Dhaka a good fit for HK companies
Part of Bangladesh will forever be Kwun Tong thanks to the efforts of two garment manufacturers with their world headquarters based in the Kowloon industrial district.
Must Garment and Epic Group have links with Dhaka's Enterprise Processing Zones (EPZs) that stretch back more than 20 years, and their factories form the bulk of Bangladesh's exports.
The companies - run by two Indian-born brothers - are separate entities with huge stakes in the ready-made garment market, supplying clothing to the likes of Abercrombie & Fitch, Wal-Mart, Marks & Spencer, Tommy Hilfiger and other leading brands. With an eye on rising manufacturing costs in the Pearl River Delta, Bangladeshi leaders are keen to show other factory owners how investing in Dhaka's EPZs should be part of their plans to ease uncertainty over such matters as the strengthening yuan.
Sanjeev Mahtani, managing director of Must Garment, and Epic Group's chief executive Ranjan Mahtani are equally eager to emphasise how their businesses have benefited from involvement with Bangladesh and to allay what they feel are unnecessary fears investors may have.
Not only have their companies reaped success in Bangladesh and gained accolades from the brand names which they supply, but the factories are also at the forefront of providing training, education and safe, non-exploitative working conditions. It is these efforts and more that have impressed Bangladeshi officials.
'Our success lies with 15,000 people in Bangladesh,' Ranjan Mahtani said of Epic's expanding workforce. 'Bangladesh is the major centre for us - it has been our business and our haven. I have always believed in Bangladesh for two reasons: one is sentimental and another is that I see China being left behind in some ways. Rates and raw material prices are going up along with a change in living standards.'
Sanjeev Mahtani likewise feels an affinity with Bangladesh, having seen the technology and the personnel he employs developing to high standards. Must Garments has recently started Kwun Tong Apparels in one of the EPZs which will eventually employ 10,000 people in a state-of-the-art 1 million sq ft factory. This will add to the 7,000-strong workforce the Must Corporation already has in Bangladesh. Must also has plants in China, Bahrain and Egypt.
Must's confidence in Bangladesh is reflected in its investment last year, which rose to US$28 million compared to US$3 million in 2006, according to the company.
'You naturally feel there are a lot of challenges with the change of government, but by and large the caretaker government has been good,' said Sanjeev Mahtani. 'Change in the government is always a worry because businessmen wonder whether there will be stability. I have to say we have gone through so many different phases of maturity, but everything is working out positively,' he said, citing the drop in unloading times at Chittagong, the chief seaport in Bangladesh, from 11 days to three as one example.
Epic has made a US$25million investment in a denim manufacturing facility on the outskirts of Dhaka and is in talks with a United States partner to build a 'hardware accessory village' where zips, metal buttons, elastics and other materials can be made in Bangladesh instead of being sourced from China or elsewhere. A heavy R&D process is also integral to Epic's Bangladesh operations.
Both believe the strikes and political unrest seen in 2006 are now behind them as the caretaker government gets to grips with an anti-corruption drive and improves the infrastructure that is vital to investment.
'I think it's just the start, and Dhaka will realise stability by first generating business,' Ranjan Mahtani said. 'We are expanding because we believe in Bangladesh.'
Integral to the success of both companies' operations is a contented and motivated workforce who feel they play a part in the progress made in the EPZs, which already have infrastructure and tax incentives in place for businesses. 'We read a lot about sweatshops and child labour, so it may surprise many how well advanced the training is for our managers and workforce,' Sanjeev Mahtani said.
'A typical manager has trained with us for two years and there is so much automation in the production process now. Wireless technology in our factories means everything is tracked and a workers can look up at one of the 150 LCD screens throughout the factory and see where there may be a delay. You can consequently see what you are making and its quality. It encourages teamwork and makes each member very aware of what other teams are doing.'
Both companies are also making headway with better environmental applications such as steam recycling for energy use, climate sensors and their own power generators. 'We have tried to be as forward thinking as possible. Bangladesh is changing, workers are now being treated better,' said Sanjeev Mahtani, who has also given his personal seal of approval to Must's canteen facilities, where to drive home the sense of team spirit, management can be found serving food to workers.
Ranjan Mahtani said Epic believed in redefining the technological processes that went into clothing manufacture so it could compete with the world's 'big players', which these days were often based in China.
'To do this, a well-trained workforce is required with the industry's best technicians coming to our operations in Bangladesh. This advancement and growth is coming from the garment industry.'
Sanjeev Mahtani said Bangladesh's EPZs had worked well in reducing bureaucracy and, as costs rose in China, should enjoy more success. Bangladesh was 'on the road' as far as growth was concerned.
Ranjan Mahtani is planning a forum in Hong Kong to share his experiences of Bangladesh with local investors and entrepreneurs.