relatively large market especially in the traditional men’s belts
segment. Belts are not much influenced by fashion, since changes occur mostly in buckle
designs. The manufacturing process of such items has become highly mechanized.
Watch straps: This also constitutes a relatively large market that has only been slightly
threatened by metal or synthetic straps since it stabilized some years ago. The manufacturing
process, as in the case of belts, is highly mechanized, except for top luxury products (hand-
stitched straps made of exotic skins). Leather for watch straps has to be anti-allergic and to
have good levels of sweat resistance.
Overall, the leather goods industry is characterized by the diversity of its products. These items
are constantly developing according to consumer needs and, for certain articles, to fashion
trends.
11
3.0 BANGLADESH LEATHER INDUSTRY
3.1. History of Leather Industry in Bangladesh
Leather sector is a mature manufacturing sector in Bangladesh with an extensive heritage of
over 606 years. This is a bi-product industry which is agro based integrated with locally
sourced original raw materials (hides and skins) having incredible potentials for sustained
growth and export development along a noticeably long duration of time length.
Indian vegetable-tanned crust was being developed by the Indian- subcontinent small leather
industry over a hundred years ago to safeguard the hide in the safest way to suit Indian weather
conditions. The leather industry was subjugated by vegetable-tanned until mid-1960’s.
Bangladesh’s expansion of leather processing industry started in the later part of1940s. East
Bengal, the first tannery of the country, was set up by RP Sahaat Narayanganj in the 1940s7 .
It was afterward moved to Hazaribagh area of Dhaka, which evolved into the major mover of
tannery units through the installation of a large number of tannery units in the past years. Before
the Partition of Bengal (1947), hides and skins available in the former East Bengal, almost all
were exported to West Bengal, erstwhile West Pakistan, Iran and Turkey. During that time it
was mostly the non-Bengali tradesmen and traders scheme the tanning industry in East
Pakistan and export of leather. Nevertheless, a few small tanning units which were mostly
cottage type and used to process leather mainly for the domestic markets, belonged to Bengali
entrepreneurs.
Non-Bengali tanners processed wet-blue and for further processing and finishing for producing
different consumer goods sent them to erstwhile West Pakistan. Till1960, tanneries of erstwhile
East Pakistan used to process raw hides and cattle skins by applying salt and then freshening
them in the sun and the substance thus developed were known as shaltu8 .
In 1971, during the war of liberation, abandoning about 30 tannery units owned by them, the
non-Bengali tanners of Bangladesh left the country. After the war, the new government of
Bangladesh with a newly formed Tannery Corporation vested the management of these units,
addressing an indirect expectation to change the units into finished leather manufacture units.
Regrettably, because of lack of experience and corrupt practices the corporation could not serve
the purpose.
Later, the government closed down the Tannery Corporation and transferred the management
of most of these tanneries to Bangladesh Chemical Industries Corporation (BCIC) and three
of them to Bangladesh Freedom Fighters Welfare Trust. Both the authorities had miserably
failed to bring success in the tannery industry9 .The Government of Bangladesh forced export
duty on wet-blue leather in 1977 to encourage the production of crust and finished leather.
6 Banglapedia
7 Banglapedia
8 Ancient way of preserving raw cattle leather
9 www.sos-arsenic.net
12
The export from leather sector was almost 100% in the form of wet-blue, the chrome tanned and
semi-processed leather until 1980-85. Improvement of major policies took place in this sector
during the period of 1980-81, which resulted in affirmative development of the sector.
Due to the veto on wet-blue export from July, 1990, the leather industry of Bangladesh had
entered into second chapter of its development. Duringthemid-90s began a new era for leather
industries in Bangladesh as the modern leather manufacturing units were set up. Till the end of
the last century, the leather sector maintained a very feeble profile. So, the growth of this
industry was always minor.
As it has neither encouraged the emergence of new entrepreneurs in this sector nor has it
helped to raise foreign buyer’s confidence to invest, this trend in management of technology has
further worsened the state of the industry. Therefore, Bangladesh still remains a source of
processed leather and to a very inadequate extent, finished leather and leather goods in the
international market.
3.2. Leather Industry in Brief
The leather industry in Bangladesh is well recognized and is a significant foreign exchange
earner. The industry is completely in the private sector, which has been proven fully capable of
handling it. Out of the total 207 tanneries of Bangladesh, 186 are located chaotically in
Hazaribagh area in Dhaka where 84 percent of the total supply of hides and skins are
processed in a highly jam-packed area of only 70 acres of land.
The unplanned tanneries at Hazaribagh do not have sustaining infrastructures. No tannery in
the area has effluent treatment facilities (ETP), which is posing a grave danger to environment.
The industry is in the process of shifting to Savar in thought of the pollution it cast upon the
Dhaka City and because of a heightened lack of space for development and modernization.
13
Figure 2: % Contribution to GDP
The main raw materials for this industry are cowhides and goat skin. The annual domestic
supply of hides and skins is around 200 million square feet, consisting of 63.98% Cowhides,
32.74% goat skin, 1.09% Sheep skin and 2.219% buffalo hides. Local Consumption of leather is
around one fifth of the total output and the rest 80% is exported in the form of Crust leather
(75%), and finished leather (20%), footwear and leather goods (5%)10 .
There has been some significant improvement in animal husbandry and butcher's techniques in
Bangladesh in current times, but to reach the international standard, it may take quite some
time. The Black Bengal and other variants of goat skin from Bangladesh enjoy an exceptional
status for quality worldwide.
At present, the leather sector accounts for 3-4 percent of total export earnings. According to
Bangladesh Export Promotion Bureau (EPB), contribution of leather sector to total GDP was
0.32% in 2005. Figure-2 shows Contribution of Leather Sector to GDP from 1999 to 2005.
Over 50 manufacturers are producing various leather items such as footwear, travel goods,
suitcases, briefcases, fashion accessories, belts, wallets, hand bags, case holders etc. for
overseas export. Most of the minute tanneries are family owned and operated as cottage type
industries. Many of them are established as proprietorship or partnership. The larger tanneries
are mostly public or private limited companies. Only a few tanneries have proper accounting
practices and financial controls in place to identify their profitability and financial condition.
10
www.sos-arsenic.net
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
% of GDP 0.38 0.37 0.22 0.21 0.2 0.21 0.41 0.35 0.32 0.31 0.32
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
% o
f G
DP
% Contribution to GDP
14
Now a days, leather and leather products are exported to about 53 countries of the world. The
chief importing countries are: Italy, Brazil, Germany, Singapore, China and the USA. Export
Promotion Bureau sources state that export income from leather goods was US$287.78 million
in 2004-2005, and of that, about 80% are from leather and the rest is from completed leather
goods.
Figure 3: Export Growth Rates of Leather and Leather Goods for the Years 1998-2005 (Source: Bangladesh
Bureau of Statistics and Export Promotion Bureau)
Figure-3 exhibits the initially decline of the export growth rate of Bangladesh leather sector in
the year 1998-1999 as there was economic depression in Bangladesh due to substantial flood.
In the year 2002-2003 export growth rate was downbeat because of the worldwide economic
recession as a result of the War in Iraq, the Twin Tower (9/11) incident, increase of international
terrorism, fundamentalist orientations, etc.
Export growth rate for the year 2004-2005 was 8.22%. Foreign investment to the manufacturing
leather sector of Bangladesh has been very narrow. Till March 2003, the total foreign
investment in the industrial leather sector was $136.12 million, which is only 1.33 % of the total
foreign direct investment into the country. The growth rate was highest in 2000-2001
(16.32%)11.
The Leather sector is also a foremost employer of semi-skilled workers, which is a fundamental
step towards alleviating unemployment. Information obtained from a number of trustworthy
11
Export Promotion Bureau
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Growt Rate in % -5% 11% 15% -15% -9% 15% 9%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
% C
han
ge in
Exp
ort
s
Export Growth Rate of Leather and Leather Goods in Bangladesh
15
sources exhibits that in total (accumulated) 741,000 people are directly or indirectly in leather
and its sub-sectors are employed. 200,000 people are involved in rawhide collection and supply
and 50,000 are operational in tanning industry. About 300,000 workers are related to retailing of
leather.
Table 5: List of Leather Goods Produced in Bangladesh
At present it is anticipated that about
150,000 persons are employed in the
footwear industry, 30,000 persons are
in leather goods industry and another
8000 persons are involved in
exporting of leather and byproduct
processing12. In spite of having a
great prospective for growth, the
net outcome of development efforts
undertaken for the leather export
sector of Bangladesh have been far
from remarkable due to the
unfortunate quality of processing,
illegal export to India, reduced
technological base, insufficient
financing, low value addition,
requirement of marketing skill,
incorrect planning and improper
execution.
Bangladesh exports significant
amount of leather, which is used as a
go-between product for producing
special types of leather goods and
footwear by the developed countries.
Besides, Bangladesh manufactures an
extensive and diverse range of leather
goods for the export market albeit in a
restricted quantity.
12
(Source: BCLT, LSBPC, ILO, BBS, GTZ, RSMA and ITC-ATF)
Sl For Domestic
Market
Sl For International
Market
1 Ladies Shoes 1 Processed Leather
2 Leather Jacket
2 Gents Shoes 3 Leather Blazer
4 Leather Skirt
3 Sandals /Slippers 5 Leather Trouser
6 Apron
4 Belts 7 Purse
8 Money bags
5 Travel Bags 9 Belts
10 Briefcase
6 Purse 11 Travel bags
12 Office bags
7 Money Bags 13 Suitcase
14 Ladies shoes
8 Office Bags 15 Gents shoes
16 Sandals /Slippers
9 Suitcase 17 Camera case
18 Racket cover
10 Briefcases 19 Card holder
20 Pen holder
11 Gift Items 21 Passport case
22 Document case
12 Processed Leather 23 Spectacle case
24 Gift Items
16
3.3 Market Structure
3.3.1 Demographic Concentration
Traditionally, the tannery industry got intense in the Hazaribagh area of Dhaka city where
almost 90% of all tanneries are situated. This concentration happened in an unplanned style
posing severe threat to the environment. Hence, the government has taken a step to shift the
industry to a leather estate at Savar outside the city. Nearly 90% of all leather footwear making
units is located in and around Dhaka city with some leather footwear production units existing in
Khulna and Chittagong city and in Bhairab of Kishoreganj district.
Inside Dhaka city) in two areas known as Siddique Bazaar and Bongshal where concentration of
small leather footwear making units (having 10-49 workers), half of these small units are
located. Others areas of concentration of small and medium leather footwear making units in
and about Dhaka city include Lalbag, Nazirabazar, Sitpatli, Bangladuar, Alu Bazar, Dakkhin
Moishundi, Pagla and Nawabpur.
3.3.1.1. Modern Leather Industrial City-Savar
In the year 2003, the Government of Bangladesh announced that the tanneries situated in
Hazaribag will be shifted to modern and a purpose-built cluster in Savar, 10 kilometers from
Hazaribag, on the banks of the river Dhaleswari. The key emphasize of the Savar cluster was to
be the Common Effluent Treatment Plant (CETP), compliant to international environmental
standards. The Bangladesh Small and Cottage Industries Corporation (BSCIC) is the
implementing agency for the project.
It will hold up 195 tanneries with an employment probable of 100,000 people. However, transfer
and moving to designated modern tannery cite with on handout old machineries from the
existing Hazaribagh cite is a huge challenge, and a matter of big investments for the tannery
owners. The sooner it takes place the better.
3.3.2 Leather Goods Market Size in Bangladesh 2013
Other than the existing subsectors in leather sector no pioneering sub-sector is found emerging
very soon, although a few big companies from Taiwan and China beforehand invested in this
sector, and a few factories had started producing out soles which is a very significant and
welcoming start of new addition in the footwear sub-sector. The rearward linkage industries are
nearly empty, and ready for investment.
17
3.3.2.1 Tannery Subsector
Among the total 220 tanneries in Bangladesh, 187 tanneries are situated in Hazaribagh, Dhaka.
The main raw materials for
this sector are cowhides
and goatskins. 112-115 big
units have amenities for
processing only wet blue
leather. The residual 91-95
small, medium and large
units have sound facilities
to produce crust and
finished leather.
The annual domestic
supply is around 220
million square feet of hides
and skins, consisting of
63.98% cowhides, 32.74% goat skins, 1.09% sheep skin and 2.219% buffalo hides. While 50%
of this is consumed locally and rest 50% is exported to 53 countries in the form of semi-finished
leather (75%), finished leather (20%), and footwear, handbags, accessories, and other leather
goods (5%)13 .
The Hazaribagh tanneries can reportedly process 94% of the hides and skins accessible in
Bangladesh. However, free of this capacity, there are issues effecting the collection of hides and
skins before they arrive at the tanneries.
The global leather and its product market size is considered to be as ~US$ 100 billion, and the
share of Bangladesh business is 0.56% (COMTRADE, 2014) . The objective of Bangladesh is
increasing that market share to 2% by 2013 represents an striving increase in export value. This
subsector generated direct employment of about 50,000 people.
Environmental pollution is one of the major concerns of this sector, according to DOE, the
tanneries release nearly 22,000 cubic meters of unprocessed and highly toxic (contains
chromium) into the water body on a regular basis. On the other hand, it produces 100 tons of
solid waste every day in the form of trappings of finished leathers, shaving dust, hairs, trimmed
animal flesh skins/hides to infect the soil and the water.
13
Draft Leather Policy 2006-2010 by LSBPC, MoC & GoB
18
3.3.2.2 Leather Footwear Subsector
The footwear sub-sector of Bangladesh earned revenues in surfeit of USD 335.51 million in
2012-13. The biggest destination for footwear exports with a 60% Share the EU, followed by
Japan with 30%, and the rest of the world totaling for 10%. Bangladesh has a >1% share of the
world footwear market.
Meeting with council of the footwear sub-sector highlighted a positive response about business.
The businesses analysis of their products shows that the price and quality segments need to be
handled aggressively.
Footwear manufacturers in the country rate themselves as being able to take action quickly to
buyer inquiries, having the ability to offer competitive prices, quality products, and quick
fulfillment of orders. The growth of this sector is very heartening and shows off the core
potentiality of the sector.
