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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:
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.
Ella Ava is a financial expert and a renowned blogger. She has more than 5 years of experience in writing as well as in working for various loan companies. Currently, she is working at Finance.