Importance of Garments Buying House

Before discussing what is Garment Buying House and its importance, it is necessary to say a few words about the Ready-made Garment (RMG) sector. Long back in 1970, RMG started as a small unconventional business in export business of Bangladesh. Since 1990, once the country achieved a more stable government and economy, RMG started to grow at a tremendous rate and the rate is still growing with some minor ups and downs. In the last two decades, the RMG sector of Bangladesh rapidly flourished and won the competition against China, Vietnam and many other countries. Among many other business sectors, RMG now brings the highest revenue by export in Bangladesh. Now, if we compare the RMG of Bangladesh with other countries, in 2018, Bangladesh ranked 2nd on the Top 10 Ready-made Garments Exporters of the world.

Garment Buying House (BH) plays a crucial role in the remarkable achievement of RMG sector and one of the distinguished business fields in Bangladesh. In general terms, BH is the trading partnership between the buyer and the manufacturer. Similarly, Garment BH is the platform that helps the garment industries in Bangladesh to export their garment products in the local as well as in the global market. These garment products are sold at a competitive price in the apparel markets of United States, United Kingdom, Germany, Spain, Canada, Italy, Australia and in many other countries across the globe. At present, Garments BH plays a crucial and important role in the economy of Bangladesh.

Following are the two types of Garment BH available in Bangladesh:

Buying agency or Liaison office, sometimes also known as Representative office. As the name ‘liaison’ suggests, it only executes the liaison activities. It is the communication and trading channel between the Head office and the manufacturers. For example, H&M Bangladesh is a liaison office of H&M head office, Sweden; Walmart Bangladesh is the liaison office of Walmart head office, USA. In this type of BH, all the required approvals are coming from the Head office (buyer). The BH is only allowed to execute the order, not for major decision making.

Sometimes, manufacturers use their separate marketing office as a BH, and they charge a small (e.g. 5%) commission for that service. As these offices are part of the marketing team of the manufacturers, they participate in business decisions. This kind of BH is mostly found in large corporate industries.

The importance of BH are discussed in detail below:

1. It searches for garment apparel buyers and collect orders from them. That’s how manufacturers don’t have the need to find buyers for their product. BH is finding buyers for them. Therefore, it creates the scope to do business for the garment manufacturer.
2. Garment manufacturers don’t have to spend money on product marketing. BH contributes to all marketing activities in both foreign countries as well as in Bangladesh.
3. For doing business, foreign buyers must know details about business laws; tax, customs and revenue laws; investment-related laws; investment-related policies; license information to do business in Bangladesh. But, if they make a partnership with the BH, the buyer will be relaxed for the above issues easily. Thus, they heavily rely on the Garment BH in Bangladesh to understand the overall prospect of business.
4. Buyers from foreign countries don’t have enough knowledge about Bangladesh’s culture, language, weather, people, environment, laws, transportation system, labour cost, material cost and so on. Thus, they need continuous support from the Bangladesh Garment BH to conduct their business.
5. Foreign buyers also rely on the BH to conduct business with Bangladesh RMG industry rather than dealing with each individual manufacturer. Basically, BH makes the buyer’s job easier and ensures Bangladesh RMG always have buyers.
6. Market analysis is a major concern for a fast-growing buyer. They want to know about political issues, labour law, worker salaries, yarn price, accessories price, fabric price, time-schedule, any other issue related to production. International news couldn’t give the correct and accurate news always. But buyers need regular update about production country related to their budget planning. So, the local BH plays a vital role in the Bangladesh RMG sector for the foreign buyers.
7. BH takes the responsibility of communication in both ways.
8. BH takes the responsibility of ensuring that the manufacturers are maintaining quality according to requirements while producing the garment apparels.
9. As the BH works on setting a competitive price while ensuring the best quality product, it holds the power to create a mass level consumer market.
10. Continuous observation support is needed in the complex supply chain process specially in the production time. Merchandiser should observe real scenery before taking a decision for smooth production. Without support from the BH, the merchandiser may not have this ability.
11. Due to the close observation BH can give instant information to the buyer when buyers can take preventive measure as soon as possible.
12. BH single-handedly works with customers, suppliers and industry partners.
13. Creating a lot of jobs opportunities for the residents of Bangladesh and helping to reduce the unemployment rate.

As we already mentioned before, BH plays a vital role in RMG. It works as the trading ground for Bangladeshi RMG and local/international buyers. Without the excellent job done by the BH, there’s no way RMG could have achieved the 2nd rank in the export market of garment apparel. When people are praising the good works and achievements of RMG, they often forget to mention the excellent work done by BH.

If you want to know about the importance of garments buying house, this article of WEBTECH might help you.