Table 6: Footwear Sector Growth (Source: Bangladesh Bureau of Statistics)
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Footwear
(all)
68.3 87.78 95.45 123.03 159.16 182.92 204.09 297.8 335.51
Growth in
%
46.56 28.52 8.73 28.89 29.37 14.93 11.57 45.92 12.66
3.3.2.3 Leather Goods Sub-Sector
The sub-sector leather goods in Bangladesh earned export revenues of USD 99.39 million
during 2011-12. This sub-sector displays variety in enterprise dynamics that is exclusive, in that
it encompasses very few enterprises that are very sophisticated in product expansion and
developed processes, as well as those that are smaller and still trying to characterize their
competitive competencies. The sector is very potential, and the growth of this sector is very
encouraging:
Table 7: Leather Goods Subsector Growth (Source: Bangladesh Bureau of Statistics)
2008-09 2009-10 2010-11 2011-12
Growth in % 111.72 54.2 91.29 79.4
The future is supposed very positive, with possibility for more than 100% increase predictable in
2012-13. Nearly all manufacturers are EU focused in their exports, and have been to fairs to
promote their products. They are presented with preparatory design and industrial assistances
subsequent to their participation. This experience was seen as important in light of the fact that
they need to develop core competencies at the enterprise-level was a valuable lesson. Another
19
lesson that came through to the participants was the requirement for product demarcation at the
enterprise-level.
This sub-sector is eager on developing partnership with its peers in Asia (India, China, and
Vietnam), and believes that in craftsmanship that technical assistance may be more appropriate
if sourced from the region. The representatives of leather goods firms also uttered the need to
organize fair(s) in Bangladesh regularly, and attracting buyers to visit in concurrence with the
Chennai leather fair, in India. Japan.
Table 8: Employment in the Leather Sector Value Chain (Source: GTZ)
Stages in Value Chain
Total Number of People
Employed (Estimated)
Average Value
Addition at Each
Stage Direct Indirec
t
Total
Raw hide Supply 70,000 130,00
0
200,000 3%
Tannery/Leather Processing 30,000 20,000 50,000 Wet Blue
7% Crust Leather
8% Finished
Leather 9% Wholesaling (Leather, Footwear
and Leather Goods)
3,000 - 3,000 Leather 29% Footwear 6%
Retailing (Leather, Footwear and
Leather Goods)
300,000 - 300,000 16%
Footwear Production (Mechanized,
Semi- mechanized & Handmade)
130,000 20,000 150,000 35%
Leather Goods Production (Semi-
Mechanized & Handmade)
25,000 5,000 30,000 42%
Exporting and By products
Processing
-
8,000
8,000
13%
Total number of people
employed
558,000
183,00
0
741,000
-
Table 9: Distribution of Value Addition across all Value Chain (Source: GTZ)
Sl
Stages
Distribut
ion of
Value
Addition
%
Sl
Stages
Distribut
ion of
Value
Addition
% Tannery Footwear Industrial (Export
Market)
1. Raw hide to wet blue stage 24 1. Tannery to footwear
production
100
2. Wet blue to crust leather
stage
33
3. Crust leather to finished
leather stage
43
Total 100 Total 100 Footwear Handmade (Local
Market)
Leather Goods Handmade
(Local Market)
20
1. Input supplier to footwear
production
58 1. Input supplier to Lather
goods
production
71
2. Footwear production to
footwear
wholesale
10 2. Leather goods production
to
retailing
29
3. Footwear wholesale to
retailing
32
Total 100 Total 100 Footwear Industrial (Local
Market)
Leather Goods Semi-
industrial
(Export Market)
1. Tannery to footwear
production
65 1. Tannery to leather goods
production
100
2. Footwear production to
wholesale
9
3. Wholesale to retailing 26
Total 100 Total 100
3.4 Major Institutions involved in leather sector
3.4.1 Leather Associations of Bangladesh
Table 10: Major Associations in the Leather Sector (Source: GTZ)
Name of the
Organization
Major Five Stated Activities Contact Address
Bangladesh
Finished
Leather,
Leather goods
and Footwear
and Exporters’
Association
(BFLLFEA)
To promote, protect and safeguard the
interest of all the members of the
association who are engaged in the
manufacture and export of crust and
finished leather and leather goods.
To keep and maintain the highest
standard of unity, mutual cooperation
and goodwill among the members of
the association in the conduct of their
business carried on by them.
To promote a cognizance of mutual
assistance and cooperation among the
members and maintain the uniformity
of rules of business and discourage
unhealthy competition among the
members of the association.
To render such assistance, cooperation
and advice to government authority or
any other public or private authority in
order to enable them to promote,
protect and safeguard the interest of
the members of the association
members and customers.
To arbitrate all disputes and differences
Mr. Md. Tipu Sultan,
Chairman Bangladesh
Finished Leather, Leather
goods and Footwear
Exporters’ Association
(BFLLFEA) House#61,
Road#2A, Dhanmondi
R/A, Dhaka-1209
Phone: +8802-8622167
Fax: +880-2-8622168
E-mail:
21
that may arise between the members
of the association and/or between the
members
Bangladesh
Tanners
Association
(BTA)
To work for over all welfare of the
members of leather industry.
To apprise the government about the
importance and contribution of leather
industry in order to raise benefits of the
members.
To popularize leather, leather goods
and footwear of Bangladesh in
international markets; marketing of the
same.
To resolve disputes related to
transactions among the members.
To perform social works for general
public in times of famine, earthquake,
storm etc.
Mr. Md. Harun
Chowdhury
Chairman Bangladesh
Tanners Association
(BTA)
99, Hazaribagh, Dhaka-
1209
Phone: +880-2-8626878,
9660754 (Off)
Fax: +880-2-8616348,
8618546
Leather Goods
and Footwear
Manufacturers’
& Exporters’
Association of
Bangladesh
(LFMEAB)
To help in gaining export market for the
members by sending delegates to
various countries, attending
international fairs, seminar etc.
To assist members get customs, bond,
and warehouse license and renew
them.
To help members in resolving various
problems and difficulties related to
customs, duties and taxes.
To authenticate GSP application and to
help out members for getting cash
incentive and other financial benefits
from government.
To maintain liaison with exporters and
to work with Export Promotion Bureau.
Mr. Saiful Islam
Vice-President Leather
Goods and Footwear
Manufacturers’ and
Exporters Association
of Bangladesh (LFMEAB)
Erectors House (9th
floor), 18, Kamal Ataturk
Avenue,
Banani C/A, Dhaka-1213,
Bangladesh
Phone: 9354993-4 (off),
01711522170
Fax: +880-2-9332569
Bangladesh
Hide and Skin
Merchants
Association
To handle tax problems for the
member.
To prevent extortion and other
problems associated with riverine
transportation as un-processed/semi-
processed hide can be considered as
perishable goods.
To resolve problems related to debt
and receipts with the tannery owners.
To organize joint committees for
Mr. Md. Aftab
Vice Chairman
Bangladesh Hide and
Skin Merchants
Association
88/A, Water Works Road,
Posta, Dhaka-1211,
Bangladesh
Phone: 9663203,
01711-523673
22
controlling seasonal businessmen
(those who do business only during
Eid-ul- Azha) and to try to control
market.
To co-ordinate with the Ministry of
Commerce to stabilize the salt market
so that the supply and prices of salt
remains unaffected.
Bangladesh
Chemical
Importers &
Merchant
Association
To resolve import duty reduction issue
through discussion with National Board
of Revenue (NBR).
To see that no leather chemical is
imported or sold illegally.
To resolve transaction problems
through mediation with owners of
leather companies and to create and
maintain good relation with them.
To help out members for problems
regarding chemical import through
discussion and to help out members
from association fund when it is
required.
To supply information about retention
and expansion of trade and commerce
and to discuss with government for
avoiding uneven competition.
Mr. Mizanur Rahman
Mesban
President Bangladesh
Chemical Importers &
Merchant Association
124, Hazaribagh, Dhaka-
1209
Tel: 8650712,
0189145007
Bangladesh
Leather
Manufacturers
Association
To preserve and enhance the interest
of the members.
To act as Collective Bargaining Agent
(CBA) for discussion with government
about Tax, VATs etc.
To participate in local business.
To resolve problems relating to
outstanding payment in terms of credit
sales and credit purchase.
To assist members’ legal issues.
Hazi Md. Ali General
Secretary Bangladesh
Leather Manufacturers
Association
53, Sher-e-Bangla Road,
Hazaribagh, Dhaka- 1209
Tel: 8619784
Bangladesh
Hide and Skins
Retail
Dealer
Merchant
Association
To communicate with the govt. about
the interest of the association
members.
To co-ordinate with the Government for
ensuring supply of salt at a reasonable
price to the members of the
associations when the price of salt
rises.
Mr. Md. Aslam
General Secretary
89, Water Works Road
Posta, Dhaka-1211
23
To resolve disputes related to
transactions in tanneries among the
members through discussion.
To take steps for getting help from the
government to prevent extortion during
transportation and to ensure fast
supply of leathers from remote areas of
the country as they are perishable
goods.
To help out association members
financially (not business related) when
it is required
Leather
Technologist
Society
Bangladesh
To help out leather technologists in the
leather, footwear and leather goods
sector when they have problems
related to their job with the tanner
owners.
To provide financial support to leather
technologists if required (such as for
treatment).
To help out fresh leather technologists
by providing information about jobs
available in different leather, leather
goods and footwear industries; and
sometimes helps them to get jobs.
To arrange scholarships for poor and
meritorious students of leather college.
To arrange recreational events for the
members of the association (For
example, arranging annual picnic).
Mr. Mir Asadur Rahman
Asad
General Secretary
Leather Technologist
Society Bangladesh
Kohinoor Tannery Block,
1st Floor, 130 Hazaribagh,
Dhaka-1209
Tel: 9663432
Hazaribagh
Tannery
Workers Union
To take steps so that no child laborer is
engaged in tanneries.
To bargain with tannery owners for
increasing labor wages and other
benefits.
To make tannery owners aware about
labors heath security and to arrange
meetings to create awareness among
laborers.
To participate in workshop, meetings
and seminars on leather related issues
organized by government.
To apprise government regarding to
continuity of service of laborers and
Mr. Mr. Abdul Maleque
General Secretary
Hazaribagh Tannery
Workers Union
180/A, Hazaribagh
Dhaka-1209
Tel: 8614311
24
treatment facilities when tanneries will
be shifted to Savar, Dhaka.
Bangladesh
Leather and
Leather Goods
Manufacturers
Cooperative
Society Ltd.
To discuss with the government and
related parties for increasing export
related benefits for those association
members who are commercial
exporter.
To solve problems related to
transactions among the members
through understanding.
To maintain communication with the
government about allocating plots to
the association members when the
leather industry will be shifted to
Hemayetpur.
To maintain liaison with other
associations of the leather industry.
To supply information about marketing
to the association members.
Mr. Md. Shahjahan
Bhuiyan
President Bangladesh
Leather and Leather
Goods Manufacturers
Cooperative Society Ltd.
99, Hazaribagh, Dhaka-
1209
Mobile: 01711137005,
01711695120
Bangladesh
Leather
Exporters’
Association
To act as mediator if there is any
problem among the members.
To discuss with government for the
benefits of association members.
To maintain liaison with other
associations of leather industry.
To advise exporters about shipment,
leather market etc.
To develop combined funds to
undertake projects for the welfare of
association members.
Mr. A. B. M. Masud
General Secretary
Bangladesh Leather
Exporter Association
38, Sonaton Gar Road,
Dhaka-1209
Tel: 9661114
25
3.4.2 Leather Institutions
Table 11: List of Major Leather Institutes (Source: GTZ)
Name of the
Organization
Major Five Stated Activities Contact Address
Bangladesh
College of Leather
Technology
To prepare leather
technologists for leather,
leather gods and footwear at
the degree level.
To conduct research for the
development of leather,
footwear and leather
products.
To provide different services
to ministry of Education,
Ministry of Industry, Ministry
of Commerce and National
Board of Revenue (NBR).
To maintain liaison with
different government
organizations.
To provide services for
through Leather Service
Centre with the help of Italian
supported project
(International Trade Centre-
ITC)
Dr. Khan Rezaul Karim
Principal
Bangladesh College of
Leather Technology
45-50, Hazaribagh, Dhaka
Tel: 8617439, 8620114
26
3.4.3 Leather Research Institutes
Table 12: List of Major Leather Research Institutes (Source: GTZ)
Name of the
Organization
Major Five Stated Activities Contact Address
Leather Research
Institute, BCSIR
To initiate, promote and guide
scientific, industrial and
technological research on
establishment and development
of industries.
To establish, maintain
and develop laboratories,
workshops and institutes,
centers and organization for the
development of scientific and
industrial research.
To adopt measures for the
commercial utilization of
discoveries and invention.
To collect and disseminate
information of scientific,
industrial and technological
matters and publish scientific
papers, reports and periodicals
on such matters.
To encourage establishment of
industrial research
organizations
Mr. Samsul Haque
Director General – In
charge
Leather Research
Institute, BCSIR
Nayerhat, Savar,
Dhaka-
1350
Tel: 8625038-9
Fax: 7708754
Bangladesh Livestock
Research Institute
Animal health and disease
control.
Economic of livestock and
marketing of livestock and
livestock products
Development of breed (Cattle,
goat, sheep, poultry etc.)
Development of feed and forge
Development of dairy and meat.
Dr. Kazi Emdadul
Haque
Director General
Bangladesh Livestock
Research Institute
Savar, Dhaka-1341
Tel: 7708326
Contact: Abdul
Subahan
Miah
27
3.4.4 Government Bodies
Table 13: List of Government Bodies Working in the Leather Sector (Source: GTZ)
Name of the
Organization
Major Five Stated Activities Contact Address
Export Promotion
Bureau (EPB)
Formulating and adopting policy and
Programs for active promotion of
exports from the country and carrying
out promotional activities in product and
market development & expansion of
supply side capacity.
Coordinating exports development
efforts at different sectors and
production levels.
Exploring markets of exportable goods
in abroad, collecting and disseminating
trade information to the stakeholders
and organizing Bangladesh private
sector participation in international trade
fairs abroad.
Imparting training for Human Resource
Development and conducting studies,
surveys, research etc. for expansion
and diversification of exports.
Assisting the Ministry of Commerce in
formulating Export Policy of the country.
Mr. Mir Shahabuddin
Mohammad Vice-
Chairman Export
Promotion Bureau
1, Kawranbazar,
Dhaka
Tel: 8159140
Leather Sector
Business
Promotion
Council (LSBPC),
Ministry of
Commerce
Promoting the export of leather, leather
goods, leather footwear and
accessories.
Promoting and facilitate export of
leather and leather products and import
of raw materials, know how, resources,
equipment and machinery.
Encouraging and assisting in a
balanced development of leather sector
in Bangladesh and setting up a
common facility center/institute for
testing, training, standardization and
design centers for upgrading the
technology in the leather sector.
Editing, printing and publishing journals,
brochure and sales materials for
business promotion.
Ms. Ishrat Jahan
Program Manager
Leather Sector
Business Promotion
Council (LSBPC)
DCCI Building (9th
Floor), Room 1001,
65-
66 Motijheel C/A
Dhaka, Bangladesh
Tel: 9550104,
9550074
Fax: 9567149
E-mail:
28
Undertaking training or educational
program constantly to develop, promote
advance and increase the value added
products in the leather sector
Bangladesh
Small
& Cottage
Industries
Corporation
(BSCIC)
Provide pre-investment and post
investment, counseling and advisory
services.
