From crafting traditional cottage based footwear to paving the way of becoming one of the major player in the global arena, the journey of leather and footwear industry of Bangladesh is a remarkable one.
The leather industry of Bangladesh. An industry which traces back its origin to the colonial era, stepped into the footwear segment after modernization in the 1980’s. At the time of Independence in the year 1971 Dhaka city’s Hazaribagh area was home to merely 30 tanneries.
As of Today Bangladeshi Leather and Leather Goods Industry has positioned itself, firmly, as the second highest export earning sector of the country, right after the ready-made garments industry, paving its path to become one of the top ten leather exporting countries by 2025.
But, how did a small industry find its way into the global market? What were the key components that catalyzed this rise? Is the export opportunity truly there? Let’s dive in and unravel that story.
The Industry at A Glance
One of the key feature why Bangladeshi leather good, are preferred globally is the Raw Hide, notably, the cow hides known for its distinctive texture and finish. The Industry now employs more than 850,000 thousand where 60% of them are women, providing significant contribution to the employment of the country’s population. As mentioned, the country’s leather goods industry started with merely 30 tanneries, but that is not the scenario anymore. Currently Bangladesh has more than 200 tanneries, 3500+ MSME’s and several large scale manufacturers active in the industry already catering to both domestic and international market.
More than 1 billion dollars has been invested in the sector, amongst which, 700 million dollars is domestic and 300 million dollars is international investment with an export goal of 10-12 billion dollars by 2030. The trajectory so far looks extremely promising as in the FY 2022-23 Bangladesh’s leather goods export exceeded 1.2 billion dollars amongst which 396.37 million dollars were generated from leather products, 123.44 million dollars were generated from only leather and 703.81 million dollars were generated from leather footwear products. Considering the given scenario, the future of particularly footwear segment looks bright.
Factors Behind the Success Story
The success story of Leather and Leather Goods did not happen overnight. There are some key factors which catalyzed the growth of this industry. Amongst them the notable ones are:
Warehouse Facility: Central bonded warehouse facility for small and medium leather goods manufactures.
Competitive Workforce: Minimum monthly wage of 65.61 USD.
Cheap Raw Materials: Bangladesh possesses 2.4% of the world’s total livestock population.
Low Production Cost: The production cost is low due to cheap raw materials and competitive labor cost.
Diversified New Products in the Leather Markets: Sports Footwear; footwear-outer soles of rubber/plastic, uppers of leather coverage ankles; belts and bandoliers; handbags; jackets; suitcases; wallets; gloves, mittens and other articles of leather.
Diverse Range of Supporting Industries: Packaging materials, metal accessories, adhesive, dies/molds and soles etc.
MAC Consumers: Number of Middle and Affluent consumers will increase to 34 million by 2025.
Access to Neighboring Countries’ Consumer Market: Country’s strategic geographic location, potential economic corridors. Alongside, the Bay of Bengal offers easy trading access to the Asia-Pacific region and Middle Eastern country’s big consumer markets.
The EC4J Factor and The Success Stories
The Export Competitiveness for Jobs (EC4J) project is a breakthrough initiative taken by the Government of Bangladesh to uplift the export capability of Bangladeshi manufacturers. The EC4J project aims to support the Government of Bangladesh’s export diversification targets. the project has been focusing on priority sectors in which Bangladesh has a demonstrated comparative advantage, or sectors that provide essential inputs in export-oriented manufacturing value chains. Bangladesh’s Leather and Leather Goods happens to be one of those sectors. The project is continuously supporting the private sector companies in these targeted sectors to address some of the key constraints they face in accessing export markets; enhancing productivity; improving environmental, social and quality (ESQ) standards; and collective infrastructure facilities. Hence, a few success story was born.
Footmark Footwear Limited: One of the company which received the benefit is Footmark Footwear Limited. The story of Footmark Footwear is a remarkable one. A company which started its journey in 2017 with a single assembly line. The founders had a plan of expansion within two-three years, but unfortunately Covid-19 pandemic stranded that endeavor. Right when the company was struggling, the EC4J project’s ERF fund not only ensure its survival but also paved a way for the company to become an export oriented footwear manufacturer.
“The EC4J project has been an extremely helpful initiative for us. Without their help my initial plan for expansion would have been obstructed. We started small with a single line of assembly. As we were fairly new in the industry, we thought of giving ourselves an opportunity to learn first and then focus on expansion. But the Covid-19 pandemic obstructed our endeavor. During 2020-2021 the business operation was interrupted. At that time, we received the grant from EC4J project, we were able to purchase machineries and expand. For a young company starting in a small space ensuring compliance and ESQ factors were very difficult. The EC4J project helped us through training and certification” said Mr. Emamul Ahsan founder of Footmark Footwear.
Italy Footwear Limited: Another company in the footwear industry which were hugely benefitted through EC4J project is Italy Footwear Limited. Established in 2014 Italy Footwear Limited overcame numerous challenges and experienced exponential growth over the past decade and now has a market reach in countries like Italy, Canada, France, Turkey, Germany, Sweden, Poland and Japan. En route to its expansion Italy Footwear faced a challenge to meet the compliance and ESQ standards. However, EC4J Project made the task easy for the company.
“The EC4J project, helped us a lot. Firstly, with the fund, which was helpful in buying machineries and improving compliances, secondly they made the way easier for us to get the certifications. I believe for us, the training and assistance in meeting the compliance and ESQ standard was more helpful than the fund itself. I am really pleased and hopeful for this project, I am looking forward to its industry based skill development program cause that’s where people in our industry face the biggest challenge. We really need to develop skilled workers in the footwear industry. Also, most of us build a business network completely on their own, in this case, hopefully, initiatives like Meet Bangladesh Show (MBS) and Meet Bangladesh Exposition (MBX) will definitely open a new door of opportunity” said Mr. Mannan the owner of Italy Footwear Limited.
Bangladesh’s leather and leather goods sector offers a fertile ground for investment particularly in product design, eco-friendly processing technologies, modern tanning and high end leather accessories. With rising global demand for sustainable and ethically produced leather products, the sector is primed for growth in the mid to high end segments. The success stories of this industry is just the beginning, now is the time to be part of the next chapter.
