Crafting A Billion Dollar Success

While the RMG sector has always been the limelight of Bangladesh, another sector has been slowly building itself up and growing at an astounding rate. One of the oldest industries of the country, the leather and footwear industry has now become one of the key engines of growth in Bangladesh.
The first ever tannery was established in 1940 by RP Saha, a business man in Narayangonj, and since then this industry has amassed a rich history of 77 years. What really kick started this industry was when BATA, an international footwear company, started full fledge operation in Bangladesh in 1972. Their contribution in the local market of Bangladesh made a big difference.

By 1995 206 tanneries had been established which consequently led to an annual growth rate of 8.5% in the leather goods industry and 15.4% annual growth rate in the leather footwear industry between 1992-2002. Leather footwear accounted for 28% of export earnings from leather and leather products in 2007-08.
According to a study in 2014, there are around 100 small-to-medium leather goods manufacturers, and a small number of niche larger manufacturers.
In 2001-02 export earnings from the leather, leather goods, and footwear were approximately $210, $10, and $40 million accordingly. After 10 years, in 2011-2012 export earnings from the leather, leather goods, and footwear increased to $330.16, $99.36, and $335.51 million accordingly. To put things into perspective, in between those 10 years there has been a roughly 50% increase in export of leather, 900% increase in export of leather goods and 700% increase in export of footwear. As a result, the leather industry achieved a growth rate of 19.42% in 2011-2012. This led to an FDI of $ 57.29 million in the leather industry of Bangladesh in 2012-13.
In FY 2016-17 (July-February) FDI in EPZ area in leather, footwear and leather goods industry were $252.41 million and investment outside EPZ area in leather, footwear and leather goods industry with joint venture investment were $3.33 million. On top of that, during the same time frame there was a local investment in leather, footwear and leather goods industry were $130 million.

The leather sector generates direct and indirect employment for about 850,000 people. The ratio of female and male workers is 65% and 35% accordingly. The industry currently has approximately 65,000 tannery Workers and 5,00,000 leather collector and hoard Labor. According to the Export Promotion Bureau of Bangladesh, the leather industry achieved the milestone of $1 billion in 2012-13 fiscal years for the first time, whereas the International leather industry size is $233 billion approximately.
Bangladesh is currently exporting 0.53% of the global leather, leather goods and footwear market. International leather goods industry size is $72 billion approximately, where Bangladesh shares 1% of the whole market. International leather footwear market size is $52 billion approximately, where Bangladesh shares 1.07% of the whole market.
Bangladesh was ranked 8th, in terms of footwear production in the world in 2016, with a production of 378 million pairs. The traditional market of Bangladeshi leather products comprises of Japan, Germany, Italy, UK, Belgium, Spain, France, Poland, the US and Canada.

Local Scenario
Bangladesh, a country with a population of 160 million (approximately) consumes 300 million pairs of footwear annually. Consequently, the local footwear market is growing at 10-15% per year.
Popular local brands comprise of Apex, Bay, Jennys, Zeil’s, and Leatherex. Among them Apex is the largest with 224 retail stores countrywide. Combined, they have imported approximately 24 million pairs of footwear in fiscal year 2016-17, which values approximately 93 million USD with an average unit price of USD3.87.

Future prospects
Given the steady rise in growth of the leather industry, Bangladesh government has targeted export earnings of $5 billion by 2021 from this sector. Keeping that target on sight Bangladesh government is currently implementing Skills for Employment Investment Program (SEIP) through Ministry of finance in cooperation with Asian Development Bank (ADB) and targeted to train 15,000 skilled workers by December 2020.

Source :
1. http://en.banglapedia.org/index.php?title=Tannery
2. http://www.assignmentpoint.com/business/marketing-business/report-on-marketing-strategies-of-bata-shoe-limited.html
3. http://jbbc.co.jp/wp-content/uploads/2014/08/A-Report-on-Leather-Leather-Goods-Industry-of-Bangladesh.pdf
4. http://www.aplf.com/en-US/leather-fashion-news-and-blog/news/35381/bangladesh-footwear-market-expands-fast-as-demand-rises

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