Develop industrial plots for investors.
Supply technical information, design
and prototypes, industrial profiles and
market information.
Assist financing of SCI through DFIs &
NCBs, selection of right type of
machinery, adopting and adapting
appropriate technology, studying
investment feasibility and establishing
sub- contracting linkages.
Organize technical and management
Skill development training, Fairs and
exhibitions and buyer-seller meet.
Mr. S. R. Osmani
The Chairman
Bangladesh Small &
Cottage Industries
Corporation
105-106 Motijheel C/A
Dhaka-1000
Tel: 9559373,
9553481
Bangladesh
Standard and
Testing Institute
(BSTI)
To set up Bangladesh Standards of
quality and dimensions and prepare and
promote the general adoptions of
standards on national and international
basis in relation to materials,
commodities, structures, practices and
operations.
To promote Standardization, quality
control, metrology and simplification of
benchmarking in industry and
commerce.
To implement Bangladesh Standards
through the administration of a national
certification mark scheme or inspection
of goods or both.
To certify the quality of commodities,
materials, products, and other things
including food materials, whether for
local consumption, export or import.
To coordinate the efforts of producers
and users for the improvement of
materials, products, code of practice,
appliances, processes and methods.
Mr. A. B. M. Abdul
Huq Chowdhury
Director General
Bangladesh Standard
and Testing Institute
116-A, Tejgaon
Industrial Area,
Dhaka-
1208, Bangladesh
Tel: 8821462
Fax: 9131581
29
Ministry of
Industries
Accept private initiatives for economic
development and uphold the
government’s facilitating role in creating
a favorable atmosphere to augment
private investments in the country’s
industrialization, given the background
of a free market economy and
globalization.
Cater to the needs for local and foreign
market and also for consumer
satisfaction of the local products;
measures undertaken include, among
others, efforts to: (a) produce world
class quality products, (b) diversification
of goods, (c) introduce cost-effective
management in the production system,
(d) more value addition in the industrial
sector, and (e) provide support for
enhancing productivity by using
continuous, appropriate and advanced
technology.
Provide assistance to augment the
industrial sector’s contributions to the
GDP of the national economy, meet the
general demands of local consumers
and earn more foreign exchange so that
local industrial entrepreneurs can attain
further capacity to establish industries,
and industrial goods can have access to
the overseas market on a competitive
basis.
Provide inspiration for the speedy
expansion of cottage industries and
SMEs and for further investment in
these sectors so that new employment
opportunities are generated,
unemployment is reduced and poverty
alleviation program made successful in
the country.
Increase productivity at the enterprise
level; produce high-value added
products step by step through
development and application of
appropriate technology and increase of
Dr. Mohammad Ayub
Miah
Additional Secretary
Ministry of Industries
Shilpa Bahaban,
Dhaka-
1000
Tel: 9563556
30
export through export diversification.
Ministry of
Fisheries &
Livestock
Improvement of cattle wealth.
Dairies- Management of cattle farm.
Animal nutrition.
Livestock census and cattle insurance.
Research and training in fishery and
livestock
Mr. Iqbal Mahmood
Joint Secretary
(Admin/Livestock)
Ministry of Fisheries &
Livestock
Bangladesh
Secretariat, Dhaka
Tel: 7166263
3.4.5 Private Organizations
Name of the
Organization
Major Five Stated Activities Contact Address
Design &
Technology
Centre (DTC)
Providing:
Training for factory managers,
technicians, product designers and
advisory services for quality and
wastage control.
Consultancy in improving existing
and new product line and
arrangement of production flow for
the factory.
Assistance for designing corporate
profile, product catalogue and
assistance in arranging/participating
fairs locally and internationally.
Marketing assistance for local and
export market.
Information services regarding fairs,
designs, technology, machinery and
tools, materials, business
opportunities, market statistics etc.
Mr. Atif Rashid
Executive Director Centre for
Design & Technology Ltd.
House#53, Road#10, Block-
E, Banani-1213
Tel: 9860077
Fax: 9881225
3.5 Leather Products in Bangladesh
There is wide variety of leather goods produced in the Bangladesh. The main groups are below:
I. Small leather goods/Fancy leather goods
II. Medium leather goods
III. Heavy leather goods
The leather products of Bangladesh (non-footwear) include the following:
31
3.5.1. Small Leather products
Small cowhide merchandise or local leather
products which are normally conveyed in pocket
and purses, incorporates totes, wallets, key case,
international ID case, note case, card case,
cigarette case what's more stogie case, match
box case along these lines others. A large portion
of those items are made without any inside
solidifying of fortification. These cowhide products
oblige leather having thickness of around 0.5 mm
to 1.0014 mm . distinctive sorts of conceals and
skins which are typically utilized as a part of
making small cowhide products are, bovine softy,
goat coat, sheep napa, calf skin and so forth.
3.5.2. Medium Leather Goods
It incorporates purses, shopping packs, shoulder sacks, report cases, join cases et cetera.
These packs are produced using calf, goat, sheep and colorful skins and stows away completed
with scope of colors which produces a decent appearance and look complexity and innovation.
Leather, which has a thickness of 0.8 mm to 1.2 mm, is utilized as a part of making of medium
cowhide merchandise. Bovine softy, dry processed, cow napa, sheep napa, goat and buff softy
cowhide are broadly utilized as a part of making of medium leather merchandise.
3.5.3 Heavy Leather Goods
These are made by and large from cow and bison shrouds, which are solid and strong. The
shrouds always have different surface grain examples and size reaches from 20 to 30 sq. ft. is
full stow away. Cow and buff covers up of thickness 1 to 1.5 mm are utilized for making
substantial cowhide products. The sort to cowhide products for making substantial cowhide
products are, box sides, Katti Leather, Split Leather, Cow Upper, Upholstery, Buff Softy, and so
forth.
14
International Leather Standards
32
3.6 Marketing Leather goods
3.6.1 Research
The first step would be to know the market by answering the following questions:
Know the Target Market
Who are the potential clients?
What number of will be there in the market?
What amount/ how frequently/ do they purchase?
Is there any changing patterns?
Is the request expanding?
Market Environment
How is the economy influencing the market?
Who are the potential contenders?
What will be the piece of the pie of the contenders?
What is the level of rivalry?
What is the premise of rivalry
Is it value/ brand and so forth?
What government regulations influence this market?
Item Plan
What brand name/ image do you need?
The items advertise destinations?
How you plan to position the item?
The item promoting system to attain achievement?
Deals
What will be the deals targets for the next 12 months?
What can’t avoid being the - income?
What will the terrible benefit gauges?
What geological territories do you wish to spread?
Dissemination
How would like to disseminate the items?
Is it through the current dealer network?
Is it through extra merchants?
When will they be selected?
What can’t avoid being the exchange rebates?
33
Advancements
The advancements which relies upon the:
market size
market spread
business sector fragment
item situating
3.6.2 Strategies for Selling Products
Businesses can follow either the pull or the push strategy, or a combination of both to market
their product to the masses.
3.6.2.1 Push Selling
Steps needed for the push selling entails:
New merchant arrangement [ time/ schedule]
Yearly deals gauges for the new merchants
Month to month stockholding for the new merchants in their dealership.
Yearly deals gauges for the current merchants
Month to month stockholding for the current merchants in their dealership.
Consistent exchange rebate
Exceptional discount reward for lifting more stock -say 20% over keep going year.
Train the deals delegates.
Standard deals commission.
In addition to uncommon reward if they attain the targets [ 20% over the keep
going year]
Arrange the best deals
Ensure the existence of agent rivalry.
Arrange the exceptional merchant rivalry by areas in the nation.
Arrange the best merchant rivalry broadly.
Helpful tactics for push selling:
Provide presentation stands to the merchants
Provide Shop signs
Leaflets
Giveaways
34
3.6.2.2 Pull Selling
Pull Selling involves the following:
Immediate promoting advancements to the use of catalogs.
SEASONAL promoting advancements to the purchasers with extraordinary value
built in light of volume.
Deals drive by the deals reps. on major retailers.
Create a steadfastness program for 12 months for small independent stores.
Promote in the neighborhood papers/ magazines with a markdown voucher offer
with which people can purchase the items from the neighborhood merchants,
utilizing the voucher.
Load the site with a rebate voucher offer with which people can purchase the
items from the neighborhood merchants, by downloading/ utilizing the voucher.
3.6.3 Parameters
Parameters will to understand if the marketing strategy is actually working.
Sales Targets
Recovery/ Sales Collection
Business on net money
Invoicing Record
3.6.4 Marketing Tools
Leather goods are considered luxury goods and therefore ordinary marketing strategies do not
work for them. They are to be handled very delicately and treated as limited user goods and
therefore, the marketing strategies should also be very much be targeted towards the target
market.
3.6.4.1 TVC
The people who use leather products do not normally have a lot of time to sit back and watch
TV commercials. So it may not be a very viable approach.
35
3.6.4.2 Print Ad
Print ad might be a bit more effective if it is specifically
targeted to the rich and up class. Therefore, the
placement of the print ad must be done accordingly.
Magazines work best in this case. Historically, print ad
of leather goods have always known to show richness
and class in them so that must be kept in mind. Here is
a sample of some of the print ads.
3.6.4.3 Others
Free sampling might be an expensive but effective promotional tool when it comes to leather
goods. For example, little free samples or leather presents to corporate clients is sure to bring
up more revenue.
3.7 Distribution Channel
3.7.1 Raw Hide and Skin Collectors and Suppliers
The value chain methodology of this segment is launched by raw hide and skins gatherers and
suppliers including various individuals by regional standards termed as "Faria", "Bapari" and
"Arotdar". The Farias' (neighborhood small brokers) gather the hides and skins from the butcher
or slaughterer and send them to "Baparies" (small capital businessperson) in diverse business
for the starting treatment.
In the wake of taking important consideration, Baparies send those to "Arotdars" (locale level
conceal wholesalers). The Arotdars add salt to the conveyed skins and shrouds if necessary
while sorting these in their sheds. Later these items are sent to Posta zone of Dhaka city from
everywhere throughout the nation and from Posta it is supplied to diverse tanneries according to
request.
The distribution channel for raw hide and skin collectors and suppliers is:
♦ Raw Hide and Skin Collectors and Suppliers → Tanneries
3.7.2 Importers of Chemicals
One of the primary deterrents for the advancement of leather industry in Bangladesh is the
nonattendance of compound plants for creating substance reagents required for cowhide
36
transforming. More than 90%15 of the synthetic substances utilized are foreign made in diverse
nations.
Tanneries gather these chemicals from the neighborhood vendors of chemicals or the nearby
specialists for the remote concoction organizations. On account of the protracted import
strategy, a large portion of the neighborhood vendors and nearby specialists can't supply
chemicals in time to the tanneries. Lacking supply of chemicals prompts high cost of chemicals
in the neighborhood markets and accordingly builds the creation cost. Generally, Bangladesh is
not having the capacity to gain the normal foothold in the global business sector.
The distribution channel for importers of chemicals is:
♦ Importers of chemicals → Local Merchant/Local Agent of chemicals
3.7.3 Leather Processing Units or Tanneries
Tannery changes raw hides and skins into leather for made articles like shoe-upper, sack, bag,
sash, wallet and coat. In tanneries raw hides is prepared however performing Soaking,
Fleshing, Liming, De-liming, Bating, Pickling, Chrome Tanning, Samming, Splitting, Skiving,
Scudding, Drying, Staking and giving completing touch where the leather is given the last
surface treatment and look.
Right now there are 207 tanneries in Bangladesh1, 90% of them are in Hazaribagh of Dhaka,
and the rest is everywhere throughout the nation. Some presumed tanneries of Bangladesh are
Dhaka Leather, Apex Tannery, Lexco, Karim Leather, Samata Tannery and Bay Tannery.
Tanneries of Bangladesh can be characterized into three classes regarding ability to process
raw hide and skins
They are:
Large Scale Units (Census Sector)
Medium and Small Scale Units (Simple Sector)
Cottage Unit (Household Sector)
These tanneries by and large produce wet blue, outside layer and completed cowhide.
Most of them deliver covering leather, just a couple of them are delivering completed cowhide.
Around 80% of the created cowhide (outside layer and completed) is sent out to universal
business sector and the rest is expended by regional standards for the generation of footwear,
leather merchandise and articles of clothing.
The huge scale units are capital concentrated (small number of laborers included) and creating
amazing completed cowhide. These have higher request in the universal business. Medium-
scale units are delivering similarly low quality and trading a lower amount of items. Bungalow
units are altogether given to coddling the nearby market just. Because of the colossal reliance
15
Bangladesh Export Promotion Bureau, 2013.
37
on foreign chemicals, these tanneries are confronting issues in gathering due dates of global
contracts.
The distribution channels used by these tanneries are:
♦ Tanneries → Export Agent
♦ Tanneries → Manufacturer of leather goods and footwear
3.7.4 Wholesaler of Leather and Accessories
Leather wholesalers in Bangshal are also a fraction of the value chain of leather sector. They
buy poorer quality leathers from tanneries and vend them to local manufacturer of leather and
footwear products. They also import all sort of chemicals and garnishes for leather and footwear
goods. Factors like: (i) the traffic jam of old Dhaka (causing depletion of working hours), and (ii)
insufficient space for leather dispensation in the Bangshal market region, are hampering the
growth of business in the locality.
The distribution channel for wholesalers is:
♦ Wholesaler of Leather & Accessories → Manufacturer of footwear & leather goods for
domestic and international market
3.7.5 Handmade Footwear Manufacturers
Handmade footwear is manufactured a lover the country in speckled locations. From Bangshal
wholesale market these manufacturers gather leather, accessories, and chemicals and
manufacture reasonable quality (low quality justified by low price) sandals, shoes, slippers etc
for local market only.
The majority of these manufacturers do not have right of entry to modern technology and market
information. They only use sewing machine for sewing and the rest is done physically. Nearly all
of them sell their products to wholesalers, retailers or local showrooms. After that these
products are delivered to the end users.
Therefore, the distribution channels for handmade footwear manufacturers are:
♦ Handmade Footwear Manufacturer → Retailer/ Local Showroom → End User
(Domestic Market)
♦ Handmade Footwear Manufacturer → Wholesaler → Retailer → End User (Domestic
Market)
38
3.7.6 Industrial Footwear Manufacturers
Other than completed leather, some other underdone materials as lining leather, artificial sole,
insole-leather and adhesive are also used by the footwear manufacturing firms in producing
footwear. Footwear manufacturing units imports substantial volume of raw materials from
exterior sources. They Export their products to Hong Kong, Italy, Germany, Thailand and
European countries. About 15 to 20 footwear firms are working at present in Bangladesh. These
footwear firms manufacture modified high quality sandals, shoes, slippers etc. as per wants and
needs of international buyers. A major difficulty for these firms is the locally unavailability of the
Last Machines.
The dependency on imported final delays their manufacturing process ensuing in inability to
meet deadlines. In calculation, due to shortage of skilled designers, inadequate supply of
excellence leather, inadequate product line and product mix, etc. international market of
Bangladeshi footwear is not increasing to its full potential.
Industrial footwear manufacturers are using three distribution channels and that is:
♦ Industrial Footwear Manufacturer → International Market
♦ Industrial Footwear Manufacturer → Export Agent → International Market
♦ Industrial Footwear Manufacturer → Retailer → Domestic Market
3.7.7 Semi-industrial Footwear Manufacturers
Semi-modern footwear units make quality footwear for neighborhood showcase and also for
fare advertise in a constrained scale. Generation limit of these commercial ventures is smaller in
examination to mechanical footwear producers. These units are confronting comparative issues
- as those of the mechanical cowhide products units - thwarting development of their business.
Semi-industrial footwear units use two distribution channels, they are:
♦ Semi-industrial Footwear Manufacturer → Retailer → End User (Domestic Market)
♦ Semi-industrial Footwear Manufacturer → Export Agent → International Market
3.7.8 Handmade Leather Goods/Crafts Manufacturers
There is a small number of hand tailored cowhide merchandise producers in Bangladesh. They
have an adaptable item range, for example, moneybags, travel permit case, card holder, waist
cinch, portfolio office sacks, women bags, travel bags, coats, overcoat, skirt, trousers and so on
to fulfill the interest of nearby market. They gather leathers, chemicals, and fancy
embellishments from Bangshal wholesale market and offer their completed items to nearby
retail shops, end clients and once in a while to global purchasers casually. Insufficient
information on cutting edge cowhide innovations and advertising, untalented specialists and
39
constrained offices for item expansion are some real issues that these producers are
confronting.
They use two distribution channels, and they are
♦ Handmade Leather Goods/Crafts Manufacturer → Retailer → End User (Domestic Market)
♦ Handmade Leather Goods/Crafts Manufacturer → International Market
3.7.9 Industrial Leather Goods Manufacturers
At present just two mechanical cowhide products makers – Picard Bangladesh Ltd. also Crown
Leather Goods are working in Bangladesh. Picard Bangladesh is assembling basically women's
bags, and in a restricted scale, different things. Then again, Crown Leather Goods is
assembling an extensive variety of items including moneybags, women bags, office sacks,
distinctive sorts of handbag and so on.
Due to lacking supply of fantastic completed leather these two organizations generally import
premium quality completed cowhide from Italy, Germany and other European nations. They
once in a while import adornments, elaborate materials, and chemicals, and at different times,
gather those inputs from the neighborhood markets. Picard Bangladesh fares its items to
Germany just. They specified absence of talented faculty, failure to concoct global standard
items, nonappearance of current innovation and so forth as the real deterrent for business
sector extension
Their distribution channels are:
♦ Industrial Leather Goods Manufacturer → International Market
♦ Industrial Leather Goods Manufacturer → Retailer → Domestic Market
3.7.10 Semi-industrial Leather Goods Manufacturers
Semi-modern Leather Goods producers make 'small (fit as a fiddle and size) cowhide products'
that incorporates moneybag, card holder, handbag and so on., 'medium leather merchandise's
similar to office bags, women sacks, reports' case, cam case, and so on., and 'overwhelming
cowhide products' as travel sacks, attaché, cowhide articles of clothing, for example, coats,
coat, skirt, trousers, waist layer, overskirt and so on.
They utilize completed leather, lining cowhide and glue as their crude materials. Most of the
crude materials utilized by the leather merchandise assembling firms are gathered from nearby
sources. Reliance on purchasers supplied plans just, untrained faculty, and insufficient
mechanical backing and so on are their fundamental issues for extending business
The distribution channels for semi-industrial leather goods manufacturers are:
40
♦ Semi-industrial Leather Goods Manufacturer → Retailer / Showroom → End User (Domestic
Market)
♦ Semi-industrial Leather Goods Manufacturer → International Market
3.7.11 Wholesaler of Footwear
A large portion of the wholesale footwear markets are arranged at the Bangabazar of Dhaka city
and adjoining ranges. Wholesalers gather footwear items from modern, semi-mechanical,
carefully assembled producers and offer them to retailers keeping a sensible net revenue. Now
and again they import modest shoes/ shoes and shoes from china and other Asian nations.
The distribution channel for wholesaler of footwear is:
♦ Wholesaler of Footwear → Retailer of Footwear
3.7.12 Retailers of Footwear, Leather Goods, and Leather Garments
Retail shops of footwear are found all over the place in the nation yet retailers of leather
products are essentially urban zone based. Just a couple of retail shops of cowhide
merchandise are seen in the divisional level. In Dhaka, the vast majority of the retail shops of
footwear are arranged in the elephant street, New Market, Gausia, Polwel (Kakrail), Gulistan,
Gulshan, and Banani range. Retail shops of leather merchandise and articles of clothing are
arranged in Gulshan, Banani, Elephant street, Eastern Plaza and adjacent regions of
Hazaribagh.
The distribution channel used by these retailers is:
♦ Retailer of Footwear → End User (Domestic Market)
3.7.13 Export Agent
Export specialists are helping nearby makers get worldwide contracts and they go about as
contact between the two gatherings. Be that as it may, they don't bear any obligation regarding
fare, shipment, or nature of items. Trade specialists are included in hull and cowhide send out
just. Tanneries send out their cowhide to remote purchasers through these fare operators.
They use one distribution channel and that is:
♦ Tanneries → Export Agent → International Client
41
3.8 Value Chain
42
43
Table 14: Distribution of Value Addition across Different Stages of the Value Chain
Sl
Stages Purchase
Price / Unit
Additiona
l Bought
in
Material/
Unit
Total
Bought
in
Material
/ Unit
Sellin
g
Price/
Unit
Value
Addition
Distribution
of Value
Addition %
Tannery
1. Raw hide to
wet blue stage
60 10 70 75 5 24
2. Wet blue to
crust leather
stage
75 9 84 91 7 33
3. Crust leather
to finished
leather stage
91 10 101 110 9 43
Total 21 100
Leather Goods Handmade (Local Market)
1. Input
supplier
to
leather
goods
producti
on
980 300 1280 2500 1220 71
2. Leather
goods
production
to retailing
2500 0 2500 3000 500 29
Total 1720 100
Leather Goods Semi-industrial (Export Market)
1. Tannery
to leather
goods
productio
n
1485 58 1543 2450 907 100
Total
907
100
44
3.8.1 Financial Analysis of Value Addition
Value Addition by Raw Hide (Cow) Suppliers16
Assumption:
Raw hide : 7 bundles 140 pcs ( Each bundle contains 20 pieces))
Purchase Price : Tk. 1,400.00/ Each raw hide
Selling Price : Tk. 1,500.00/Each raw hide
Calculation:
Rawhide Sales: 7 Bundles/140 pcs @ tk. 1,500 Tk. 210,000.00
Less: Cost and Expenses:
Purchase of Raw hides (140 pcs @ Tk. 1,450) : Tk. 1,96,000.00
Transportation (7 bundles @ Tk. 150) : Tk. 2,380.00
Labour, hat and Izara charge : Tk. 3,500.00
Travelling, Conveyance Foods and Hotel rent : Tk. 2,000.00
……………………………………
Tk 2,03,880.00
……………..……………….........
Profit calculation for value addition : Tk. 6,120.00
Value Addition : (210,000-196,000)
= Tk. 14,000
Value Addition Percentage : 6.66%
16
Calculations done using estimated value (GTZ)
45
Value Addition by Handmade Leather Goods Producer17
Assumption:
Production : Laptop Computer Leather Bag
Leather Required : 14 sft
Purchase Price : Tk. 160/sft
Selling Price : Tk. 4200
Calculation:
Sales : Tk. 4,200.00
Less: Cost and Expenses:
Leather(14 sft @ Tk. 160) : Tk. 2240.00
Material ( accessories) : Tk. 380.00
Making charge : Tk. 500.00
Overhead( Factory, administrative, marketing,
Overhead and financial expenses) :
Tk.
190.00
……………………………..
Tk. 3,310.00
……………………………..
Profit calculation for value addition : Tk. 890.00
Value Addition : (4,200-2,620)
= Tk. 1,580
Value Addition Percentage : 37.6%
17
Calculations done using estimated value (GTZ)
46
Value Addition by Retailer of Handmade Leather Goods18
Assumption:
Purchase Price : Tk. 4200
Selling Price : Tk. 5800
Calculation:
Sales :
Tk.
5,800.00
Less: Cost and Expenses:
Purchase Price : Tk. 4,200.00
Salesman Salary : Tk. 150.00
Rent : Tk. 160.00
Electricity : Tk. 35.00
Telephone bill : Tk. 30.00
Entertainment : Tk. 30.00
Depreciation : Tk. 35.00
Others : Tk. 40.00
…………………
Tk. 4,680.00
……………………….
Profit calculation for value addition : Tk. 1,120.00
Value Addition : (5,800-4,200)
= Tk. 1600
Value Addition Percentage : 27.5 %
18
Calculations done using estimated value (GTZ)
47
Value Addition by Leather Goods Producer (Semi Industrial Approach)19
Assumption:
Production : Ladies bag ( Mesh/Weaving) best quality-exportable
Style : Sakila
Size : 28 CM 36 CM
Raw material : Leather Strip
Raw material required : 13.5 sft @ Tk. 240/sft
Selling Price : Tk. 5500
Calculation:
Sales : Tk. 5,500.00
Less: Cost and Expenses:
Leather(13.5 sft @ Tk. 110) : Tk. 3,240.00
Lining : Tk. 125.00
Zipper : Tk. 180.00
Thread : Tk. 40.00
ADHESIVE : Tk. 70.00
Making Charge : Tk. 500.00
Overhead( Factory,admin overhead,
Financial Expenses and export cost) :
Tk.
400.00
…………………. Tk.
4555
Profit calculation for value addition : ……………………..
Tk. 945
Value Addition : (5,500-3,655)
= Tk. 1845
Value Addition Percentage : 33.5%
19
Calculated for a certain model using estimated value (GTZ)
48
Cost Analysis of the Entire Industry
Table-15 shows the total costs of the leather and leather products industry wide and the
corresponding sales in local market and export market.
Table 15: Cost Analysis of Leather and Leather Products of the Entire Industry in BDT (Source: Bangladesh
Bureau of Statistics)
Other Costs 1. Contractual cost 87,456,000
2. Machineries maintenance
cost
292,808,000
3. Other production costs 286,132,000
Total 666,396,000
Materials Cost Raw Materials and fuel 577,379,000
Other materials and supplies 441,145,000
Total 1,018,524,000
Total Production Cost 1,684,920,000
Sales in Local Market Sales in Foreign Market
(Taka)
Main product-1 20,834,212,000 52,162,116,000
Secondary product-1 468,476,000 832,763,000
Secondary product-2 649,800,000 39,912,000
Other products 66,664,000 38,840,000
Total 22,019,152,000 53,073,631,000
3.9 Brief of Top Industry Players
3.9.1 APEX Leather
Apex leather industry started in 1975, with the birth of Apex Tannery Limited being the first of
the leather industry of this country. Apex is still the largest and leading leather exporter from
Bangladesh. Mr. Syed Manzur Elahi, the founder and Group Chairman, started Apex in this war
ravaged economy at 1975. Today Syed Manzur Elahi Initiatives includes of the following
diversified businesses, from manufacturing to services, both for local and global markets.
49
3.9.1.1 Apex Tannery Limited
The leading manufacturer and exporter of finished and crust leather from Bangladesh to key
leather product manufacturers in China, Japan and Italy earning USD 37 million in 2010-2011,
including almost 15% of the total export earnings from leather of Bangladesh. ATL introduced
the first convertible debenture in Bangladesh and has been publicly traded since 1986. ATL is
also the first tannery in Bangladesh to be ISO 9001-2000 certified.
3.9.1.2 Apex Footwear Limited
Apex Footwear Limited (AFL), with revenues of USD 138.5 million in 2013, is one of the leading
manufacturer and exporter of leather footwear from Bangladesh to major shoe retailers in
Western Europe, North America and Japan. AFL is involved in the local footwear retail business
with the second largest shoe retail network in the country and Public listed and traded since
1993, AFL currently employs over 9,000 persons and is in full compliance with Corporate
Governance Compliance Report under Section 2CC of the Securities Exchange Commission
Notification Order.
Apex ltd in Bangladesh is the local manufacturing and retail wing of Apex Footwear Limited and
earned both critical and commercial fame through export of high quality leather footwear in the
international arena. It has over 180 own retail outlets and 380 authorized resellers. The ten in-
house brands, namely Venturini, Apex, Sprint, Maverick, Moochie, Nino Rossi, Sandra Rosa,
Revive, Twinkler and School Smart and one international brand i.e. Dr. Mauch. Apex provides a
huge selection of shoes, sandals and non-footwear items.
3.9.2 Bata Shoe Company (Bangladesh) Ltd.
The Bata Shoe Organization was founded in 1894 by Czech businessman Tomas Bata in the
city of Zlin, what was then Czechoslovakia. The factory automation ensured the profitability of
the company. Today the Bata Shoe Organization is a extensive geo-centric company, serving 1
million customers per day covering operations in more than 60 countries around the world
across five continents.
Bata started its operation in Bangladesh at 1962. Bata, being the largest taxpayer, pays
approximately 70% of tax paid by the entire footwear sector of Bangladesh. In 2013 Bata sold
9.5 million pairs of shoes with a turnover of Tk. 4.98 billion which is 12% growth against last
year.
Currently Bata Shoe Company (Bangladesh) Limited operates two manufacturing facilities – one
in Tongi and the other in Dhamrai. The company also has a modern tannery facility with an
output of 5 million square feet of leather annually. Every factory has Effluent Treatment Plant
(ETP) has been set up to provide a pollution free environment for both workers and the locality.
Bata introduced a number of designers’ collections for men, women and children. From
Internationally renowned brands like Bata Comfit, Marie Claire, Hush Puppies, Scholl, Nike,
50
Bubblegummers, Sandak, Weinbrenner and B’first. The Power brand is responsible for
specialized athletic shoes. These brands ensure Bata shoes to attract to different segments of
consumers.
With state of Art retail stores incorporating modern interior décor, ensuring comfortable
shopping experience, the retail outlets are an integral part of Bata’s brand marketing. Bata has a
network of 265 retail outlets located strategically in different parts of the country with an equally
extensive network of depots and dealers.
3.9.3 Leatherex Footwear Industry
Leatherex footwear industry was Founded in March, 2000, by Mr. Mohammed Nazmul Hassan
Sohail who is the Managing Director of this company under technical collaboration with Japan,
Italy and Taiwan. Consisting most modern state state-of-the-art machinery for production of
footwear leatherex annual production is around 800,000 pairs of shoes and sandals, with annual
turnover of 5 million USD in 2013-2014.
Leatherex is a 100% export oriented leather footwear industry catering to the footwear needs of
a global clientele, manufacturing and exporting all kinds of Leather products; both footwear and
leather goods. The company has state of art modern equipment for footwear making from Italy,
Germany and Japan and Conveyor system from Taiwan.
Leatherex has four group of companies that produces the leather products as illustrated below:
Impex International:
Founded in 1999 Impex International is responsible for in the manufacturing and exports of
Crust, Lining and Finished leather of Cow, Goat and sheep in Bangladesh. Impex International
exports the processed cowhides to many world famous companies; Sannyo Leather Co. Ltd.,
Himeji, Japan is one of them.
Catalyst Polymer Industries Limited:
this subsector manufacture following Shoe components such as TPR Sole, Mid Sole, Heel, Lift
and Different Wedges. Catalyst exports footwear components to Europe, Japan and Korea and
imports raw materials from reputed suppliers globally. With its modern Research development
and processing lab (R&D), Catayst can develop products according to the design of the buyers,
transform new ideas and to reality.
Scarpe e Moda Ltd:
This new shoe project, started their commercial production from 2nd May, 2011, is the joint
venture between Leatherex Footwear Industries Ltd, Bangladesh and BZ Moda s.r.l. Italy.
Scarpe e Moda Ltd. will be operated under Italian technical and will produce hi-tech and top
Italian brands in Bangladesh, and exported to Europe, USA and Australia.
51
Venezi crafts and leather goods:
This has been designing leather goods for Japan, EU, Gulf & Canada markets. They
manufactures Various types of leather items such as ladies and men bags, purse, wallet and
luggage, along with other gift items such as key chain, card holder, pouches corporate gift items
etc. These products are of shapes and sizes and have trendy, fashionable and functional styles.
3.9.4 Picard Bangladesh Limited
This is a Bangladesh – Germany Joint Venture Company formed in 1997, between Picard
Lederwaren Gmbh Co & Kg and their Bangladesh co. Picard Bangladesh is one of the pioneers
of leather goods manufacturing in the country.
Presently, Picard Bangladesh exports to Germany, Australia, Italy, Singapore and Japan. Apart
from only manufacturing the Picard brand, the company produces for brands such as
Sportscraft, Saba, Oxford, JAG, David Jones, Lloyd, Kitamura, Clathas, Max & Co. and
Pennyblack.
Currently the production plant occupies a space of 75000sqft in employing 1400 workers and
manufacturing 32000 bags & 40,000 small leather goods and gift items per month. With the
process of building the new plant of Picard Bangladesh, that has a production space of
250,000sqft and can accommodate 4000 workers, increasing the production capacity by four
folds.
With a team who is dedicated towards developing the goods on time and reducing lead time
during production. The vision of Picard Bangladesh is to become the largest leather goods
manufacturing unit in Southeast Asia and to be known internationally for its outstanding quality
and service, Picard Bangladesh Ltd is one of the top industries players for leather sectors in
Bangladesh.
3.9.5 Ramim Leather & Finished Goods Corporation
Ramim Leather & Finished Goods Corporation [RLFG] is a private Ownership Company
established in 2010, comprised of leather technologists, highly trained leather selector/inspector
and office executives. RLFG, specialized in the design and production and export of all kinds of
middle-level and promotional products, wallet, bags, Belt, money bag, file-holder, laptop-bag
etc.
RLFG manufactures both high quality leather goods (belt, wallet, travel bag, executive bag,
ladies purse, key holder, note book cover, accessory holder and others), and Finished leather
(aniline, semi aniline, corrected grain, suede) and export them to worldwide. Ideal Accessories
is RLFG sister concern, which is responsible for supplying all of the accessories of leather
goods with production capacity of 200000 sft / month.
52
3.9.6 Fortuna Bangladesh
Fortuna is a privately held entrepreneurial and innovative company located in Dhaka,
Bangladesh, with over 40 years of entrepreneurial business experience. The company goal is
to provide the optimal blend in style, quality, and affordability in footwear & accessories. Fortuna
is a design driven brand that fuses the western and local fashion trends.
Fortuna Bangladesh consist of two sister concerns manufacturing both leather good and
footwear.
3.9.6.1 Ruma Leather Industries Ltd.
Ruma Leather Industries Ltd was bought in 1991 to become one of the leading tanneries in
Bangladesh. It is equipped with modern machinery and has the capacity to produce 500,000
sqft of finished leather per month. Ruma is driving to expand and reach a target of exporting $12
million annually.
3.9.6.2 Fortune leather and craft Ltd
Fortuna Leather Craft Ltd is one of the leading footwear companies in Bangladesh. The state of
the art footwear & bag manufacturing plant has a capacity to produce 6000 pairs of shoes & 500
bags per day. Consisting of 2 factories of about 700000 sqft Fortune produces both men and
women footwear and leather goods such as bags and corporate gift items.
3.10 Legal Environment
3.10.1 Bangladesh Environment Conservation Act, 1995
Theoretically, Environmental Laws are legal measures for the conservation and protection of the
environment and ecology. These laws lay down the rights and duties of citizens and public
agencies in consonance with the global call for a healthy environment.
Conservation as it has been defined in the Act of 1995 would require qualitative and quantitative
improvement of different components of the environment and prevention of their degradation.
Environment, as has been defined in the Act, includes water, air, land and other physical
properties and the interrelationships which exist among them and between them, and human
beings, other living beings, plants and micro-organisms. Bangladesh Environment Conservation
Act, 1995 act literally introduces operational definitions of terms like pollution, waste, ecosystem
and hazardous substance.
The Act of 1995 also authorizes the government to declare an area to be an “Ecologically
Critical Area” (ECA) if its eco-system appears to be under serious threats of degradation or is
degraded. Exactly seven ranges in Bangladesh are characterized as Ecologically Critical Areas
(ECA) under this law.
53
Among other steps, back in September 2009, the four rivers surrounding Dhaka city have been
announced to be ECAs by the Department of Environment. According to the act, any activities
that can harm or alter or destroy the ECAs partially or wholly are banned and punishable by the
law.
The act is vast and not all of them are related to leather industry. But some of the acts that have
direct and indirect influences over leather industry are: The Protection and Conservation of Fish
Act, 1950, The Bangladesh Wild Life (Preservation) Order, 1973 etc. Along with that, the water
preservation act and work environment safety act also has direct influence over the leather
industry.
3.10.2 Relocation of Tanneries
Poribesh Bachao Andolon (POBA) has revealed in one of their survey reorts, in Mrach, 2014
that Hazaribagh’s tanneries discharge some 21,600 cubic meters of liquid waste and 88 tonnes
of solid waste per day (POBA, 2014) Undoubtedly, it poses a serious threat to the livelihood of
some 100,000 people around. The dangerous materials released from the tanneries are
entering the natural food chain and water supply.
Along with the Buriganga, three different rivers around Dhaka city are likewise experiencing
genuine contamination and loss of safety. Constant dumping of squanders, heedless digging
and infringement on the waterways around Dhaka city proceed unabated. A late review on the
wetland around Dhaka city says that all such terrains will stop to exist by next two decades if the
infringement proceeds at the present rate.
The relocation initiative was taken back in 2003 but was not completed. And after a lot of formal
and informal problems, finally the government of Bangladesh signed a memorandum of
understanding with Bangladesh Tanners Association (BTA) and Bangladesh Finished Leather,
Leather Goods and Footwear Exporters Association (BFLLFEA) on October 13, 2013. The new
location is supposed to be the Tannery Estate in Savar, on the outskirts of Dhaka city.
As per the memorandum of understanding, 155 tanneries are due to be relocated to Savar from
Hazaribagh, by December, 2014. Moreover, as per the agreement, the government will offer a
compensation package worth Tk 2.5 billion to 155 factories and assign Tk 6.39 billion for the
installation of the central water treatment plant (CETP) – a must for red-category factories
discharging toxic chemicals.
The central bank has urged the commercial banks for providing special supports to the tanners,
who are relocating their tanneries from the capital’s Hazaribagh to the newly established Savar
Leather Industrial Estate. The Banking Regulation and Policy Department (BRPD) of
Bangladesh Bank (BB) in a circular have announced 10-point policy supports to the tanners,
which will be implemented by the commercial banks with immediate effect. The central bank
announced the incentives following the government’s move to provide special facilities for
tannery relocation from Hazaribagh to Savar (BB, 2014).
54
This relocation is expected to allow better access to ancillary services as there will be a
concentration of the industry all around encouraging all the industries and small businesses
catering to the industry's needs shifting there.
And the promised ETP facility will increase the acceptability of the products in the international
market allowing for a much greater profit margin which in turn will increase the overall foreign
currency earnings of BD. But the fact is the promised ETP or Effluent Treatment Plant is not
functional yet. And it is doubted that the ETP will be there on time.
3.10.3 Related Tax and other issues
As leather industry is considered as one of the thrust sectors, it is entitled to special facilities
and venture capital support. Such as reduced import duty on imported machineries, tax
exemption, loan incentives etc.
3.10.4 Price Control
No specific rules or regulations are followed in case of price control. This, more or less, depends
on the supply and demand. During the Eid-ul-Azha, the supply is higher and thus the price is
more reasonable than usual.
55
4.0 INDUSTRY RISKS
4.1 Political Situation
Bangladesh faces political turbulence on a regular basis. Hartal or Strike is the most common
political weapon here. Along with all other industries, leather industry is bearing the brunt of the
ongoing political turmoil. Almost regular blockades and strikes have badly affected the overseas
business.
According to the sector insiders the future of the industry would be at stake if the violent political
programmes do not stop at once. This industry is among the top three products of Bangladesh's
export basket. And the continuous turmoil has significantly hurt the export of leather and leather
goods. The buyers have been upset, and at some cases left too. The number of orders being
placed now is lower than before. Inter-district transportation faces severe problems and thus
starts a chain reaction of shipment failures. And undoubtedly, this causes bad reputation.
According to Export Promotion Bureau (EPB) data, leather export grew by 49.54 per cent to $
160.38 million in July-October of the current fiscal year (FY 2013-14) from $ 107.25 million in
the same period of the last FY while the footwear export totalled $ 193.24 million with a 36.24
per cent growth and leather goods export totalled $ 60.34 million with a 13.94 per cent growth.
Though exports of finished leather and leather goods sub-sector showed an increasing trend,
they were 7.66 per cent less than the target set for the first quarter of the current FY (EPB,
2014).
4.2 Diseases and accidents
Working in a tannery can expose a person to various diseases. As alarming as this sounds, the
tanneries recruit children labourer too who are more vulnerable to such environment. They often
suffer from diseases such as fevers, diarrhoea, respiratory problems, and skin, stomach, and
eye conditions. Asthma is a common phenomenon.
Processing raw hides into the first stage of leather is known as “wet blue,” This process exposes
workers to numerous hazardous chemicals. The tannery has pits of four meter square tanks that
hold hides and many of the diluted chemicals used to cure them. The workers get inside, take
the hides with their bare hands and throw them outside the pit. Apparently they wear gloves and
boots but water splashes on their skin and clothes.
Aprons aren’t provided. The acid containing water in the pits even burns the skin where it
touches. Rashes and itches- these become more or less permanent. Various accidents occur
too. And unfortunately, during sickness or absence due to sickness, the workers do not get paid
violating law.
56
4.3 Cheap Chinese Products (Dumping)
As the leather industry is a growing one, dumping is not a major setback yet. But it has started.
Chinese and Vietnamese products are the major problems. Though it is not happening at an
alarming rate yet, the irregular occurrence worries the businessmen in this sector.
4.4 Smuggling of Leather
Smuggled leather is another concern for leather sector businessmen. Smuggling of rawhides
and skin to the neighboring India through various border areas is a new but alarming problem.
This causes huge loss. Industry insiders say a significant portion of rawhides are being
smuggled to India almost every day deceiving the security surveillance and sometimes
managing the law enforcers. As a result the country has been counting substantial loss in
earning foreign currencies. Especially during Eid-ul-Azha the smuggling increases even more.
4.5 Lack of Technical Knowhow in Designing
The leather industry is growing. They have lots of options to explore. The idea of a full bloomed
leather sector is not building a castle in the air anymore. The growth needs more expert hands
and ideas. But there is a great scarcity of technical knowhow. The business owners agree that
they don’t have many options to develop the expertise as per their need. And the available
trainings or options at abroad are not affordable always. This works as a setback.
4.6 Low investment in R&D
Research and Development is very crucial for a growing industry. But as much as the leather
industry needs R&D there is no functional initiative for it. Apparently anyone can start a
business in leather sector without any technical or theoretical or institutional knowledge about it.
Even the authority figures still ignore the importance of R&D.
4.7 Foreign Currency Fluctuation
Currency fluctuations are natural and are influenced by numerous factors. It has various impacts
too. Foreign currency fluctuations affect relative supply and demand of the two currencies,
economic performance, outlook for inflation, interest rate differentials, capital flows, technical
support and resistance levels etc. As a result, businessmen in leather sector have to deal with
this also. Surely this works as a major concern for them.
57
4.8 Small Market
The leather industry is growing and the market is too. Still in Bangladesh leather goods have a
very small market. It is still a totally export oriented market, though a small one. The goods are
priced really high for the local consumers. For further improvement of this sector, it needs local
growth too.
58
5.0 CRITICAL SUCCESS FACTORS
5.1 Competitive Pricing
Competitive pricing is a sensitive issue for our leather industry. Globally leather and leather
goods have a vast market and a saturated one too. Indian, Pakistani, Chinese, Vietnamese
products are available at a cheaper rate in the market.
The developed countries are outsourcing now. Bangladesh mostly exports finished leather. The
leather goods portion is not yet too high. But to survive in the market competitive pricing is used
often. Where other Asian countries are offering products at a relatively cheaper rate Bangladesh
can’t help keeping up with their pricing.
5.2 Quality of Products
Bangladesh has one of the biggest advantages and that is quality leather. The cowhide, ox-
hide, sheep and goat skin found in Bangladesh are of unparallel quality. The advantage
Bangladesh leather sector holds over their competitors is the quality of leather. Bangladesh has
soft, classy and very suitable leather that can be used to produce very good quality leather
goods. That’s why the leather this country exports have a very high demand. As good as the
leather sector is in finished leather, the designer products suffer from bad finishing, designing
and so on.
5.3 Strong Distribution Channel
There is no established distribution channel for leather and leather goods yet. More or less
leather and leather goods related businesses are growing up surrounding Hazaribagh. Almost
29% of the businesses are small businesses and micro businesses are almost 57%. These
businesses do not have their own distribution channels. As a result they sell their products to
various brands and those brands sell the goods under their brand umbrella. These small and
micro businesses do not have the chance to expand further. But if they have distribution
channels of their own it will allow them to create their own brands and increase positive
competition in the market.
5.4 Cost Control
Apart from leather, non-footwear leather goods have a very small market in Bangladesh. But
this needs to change. To create a local market, the high pricing of leather goods will have to
change. If these goods can be made affordable in the local market to a bigger number of
consumers, the market will become bigger too. To make these products available in the local
market at an affordable price, the business people must lower their production cost. Cost
control strategy is crucial for that purpose.
59
5.5 Meeting Ecological Standards
Industrialization is a blessing and a curse at the same time. It has sped up life but harmed the
environment. Every industry must meet the ecological standards. Leather industry is in dire
need of healthy work environment. Tanneries are not only damaging the health of the workers
but also polluting the environment to a great extent. Not only that, the developed countries that
purchase leather and leather products from Bangladesh maintain strict rules and regulations
about workers’ rights and safety, healthy environment, meeting ecological standards. Failure to
maintain these can not only damage our hard built goodwill but also will cause to lose the global
market.
5.6 Ensuring Government Support
Though the government has declared various incentives for the growing leather industry, most
of them are not operational yet. The solid government support will give this industry a very big
upward push which the industry needs.
60
6.0 OVERALL MARKET SCENARIO
6.1 Business Opportunities
The Bangladesh leather sector is flourishing despite all the limitations in the sector. Bangladesh
Government has declared Leather sector as a “thrust”20 sector along with 9 other sectors for the
period of 2012-2015. Special incentives are provided in line with the government directives to let
the sector grow further.
Opportunities in the leather sector are immense. Bangladesh houses one of the largest shoe
factories by Youngone. The country currently produces some of the best quality leather in the
region and that too in vast quantities. There is a huge international market for leather and
leather goods. Table-16 shows the export figures for Bangladesh standing at USD 3.43 million
in 2002-2003 which increased at an unprecedented rate in the following 10 years standing at
USD 129.16 million in 2010-2011 and ended up at USD 186.6 million in 2013-2014.
Figure 4: GDP Growth Rate of Bangladesh (Source: BBS21
)
The local market in Bangladesh is also tremendous. A huge dormant market is present and with
the availability of quality and affordable products this market can be used to fuel growth for
many years to come. The local economy has grown at an amazing rate over the last decade as
shown in Figure-4, where the growth rate of the economy defied the global downturn between
the years 2008-2012, the effects of which is still visible in most economies.
20
Bangladesh Bank-http://www.bangladesh-bank.org/investfacility/invesfac.php 21
http://bbs.gov.bd/WebTestApplication/userfiles/Image/GDP/GDP_2013-14.pdf
2008-09 2009-10 2010-11 2011-12 2012-13 2013-14
Growth Rate 5.74 5.57 6.46 6.52 6.01 6.12
5
5.2
5.4
5.6
5.8
6
6.2
6.4
6.6
% G
row
th
Growth Rate
61
Table 16: Export of Leather, Leather Footwear and Leather Goods (Source: EPB)
Year Leather
Leather Footwear
Leather Goods
Total
Export % of Total Export % of Total Export % of Total
2002-2003 191.23 83.24% 35.06 15.26% 3.43 1.49% 229.72
2003-2004 211.41 79.50% 50.86 19.13% 3.64 1.37% 265.91
2004-2005 220.93 76.77% 59.51 20.68% 7.35 2.55% 287.79
2005-2006 257.27 71.50% 95.44 26.52% 7.12 1.98% 359.83
2006-2007 266.08 64.42% 135.94 32.91% 11.03 2.67% 413.05
2007-2008 284.41 61.44% 169.6 36.64% 8.87 1.92% 462.88
2005-2006 257.27 71.50% 95.44 26.52% 7.12 1.98% 359.83
2008-2009 177.32 46.52% 186.93 49.04% 16.89 4.43% 381.14
2009-2010 226.1 49.23% 204.09 44.44% 29.06 6.33% 459.25
2010-2011 297.83 45.75% 297.8 45.74% 55.42 8.51% 651.05
2011-2012 261.16 49.76% 185.08 35.26% 78.6 14.98% 524.84
2012-2013 319.5 46.13% 243.88 35.21% 129.18 18.65% 692.56
2013-2014 392.9 39.01% 427.55 42.46% 186.6 18.53% 1007.0
5
The leather industry crossed the $1-billion mark in export earnings last fiscal year as the sector
is witnessing a robust demand for leather and leather goods in the global market. The rise in
labor costs in China forced US buyers to shift to Bangladesh. Though Bangladesh trails behind
China and even Vietnam in terms of labor productivity, the industry is still competitive.
62
Figure 5: Minimum Wage Rates (Source: China Labor Bulletin)
Worker’s wage in Bangladesh is far behind of the competing countries like Vietnam, Indonesia
and China as shown in Figure-5. Bangladesh exported USD 73 million22 worth of leather goods
July-December period, up by 107 percent in comparison to the same period last year.
Bangladesh exports leather products mainly to Italy, New Zealand, Poland, the UK, Belgium,
France, Germany, the US, Canada and Spain. Also, India, Nepal, Australia and some other
countries are emerging as the potential importers of Bangladeshi leather goods.
Table-17 shows the level of investments in the major sectors in EPZs. Majority of the sectors
are related to ready-made garments and leather is barely a part of it. In Bangladesh, leather
industry is not based inside the EPZs mostly because the tanneries are already based in
Hazaribagh and they do not seem to have any wish to shift to EPZs and pay for extra ETP
expenditures. Furthermore, ETPs in EPZs may not be equipped to handle all the chemical and
biological wastes. There is large scope for the leather goods manufacturers to invest in the
EPZs and avail the large scale incentives for the export market, and still cater to the local
market since they are allowed to sell 10% of their total produce in the local market.
Since the local market is not big enough, this 10% range is good enough to cater to the local
market and produce a large enough revenue stream. The major target for the local leather
goods makers are the corporate clients to whom they sell goods of the “corporate gift-item”
categories including moneybag, leather book covers for diaries, card holder etc. Women’s side
bags are a category that shows promise in the sector with scope for growth.
22
Bangladesh Export Promotion Bureau-http://www.epb.gov.bd/productexportdatadetails.php?year=2013-2014
Bangladesh
Cambodia
Pakistan
Vietnam
Phillipines
Indonesia
Thailand
ChinaMalaysia
Taiwan
HongKong
SouthKorea
Japan
Minimum Wage 80 85 97 115 205 209 237 251 250 600 613 1037 1572
0
200
400
600
800
1000
1200
1400
1600
1800
Wag
e in
USD
Minimum Wage
63
Table 17: Sectoral Employment and Investments in EPZs (Source: BEPZA, Ministry of Finance23
)
Product Unit Investment (In
Millions $)
Employment
opportunities
Garments 101 807.627 193245
Garments accessories 70 293.59 17,107
Knit & other textile 44 221.529 37,901
Textile 41 479.3 22,355
Elec & electronics 17 90.762 4,805
Footware & leather 25 140.462 20,017
Caps 5 49.909 7,860
Tent 8 50.52 8,486
Terry towel 18 62.548 6,863
Metal product 12 28.384 1,724
Plastic goods 11 26.864 2,861
Paper product 2 1.316 99
Fishing reel & golf 1 32.414 580
Rope 2 6.476 575
Service oriented industries 6 32.503 888
Agro product 7 2.602 286
Furniture 3 28.26 1,573
Power industry 2 45.022 97
Chemical 5 3.355 71
Sports goods 1 1.228 319
Miscellaneous 25 62.183 12,309
Total 406 2466.854 340021
Majority of the producers of leather goods in the country are either micro or small enterprises,
as Figure-6 illustrates. There are very few major players in the local market and the large ones
control most of the local market in terms of total revenue. The major problem in this sector is
that the local leading brands like Aarong buy products from these small enterprises at very low
price and then resell these at exorbitant prices allowing for them to enjoy a high margin.
However, the small enterprises do not get to enjoy any benefit off this.
23
Source: http://www.mof.gov.bd/en/budget/13_14/ber/en/chapter-8_en.pdf
64
Figure 6: Leather Goods Manufacturers in Bangladesh (Source: Bangladesh Bureau of Statistics24
)
The BBS data shown in Table-18, illustrates the minuteness of the leather industry in
comparison to the other sectors, contributing only 1.42% to the overall industrial manufacturing
output. Comparing it to the trend of export data shows that the leather sector does have a huge
scope to grow and become a major earner in future.
Table 18: Employment, Output, Tax and Salaries Provided by Leading Industries (Source: Bangladesh
Bureau of Statistics25
)
Industry Number of
Establishments
Gross
Output
(Number
s in
Million
Taka)
Indirec
t Tax
Persons
Employe
d
Total Salary
and
Benefits
Manufacture of food
products
8441 608777 3521 280257 32,354,469
Manufacture of beverages 367 52826 766 20448 2,494,798
Manufacture of tobacco 487 87197 486 52204 6,187,421
24 http://www.bbs.gov.bd/PageWebMenuContent.aspx?MenuKey=231
25 http://www.bbs.gov.bd/PageWebMenuContent.aspx?MenuKey=231
57% 29%
11%
3%
Number
Micro
Small
Medium
Large
65
products
Manufacture of textiles 10983 715247 8038 805508 86,572,488
Manufacture of wearing
apparel (Readymade
garments)
6984 1819482 29544 2762335 314,434,78
5
Manufacture of leather and
related products
930 76174 1947 75524 8,379,933
Manufacture of wood and
products of wood and cork,
except furniture;
manufacture of articles of
straw and plaiting materials
302 6912 119 8528 948,432
Manufacture of paper and
paper products
902 57187 1276 42376 4,633,916
Printing and reproduction of
recorded media
904 10821 348 26667 2,902,828
Manufacture of coke and
refined petroleum products
19 3684 151 1417 376,297
Manufacture of chemicals
and chemical products
563 140184 3775 52598 7,436,718
Manufacture of
pharmaceuticals, medicinal
chemical, and botanical
products
494 113070 6663 71380 10,950,804
Manufacture of rubber and
plastics products
1036 51143 973 41139 4,506,652
Manufacture of other non-
metallic mineral products
4654 351779 6095 471850 47,440,170
Manufacture of basic metals 1205 905850 5110 120965 17,918,269
Manufacture of fabricated
metal products, except
machinery and equipment
1449 71357 991 44462 5,037,351
Manufacture of computer,
electronic and optical
products
149 39623 685 16390 2,448,840
Manufacture of electrical
equipment
884 145166 2968 44556 5,149,674
Manufacture of machinery
and equipment n.e.c.
195 13141 86 10001 1,191,624
Manufacture of motor
vehicles, trailers and
semitrailers
137 36780 1276 4906 688,120
Manufacture of other 276 36291 182 17921 2,105,871
66
transport equipment
Manufacture of furniture 1055 39685 614 33143 2,105,871
Other manufacturing 235 11263 248 9471 1,092,200
Repair and installation of
machinery and equipment
120 1134 8 1558 159,248
Recycling 21 129 1 333 33,280
Total 42792 5394902 75871 5015937 567550059
6.2 PESTEL Analysis
Stakeholders need in-depth insight into the industry they delve into. A PESTEL analysis is a
framework or tool used by businesses to analyze and monitor the macro-environmental
(external marketing environment) factors that have an impact on an organization. The result of
which is used to identify threats and weaknesses which is used in a SWOT analysis. PESTEL
stands for: P – Political, E – Economical, S – Social, T – Technological, E – Environmental, L –
Legal.
Political
The political environment is highly volatile with frequent strikes and clashes between the
major political crises.
The government policies are highly favorable with the sector being declared a “Thrust”
sector, whereby enjoying 7% interest rate for loans, bonded warehouse facility, 15%
cash incentives, Generalized System of Preference (GSP) facilities etc.
Trade policies fixed by the government has always been favorable to businesses though
bureaucratic red tape has always hindered the smooth operations of business.
EPZs provide excellent environment throughout for smooth operations of the business.
The government has set highly attractive incentives for the foreign investors to lure in
FDI, including 100% foreign ownership, 100% profit transfer to country of origin and that
too without prior permission from the central bank.
Economical
The economy has been growing at over 5 percent over the last decade and is set to
continue this trend for years. This has increased the number of middle to high income
group in the economy who can afford leather goods with higher than average disposable
Interest rates have been set at the minimum possible level by the government whereby
ensuring cheap source of capital for the business.
Exchange rates are heavily monitored by the central bank, and is always favorable to the
exporters. However, the relatively devalued local currency makes imports of chemicals
used in the processing of raw hide and machineries used in the production process
expensive.
67
While the economy sees high level of food inflation, the overall inflation level has been
quite consistent over the last few years at less than 8 percent26 showing a downward
trend.
Social
Social factors like the acceptability of leather goods by the vast majority of the population
helps the sector gain popularity.
The trend of the present generation to lean towards fashionable and expensive products
like leather belts, side bags, jackets etc. increased the prospect of the sector.
Technological
The local companies are lacking behind major international brands in terms of innovation
and quality.
The small firms in the local market are overshadowed by the bigwigs producing in large
scale allowing for them to be able to afford expensive technologies.
Environmental
The long awaiting shift of the tanneries to Savar from Hazaribagh is yet to see any light
of day. When done, it will mean expensive relocation for the tanneries, and even more
burdensome costs to the small businesses who will not be allocated any land in the
selected area.
The ETPs in Savar will allow to increase the value and acceptability of the local leather
whereby allowing for premium pricing and entry into previously untapped market due to
restrictions.
Legal
Health and safety rules in Bangladesh are barely monitored and controlled.
Labor rate is the lowest in the world and there seems to be no interest in the government
to push the bar higher in the foreseeable future.
There are no major restrictive laws in place that hamper the smooth operations of the
companies.
26
http://www.tradingeconomics.com/bangladesh/inflation-cpi, Bangladesh Bureau of Statistics
68
6.3 SWOT Analysis
The SWOT analysis of the leather goods sector would allow for the prospective investors and
other stakeholders to analyze the position of the industry, the opportunities they can avail and
the overall risks they will have to take.
Strengths
Leather is a renewable resource and cannot be depleted in the foreseeable future.
The value chain is highly integrated and availability of raw materials in every stage of the
production process ensures smooth production.
A large pool of trained and semi-trained workforce is available at a relatively inexpensive
rate.
The local premium grain leather is highly reputed in the international market due to both
the product quality and also the favorable environment ensures premium quality skin in
the cattle.
There is a major price advantage of the products due to the low production cost in
Bangladesh.
Durability of the leather products ensures increased demand and acceptability of the
product to the customers.
A highly favorable business environment ensures the smooth functioning of the industrial
units especially in the Hazaribag Tannery Area and the EPZs of the country.
Declaration by the government making the sector a “thrust sector” and increasing the
incentives available to the sector including 7% interest rate, bonded warehouse facility,
15% cash incentives, Generalized System of Preference (GSP) facilities etc.
Quality training centers like COEL and University.
Over 2000% growth in sales over the last 10 years shows the prospect of the industry
over the long run.
A cooperative of the micro and small leather firms, Leather Technology Small
Companies, have started a brand on its own under the name of Leather Cave, to sell
goods produced by its member under a single brand name whereby increasing the value
of the goods, competing against the bigwigs in the industry.
Weaknesses
Lack of R&D facilities in the leather and leather goods sector can reduce the
competitiveness of the products both in the local and international market.
Lack of institutional training and experience of the micro and small manufacturing firms
make the industry highly vulnerable to foreign competitors.
Though the government declared the sector as a thrust sector, there is a lack in the
proactive promotion of the local leather goods in the international market by the
government.
Despite the declared 7% interest rate by the government in the sector, there is a lack of
easy access to finance.
69
Local chemical and machineries industry is not capable to cater the needs of the leather
and leather goods industry, majority of it is imported and is subject to foreign currency
fluctuations and import tax.
Though there is a very strong demand of the Bangladeshi leather and leather goods in
the international market, the local market is still not developed enough.
Lack of innovation in the sector is leading to the competing countries like China,
Vietnam, Pakistan etc. gaining advantage.
There is a severe shortage of vertical integration in the market both in forward and
backward linkages, whereby increasing the overall cost of production and reducing the
competitive advantage of the local products in the international market as well as losing
the local market to the cheap imported alternatives.
The available training institutes like COEL are new and cannot cater to the vast and ever
growing industry.
With lack of prominent local brands to compete against leading global brands in the
international market.
With the proposed relocation of the tanneries to Savar, the micro and small firms will
face a problem as relocation is costly and the government has only ensured relocation of
only the tanneries and not the other manufacturers.
Opportunities
There is an ever increase in the demand of leather and leather goods in the international
market.
Uninterrupted availability of quality raw hides in the local market.
Competitive advantage through cheap labor force.
GSP (Generalized System of Preferences) facilities to exporters
Duty free access in Major Markets
Large and potential markets in untapped regions like Middle East, Japan and Africa.
There is a huge market in the byproduct segment.
Being biodegradable, hygienic, and long lasting, there is a huge market for the products
in the local market.
Relocation of the entire tannery sector to Savar will increase the acceptability of the local
products in the international market and allow for premium pricing.
Threats
The growth rate of the industry is not reaching its optimum level due to a variety of
reasons including political instability, lack of supportive regulatory policies, infrastructure
drawbacks and disruptive electrical connections.
Highly competitive local and international market with intensive competition from China,
India, Vietnam and Pakistan.
70
The complete dependency upon imports of chemicals and machineries, increasing
costs.
There is barely any diversified product range of the leather goods produced by the local
industry.
The availability of substitute, low priced imported homogeneous products made of
Rexene and other artificial fibers.
Smuggling of raw hides and skins to India and other neighboring countries is leading to
scarcity of raw materials in the local market for production of leather goods and
footwear.
Ineffective and insufficient measures taken to address the environment pollution, health
and safety issues by the tanneries and producers of footwear can be a huge threat to
environment and human lives in particular.
6.4 Limitations Faced by the Industry
While studying the leather and leather goods industry, the following constraints could be found
that are hampering the optimum performance of the industry and its prospective growth.
Inadequate access to short-term (working capital) fund for SMEs of all cowhide sub-
areas prompts underutilization of creation limit bringing about loss of extra wage open
doors.
High cost (because of degrading of Taka at a higher rate) of transported in chemicals for
the tanneries prompts increasing expense of creation bringing about losing intensity in
fare market.
Absence of fitting specialized abilities of the butcher in excoriating and curing prompts
faulty transforming of conceal and skin bringing about 20-25% quality misfortune.
Absence of inventive and contemporary outlining capacity of nearby fashioners prompts
generation of regular leather, footwear and cowhide merchandise bringing about nearly
abate development in fare markets.
Inadequate specialized learning of the carefully assembled footwear makers prompts
creation of substandard quality footwear bringing about slower development of the
business sector for shoes.
Utilization of second rate quality leather by the cabin businesses (small scale makers) to
deliver cowhide products/creates for nearby markets prompts disappointment to draw in
the well-off purchasers bringing about slower development in local business.
Lacking supply of cowhide amid off seasons prompts import of leather by the cowhide
products and footwear makers bringing about more lead time than the contending
nations.
Unlucky deficiency of present day butchering house for butchers prompts utilization of
physically excoriating strategy bringing about regularly harm of skin and shroud quality
Absence of specialized ability of the cowhide technologists to create enhanced
completed leather prompts failure to investigate potential markets with higher worth
expansion bringing about loss of higher benefit opportunities.
71
Inaccessibility of last making machines in Bangladesh prompts reliance of footwear
makers on remote nations for making shoe endures bringing about higher expense of
creation and more lead time.
Postpone in presenting incorporated cowhide approach for the improvement of leather
industry prompts slower area development bringing about disappointment to draw in
more neighborhood and remote speculators in this part.
Unlucky deficiency of vertical reconciliation (retrogressive and forward linkages) in the
cowhide business prompts expanded vulnerability in the creation process and expense
bringing about slower improvement of SMEs in this division.
Deficient promoting information of cowhide business visionaries (leather, footwear &
products) prompts slower improvement of neighborhood and fare markets bringing about
loss of higher benefit opportunities.
Lacking activities by the concerned offices in orchestrating occasions to advance the
leather, footwear and cowhide products broadly and universally prompts constrained
presentation of Bangladeshi leather items bringing about disappointment to go into new
markets.
Lacking measures to address the earth contamination, wellbeing and security issues by
the tanneries and hand tailored footwear makers prompts unhygienic circumstance in
the creation areas bringing about weakening in specialists' execution and profit. (This
requirement at last causes movement of talented specialists to different areas).
Inadequate R&D offices prompts disappointment in presenting new engineering,
methodology, items, plans and so forth bringing about continuous decrease in the
intensity of Bangladeshi leather and cowhide items in universal business sector.
72
7.0 SUMMARY OF THE FINDINGS
The leather goods market in Bangladesh has huge potential with the increasing disposable
income of the middle and upper middle class families. The GDP growth at over 5% over the last
decade shows the strength of the economy and its resilience. Strong export growth despite the
global recession shows the competitive advantage of the entire industry, thanks to mostly the
availability of the superior quality raw materials and cheap labor. However, the lack of backward
linkage, especially in the case of chemicals may set back the industry in the long run.
The leather goods market in the country is very small, concentrating mostly on the corporate gift
sector. Major segment of the leather market consists of small enterprises at 57%. These
enterprises mostly sell directly to corporate clients and to major consumer brand shops like
Aarong, Deshal, Jatra etc, who then sells these products to the consumers at high profit margin.
There is a lack of strength of the small enterprises to compete with these leading brands.
With growth rate of the country has been quite consistent at over 5% over the last decade and
enjoyed strong growth in the exports of leather, leather footwear, and leather goods. Exports of
leather goods increased from USD 3.43 million in 2002-2003 to USD 129.16 million in 2010-
2011 and ended up at USD 186.6 million in 2013-2014 amid high political turmoil, natural
disasters, global recession in the recent past.
With wage rates ranging below 85 dollars, the country can easily compete with China, India and
Vietnam despite low productivity rates. The country enjoys having environment suitable for
excellent hide production leading to higher price range for local leather and leather goods in the
international market.
ETPs are almost non-existent in the tanneries leading to major concerns stated by the importing
countries, affecting the price quoted by them. The government is working on the shifting of the
tanneries to Savar, from Hazaribagh which will allow for the products to be marked as more
eco-friendly and prices correspondingly at higher price range. However, the shifting of the
tanneries will affect the micro and small enterprises producing leather goods as they will not be
accommodated in the government-sanctioned land and will have to avail expensive lands
outside the tannery region.
73
BIBLIOGRAPHY
BB. (2014). http://www.bangladesh-bank.org/mediaroom/circulars/circulars.php#. Retrieved November
28.11.2014, 2014, from http://www.bangladesh-
bank.org/mediaroom/circulars/brpd/nov022014brpd14b_new.pdf
COMTRADE, U. (2014). 611 Leather. UN COMTRADE.
FAO, T. a. (2013). World Statistical Compendium. Food and Agriculture Organization of the United
Nations.
POBA. (2014). Poribesh Bachao Andolon.
UNIDO. (2010). Future Trends in the World Leather. Vieanna: UNIDO.
74
APPENDICES
APPENDIX A: LIST OF FOOTWEAR MANUFACTURERS & EXPORTERS
Apex Footwear Limited
Celebration Point, 1st Flr, Road 113A, Plot
3 & 5, Gulshan 2, Dhaka 1212.
Phone : 88-02-8828258, 8821591, 8820300
Fax : 88-02-8813038
Email : [email protected]
Website : www.apexfootwear.com
Jennys Shoes Ltd
Jennys House, Road #68/A
House # 6, Gulshan-2
Dhaka-1212, Bangladesh
Phone : 88-02-8826305, 8824885
Fax : 88-02-8823372
E-mail : [email protected]
Lalmai Footwear Ltd.
Khan Mansion (5th Flr)
107, Motijheel C/A, Dhaka-1000
Bangladesh
Phone : 88-02-9567312, 9569458, 9568284
Fax : 88-02-9564633
Email : [email protected]
Legacy Footwear Ltd
64 Bijoynagar, Kakrail, Dhaka
Phone : 88-02-8319663,
Fax : 88-02-8313510
E-mail : [email protected]
Bay Footwear Ltd.
Wasa Bhaban (3rd Flr),
Kazi Nazrul Islam Ave,
Kawran Bazar, Dhaka
Phone : 88-02-9661134, 9289066
Fax : 88-02-8618716
E-mail : [email protected]
Tropical Shoes Ind. Ltd
A. R. Tower (4th), 24,
Kemal Ataturk Avenue, Banani
Dhaka-1213, Bangladesh
Phone : 88-02-8815142, 8815144
Fax : 88-02-8815143, 8860448
E-mail : [email protected]
H. N Shoe Limited
House No 69, Road No 8/A, Dhanmondi
R/A, Dhaka, Bangladesh
75
Phone : 88-02-9111209, 8111526
Fax: 88-02-8113348
E-mail : [email protected]
Leatherex Footwear Industries Ltd.
House # 34/A, Road # 10/A
Dhanmondi R/A, Dhaka-1205
Phone : 88-02-9129192, 8112543
Fax: 88-02-8127477
Email: [email protected]
Advance Industrial Management
Company Ltd.
House 15, (2nd Flr.) Road 5
Sector 6, Uttara
Dhaka, Bangladesh
Phone : 88-02-7701544 01819219094 (M)
Fax : 88-02-7701544
Email : [email protected]
Shampan Shoes Ltd.
Rahman Chamber (5th Flr.) 12-13, Motijheel
C/A, Dhaka-1000
Phone : 88-02-9563185, 9120142
Fax: 880-2-9565325
E-mail: [email protected]
Bata Shoe Company (BD) Ltd.
Tongi I/A, Tongi, Gazipur, Bangladesh
Phone : 88-02-9800501-5
Fax : 88-02-9800511
Email : [email protected]
76
APPENDIX B: LIST OF LEATHER GOODS EXPORTER
Universal Leather Products Ltd
Erectors House, 9th Flr
18 Kemal Ataturk Avenue
Banani C/A, Dhaka
Tel: 9880102-5
Fax: (880-2) 8822453
Picard Bangladesh Limited
Kondol Bag, Zirabo, Savar, Dhaka
Bangladesh
Phone : 88-02-9354116, 9354570
Fax : 88-02-9332569
Email : [email protected]
Apex Leathercraft Fashion and
Accessories Ltd.
Huse 20, (Ground Flr.) Lean 4, Baridhara,
DOHS
Phone : 88-02-8821591, 9883926
Fax : 88-02-8826815
Email : [email protected]
Kohinoor Leather Products Limited
Amanullah Complex 87, Islampur Road (5th
Flr), Dhaka 1100 Bangladesh
Phone : 88-02-7391580, 9566402
Fax : 88-02-7121273
Email: [email protected]
Cosmic Jute & Leather Ind. Ltd.
Easel Drem, Flat M-3, House 17,
Road 3A, Sectore 5, Uttara,
Dhaka, Bangladesh
Phone : 88-02-8916806
Email : [email protected]
Crown Leather Products Ltd.
179, East Kafrul, Dhaka Cantt.
Dhaka-1206, Bangladesh
Phone : 88-02-9872149
Fax : 88-02-9870876
Email : [email protected]
RMM Leather Ind. Ltd
119 Hazaribagh
Dhaka 1209, Bangladesh
Tel: 9345270, 9345963-4
Fax: 880-2-9345271
E-mail: [email protected]
Anowara Leather Bagex
255 North Badda, Satarkul Road
Dhaka 1212
Tel: 8828233, 0171-5016408
Fax: 880-2-8828233, 9860827
E-mail: [email protected]
77
APPENDIX C: LEATHER (CRUST & FINISHED)
Apex Tannery Limited
65-66 Motijheel C/A, Dhaka 1000
Phone : 88-02-9551117, 9565909, 9566013
Fax : 88-02-9562386, 8613428, 8616567
Email : [email protected]
Anowar Tannery (Pvt.) Ltd.
104, Hazaribagh, Dhaka-1209
Phone : 88-02-8628108, 9664078
Fax : 88-02-9664078
Bata Shoe Company (BD) Ltd.
Tongi I/A, Tongi, Gazipur, Bangladesh
Phone : 88-02-9800501-5
Fax : 88-02-9800511
Email : [email protected]
Bay Tanneries Ltd.
21 Hazaribagh, Dhaka 1209
Phone : 88-02-8612335, 8611468, 8623428
Fax : 88-02-8618716, 8113581
Email : [email protected]
Website : www.baytanneries.com
Bengal Leather Complex Ltd.
147, Hazaribagh, Dhaka-1209
Bangladesh
Phone : 88-02-8614077, 8615977
Fax : 88-02-9660284
Email : [email protected]
Chowdhury Leather & Co. Ltd.
95/7, Gazmahal, Hazaribagh
Dhaka-1209, Bangladesh
Phone : 88-02-9660754, 8631097
Fax : 88-02-8616348
Email : [email protected]
Crescent Tannery Ltd.
143 Hazaribagh, Dhaka-1209, Bangladesh
Phone : 88-02-9663659
Fax : 88-02-8625232
Dhaka Hide and Skins Ltd.
147 Hazaribagh T/A, Dhaka
Phone : 88-02-9669849, 8611263
Fax : 88-02-8613516
Email : [email protected]
The Earth International Tannery Ltd.
35, Kalunagar, Hazaribagh,
Dhaka-1209, Bangladesh
Phone : 88-02-8611263
Fax 88-02-8613515
Email : [email protected]
Fortuna Leather Craft Ltd.
Fortuna Bhaban Kunia, K.B. Bazar,
Gazipur, Bangladesh
78
Phone : 88-02-9801702-4, 9664617,
8627144
Fax : 88-02-9803135, 9664317
Email : [email protected]
Fancy Leather Enterprise
34, Kalunagar, Hazaribagh,
Dhaka-1209, Bangladesh
Phone : 88-02-9662840
Fax : 88-02-9662840
Hajee Mazharul Haque Limited
79/1 Water Works Road, Postha Dhaka
1211, Bangladesh
Phone : 88-02-7319001, 7319473
Fax : 88-02-7311795, 7319471
Email : [email protected]
H & H Leather Industry Ltd.
House # 69, Road # 8/A, Dhanmondi
Dhaka, Bangladesh
Phone : 88-02-8111526, 9111209
Fax : 88-02-8113348
Email : [email protected]
HRC Leather Complex Limited
13 (WP) Mohra IA, Alamin Baria Chittagong
4221, Bangladesh
Phone : 88-031-670024, 670383
Fax : 88-031-670383
Email : [email protected]
Janata Tanning Industries Ltd.
108, Hazaribagh, Dhaka-1209, Bangladesh
Phone : 88-02-8618556, 8626727
Fax : 88-02-9662464
Karim Leathers Limited
180 Hazaribagh, Dhaka 1209
Phone : 8616584, 8611129
Fax : 88-02-8613274
Email : [email protected]
Kid Leather Industry Ltd.
19, Sher-E-Bangla Road, Hazaribagh
Dhaka-1209, Bangladesh
Phone : 88-02-8612268
Fax : 88-02-8616937
Email : [email protected]
Kalam Brothers Tannery Ltd.
109/2, Hazaribagh, Dhaka-1209
Phone : 88-02-8618556, 8626727
Fax : 88-02-9662464
Lexco Limited
146, Hazaribagh, Dhaka, Bangladesh
Phone : 88-02-9669327
Fax : 88-02-8613131
Email : [email protected]
Madina Tannery
114 Poet Nazrul Islam Road Sadarghat,
Chittagong,Bangladesh
Phone : 88-031-613916, 617605
79
Fax : 88-031-617605
Mitali Tannery
71/4-A, Gazmohal, Hazaribagh
Dhaka-1209, Bangladesh
Phone : 88-02-9665916
Fax : 88-02-8618564
Pubali Tanneries Sobali Hides
44/1, Sher-E-Bangla Road, Hazaribagh,
Dhaka-1209, Bangladesh
Phone : 88-02-9662271, 8627655
Fax : 88-02-9660508
Email : [email protected]
Pragati Leather Complex
55/11, Hazaribagh, Dhaka-1209
Phone : 88-02-9663121, 8626485
Fax : 88-02-8611264
Reliance Tannery Ltd.
48/2/K, Moneshwar Road,
Dhaka-1209, Bangladesh
Phone : 88-02-8625119, 8627425
Fax : 88-02-8612037
RMM Leather Industries Ltd.
119, Hazaribagh, Dhaka-1209
Phone : 88-02-9345963-4
Fax : 88-02-9345271
Email : [email protected]
R. A. N. Leather
28/A, Moneswar Road, Hazaribagh
Dhaka-1209, Bangladesh
Phone : 88-02-8614663
Ruma Leather Industries Ltd.
131, Hazaribagh, Dhaka-1209
Bangladesh
Phone : 88-02-9664317, 8627144,
9801702-4
Fax : 88-02-9664317, 9803135
Email : [email protected]
Samina Tannery (Pvt.) Ltd.
36/1, Kalunagar, Hazaribahg
Dhaka-1209, Bangladesh
Phone : 88-02-9660384, 8611660
Fax : 88-02-8614989
Email : [email protected]
SAF Industries Limited
Akij Chamber
73, Dilkusha C/A, Dhaka-1000 Bangladesh
Phone : 88-02-9666151, 9666142
Fax : 88-02-9556619
Email : [email protected]
Samata Leather Complex Ltd.
120 Sher-e-Bangla Road, Hazaribagh,
Dhaka 1209, Bangladesh
Phone : 9662731, 8611372, 8611102
Fax : 88-02-8618360
80
Sasco International
39 Paribagh, Sonargaon Road Hatirpool,
Ramna, Dhaka 1000 Bangladesh
Phone : 9564636, 017532281
Fax : 88-02-9564636
Email : [email protected]
SMT Leather Company
28/A-2 Toyebee Circular Road Hotel
Motijheel (1st Flr), Motijheel C/A, Dhaka
1000, Bangladesh
Phone : 88-02-9570808, 7121036
Fax : 88-02-9570808
Email : [email protected]
Vulua Tannery Ltd.
109 Hazaribagh, Dhaka 1209 Bangladesh
Phone : 8626728, 8611851
Fax : 88-02-8611851
Email : [email protected]
81
APPENDIX D: LEATHER GARMENTS
Apex Footwear Limited
Celebration Point, 1st Flr
Road 113A, Plot 3 & 5, Gulshan 2
Dhaka 1212.
Phone : 88-02-8828258, 8821591, 8820300
Fax : 88-02-8813038
Email : [email protected]
Beautiful Jacket Ltd.
279/6 Kudrat-E-Khuda Road Kataban,
Dhaka 1205, Bangladesh
Phone : 88-02-9665571, 8624273
Fax : 88-02-9669510
Continental Footwear Ind. Ltd.
240 New Elephant Road, Dhaka,
Bangladesh
Phone : 88-02-8616239
Fax : 88-02-8824175
Eitbm Corporation
(Home & Overseas) Bangladesh
Road No.9, House 1/1 Kallyanpur, Dhaka
1207 Bangladesh
Phone : 88-02-9010059
Fax : 88-02-8117957, 8010551
Email : [email protected]
Inter Fashion Leather & Footwear Ind.
Ltd.
Dhaka Chamber, Buildilr
Room-410, 65/66 Motijheel C/A Dhaka,
Bangladesh
Phone : 88-02-9560591, 9567986
Fax : 88-02-9560866
Karim Leathers Limited
180 Hazaribagh, Dhaka 1209 Bangladesh
Phone : 88-02-8616584, 8611129
Fax : 88-02-8613274
Email : [email protected]
Kohinoor Leather Products Limited
Amanullah Complex 87, Islampur Road (5th
Flr), Dhaka 1100 Bangladesh
Phone : 88-02-7391580, 9566402
Fax : 88-02-7121273
Email : [email protected]
Madina Tannery
114 Poet Nazrul Islam Road Sadarghat,
Chittagong, Bangladesh
Phone : 88-031-613916, 617605
Fax : 88-031-617605
Oasis International
4/1-C Hare Street, Wari,
Dhaka 1203, Bangladesh
Phone : 88-02-7112759, 018-212320
Fax : 88-02-9561122
Email : [email protected]
82
Sasco International
39 Paribagh, Sonargaon Road Hatirpool,
Ramna,
Dhaka 1000, Bangladesh
Phone : 88-02-9564636, 017532281
Fax : 88-02-9564636
Email : [email protected]
83
APPENDIX E: LEATHER PRODUCTS EXPORTERS
Abdul Khaleque Khan & Co.
47 B K Das Road, Farashgonj
(1st Flr), Dhaka 1000, Bangladesh
Phone : 88-02-7112007
Fax : 88-02-9560830
Email : [email protected]
Absolute Leather Products
14 Rajuk Avenue Motijheel C/A
Dhaka 1000, Bangladesh
Phone : 88-02-9557788
Fax : 88-02-9557788
Email : [email protected]
Apex Tannery Limited
65-66 Motijheel C/A, Dhaka 1000
Bangladesh
Phone : 88-02-9551117, 9565909, 9566013
Fax : 88-02-9562386
Email : [email protected]
Apex Leathercraft Fashion and
Accessories Ltd.
Huse 20, (Ground Flr.) Lean 4, Baridhara,
DOHS
Phone : 88-02-8821591, 9883926
Fax : 88-02-8826815
Email : [email protected]
Bata Shoe Company (BD) Ltd.
Tongi I/A, Tongi, Gazipur, Bangladesh
Phone : 88-02-9800501-5
Fax : 88-02-9800511
Email : [email protected]
Bengal Novel Handicraft House
147/1-B North Shamoli, Dhaka 1207,
Bangladesh
Phone : 88-02-8130332
Fax : 88-02-9130522
Chaman Enterprise Pvt Ltd.
11 Gopibag 3rd Lane, Wari,
Dhaka 1203, Bangladesh
Phone : 88-02-9553838
Fax : 88-02-9561122
Email : [email protected]
Creative International
Road New 14, Old 29 Hosue 7 Dhanmondi,
Dhaka 1209, Bangladesh
Phone : 88-02-9143158, 9138139-40
Fax : 88-02-9122847
Email : [email protected]
Crown Leather Products Ltd.
179, East Kafrul, Dhaka Cantt.
84
Dhaka-1206, Bangladesh
Phone : 88-02-9872149
Fax : 88-02-9870876
Email : [email protected]
Dewan International
8 B B Avenue (3rd Flr), Dhaka Bangladesh
Phone : 88-02-9555736, 8315861
Fax : 88-02-9552760.
Foundation Associates Ltd.
1/B-DIT Avenue (4th Flr), Motijheel C/A,
Dhaka, Bangladesh
Phone : 88-02-9565652, 018-221027
Fax : 88-02-9569910
Email : [email protected]
Hira Enterprise
57 Kazi Riazuddin Road, Posta
Dhaka 1211, Bangladesh
Phone : 88-02-8610242, 8624313
Fax : 88-02-9672764
Email : [email protected]
Haroon Leathers Ltd.
House 6 (New), 19 (Old), Road 6
Dhanmondi, Dhaka, Bangladesh
Phone : 88-02-8821024
Fax : 88-02-8826114
HRC Leather Complex Limited
13 (WP) Mohra IA, Alamin Baria Chittagong
4221, Bangladesh
Phone : 88-031-670024, 670383
Fax : 88-031-670383
Email : [email protected]
International Trading Company
55 Dilkusha C/A, 4th Flr
Dhaka 1000, Bangladesh
Phone : 88-02-9569706
Fax : 88-02-9565483, 7162131
Karupalli
Palli Bhaban, 5 Kawran Bazar
Dhaka 1215, Bangladesh
Phone : 88-02-9124238
Fax : 88-02-8114343
Email : [email protected]
Kohinoor Leather Products Limited
Amanullah Complex 87, Islampur Road (5th
Flr), Dhaka 1100 Bangladesh
Phone : 88-02-7391580, 9566402
Fax : 88-02-7121273
Email : [email protected]
Karim Leathers Limited
180 Hazaribagh, Dhaka 1209 Bangladesh
Phone : 88-02-8616584, 8611129
85
Fax : 88-02-8613274
Email : [email protected]
J A & Company
45 Imamgonj, Dhaka 1100 Bangladesh
Phone : 88-02-7315382, 7312655, 9560149
Fax : 88-02-7319753
Email : [email protected]
Madina Shoe Industries Ltd.
Baitul Hossain Building, Suite # 1204, 27
Dilkusha C/A, Dhaka, Bangladesh
Phone : 88-02-9667654, 9667745
Fax : 88-02-9564042
Email : [email protected]
Moon Enterprise
19/25 Begum Bazar (2nd Flr) Golden Super
Market,
Dhaka- 1100, Bangladesh
Phone : 88-02-7311913, 7319432
Fax : 88-02-9672764
Email : [email protected]
Oasis International
4/1-C Hare Street, Wari, Dhaka 1203,
Bangladesh
Phone : 88-02-7112759, 018-212320
Fax : 88-02-9561122
Email: [email protected]
Picard Bangladesh Limited
Kondol Bag, Zirabo, Savar, Dhaka
Bangladesh
Phone : 88-02-9354116, 9354570
Fax : 88-02-9332569
Email : [email protected]
Samata Leather Complex Ltd.
120 Sher-e-Bangla Road Hazaribagh,
Dhaka 1209, Bangladesh
Phone : 88-02-9662731, 8611372, 8611102
Fax : 88-02-8618360
Sasco International
56, Purana Paltan (5th Floor)
Dhaka 1000, Bangladesh
Phone : 88-02-9564636
Fax : 88-02-9564636
Email : [email protected]
SMT Leather Company
28/A-2 Toyebee Circular Road Hotel
Motijheel (1st Flr), Motijheel C/A, Dhaka
1000, Bangladesh
Phone : 88-02-9570808, 7121036
Fax : 88-02-9570808
Email : [email protected]
Spectra Leathergoods Ltd.
Namazi Chamber (1st Flr.)
16, Motijheel C/A, Dhaka, Bangladesh
86
Phone : 88-02-9565301, 9564543
Fax : 88-02-9551017
Sureswar International
204 Shohid Syed Nazrul Islam Sarani, Aziz
Co-operative Market, Bijoy Nagar, Dhaka
1000
Phone : 88-02-9330334, 933584-041
Fax : 88-02-8315942
Email : [email protected]
Touhid Trade International
84 Naya Paltan, Dhaka 1000
Phone : 88-02-9342167
Fax : 88-02-9341748
Email : [email protected]
Tradesman International Ltd.
14 DIT Avenue, 6th Flr, Motijheel C/A,
Dhaka 1000, Bangladesh
Phone : 88-02-9553614
Fax : 88-02-9565506
Email : [email protected]
Trans Atlantic Trade Associates
55 Dilkusha C/A, 4th Flr, Dhaka 1000
Phone : 88-02-9569706
Fax : 88-02-9565506
Universal Leather Products Ltd.
18, Erectors House (9th Flr.) Kemal Ataturk
Avenue, Banani, Dhaka
Phone : 88-02-9880102-5
Fax : 88-02-8822453
Email : [email protected]
Uttama Leather Products Ltd.
House 2/A, Road 138, Gulshan
Dhaka, Bangladesh
Phone : 88-02-8613160
Fax : 88-02-8616891
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