TEXTILE INDUSTRY
Abstract
Textile and Garment industry is among the world’s largest industries and it provides employment to around millions of people around the world. Such industries are dependent on the use of harmful chemicals to process the textiles, it subsequently seals to environmental degradation and pollution, which is a matter of public concern. These industries play a major role in the economy of various developing nations like India, China, Bangladesh, Vietnam etc. However, even these growing economies somewhat face strong challenges regardless of low labor costs, short production-cycle, and high volatility, and minimum predictability, strong impulse purchasing and quick decisions on market needs. Even developing nations face competition among them, so to reduce the production costs; they focus on discovering new source to cheap raw material and to reduce the delivery costs and methods which would increase the productivity among labors.
This report shall consider the challenges faced by the textile and garment industry in terms of Corporate Social responsibility while they operate in the developing countries (Vietnam and Bangladesh). Also provided in this report are the recommendations to effectively implement ethical norms to face the main challenges (Akter, 2018), (“Hải Quan Việt Nam – General Department of Vietnam Customs”, 2020).
Introduction
Textile industries are industries whose primary concern is the design, to produce, to distribute the yarn, cloth, and the clothing. The main raw-material that is to be used can be natural, or maybe synthetic with the help of products from chemical factories. Operations in textile and garment industries lead to the produce of products like apparels and clothing. Among the leaders in textile markets are the developing nations like India, China, Bangladesh, Vietnam etc. The industries must comply with the corporate social responsibility norms to maintain proper sustainability in accordance with the working of the industry. Countries like Vietnam and Bangladesh have been constantly expanding their textile sector over past few years and making their economies work and sustainable through import of cheap raw materials from various other nations (Vietnam News, 2013).
By sustainability, we mean, a market of a product through which not only the primary shareholders or the stakeholder’s benefit but also the environment. There is always a stiff competition among the developing nations regarding their quality and costs in international markets. The addition of CSR in textile industries is important for all organizations in order to continue the sustainability. The industry must assume the responsibility to not only manage the internal operations but also the outdoor operations (“Prospects Of The Textile And Clothing Industry In Bangladesh :An Overview. | FASHION PRESS24”, 2020).
The Textile and garment industry complies with the norms of various international corporations like the WTO to make themselves sustainable in the international markets (“Master plan to boost textile and garment industry”, 2020).
Key challenges faced by textile and garment industries incorporate in developing nations.
The textile and garment industries encounter various challenges in their operations in developing nations. Among those developing nations are Bangladesh and Vietnam, they are among the most affected due to industrial processes of different companies or different brands that are in use in these nations.
Poor working conditions faced by the labors:
The labors in the textile industry of Bangladesh working for the western firms suffer from the poor working environment even after two years when a factory collapsed and killed 1100 poor workers. Researchers found that many workers complained of physical assault, improper sanitary facilities, lack of payment of wages to labors, verbal abuse, forcing labors for overtime, no materiality leave granted and no bonus payments in due time. The textile industry in Bangladesh in second largest in size in the world and it employs around 4 million workers, mostly female, in an estimated 3500 factories. Over 80% of the textile factories in Vietnam violated the working duration policy, resting time and other safety for labor rules and regulations. Over half of the labors in Vietnam suffered from headache, one-third from dizziness. The labors in Vietnam expressed their fear arising from the management of the companies which threatened them to kick out from their jobs if they spoke out about the working conditions in media or to the public by any means (“Bangladesh: Garment brands contribute to low wages, long working hours & child labor alleges report | Business & Human Rights Resource Centre”, 2020).
Child labor:
In the year 2016, the labor department of the United States of America listed the Vietnamese textile industry as a sector that uses the system of forced child labor. According to the data, about 50000labors in Vietnam are fewer than 18, the majority of which are working in unregistered factories. These children are forced to work like slaves and implements worst kind of treatment to them. Child labor is persistent in Bangladesh over the years. The large part of the children working in the industries belong to poor families, even some middle-class families send their children to work in the textile industry. Brands like H&M, C&A, and Esprit may be indulging in child labor practices in Bangladesh (Barrie, 2016).
Changing international trade regimes:
Vietnam and Bangladesh are new entry into the textile industry in international markets. Export of these nations is partially regulated by Multifiber Agreement (MFA). Exports made by Vietnam and Bangladesh to Japan stands outside the scope of the MFA. Japan is a non-quota market. The 1992 trade deal by Vietnam with the EU gave the nation a preference towards the export of garment in EU market. This is a major reason for the exceptional growth of Vietnam exports in EU markets. Both Vietnam and Bangladesh have limited reach to the US market due to the quota system of MFA, US being the top economy with MFA regulations. Vietnam somewhere appears to be better placed than Bangladesh regarding the reduction in quota markets under guidelines of the MFA. Vietnam experienced success from its Japan market, clearly indicating Vietnam can do better when the quota system is lifted (Nadvi, K., Thoburn, J., Thang, B. T., Ha, N. T. T., Hoa, N. T., & Le, D. H., 2004), (Sreedharan & Kapoor, 2020).
Identify and analyze the scale and scope of global operations sourcing materials and/or labors in these regions.
When it comes to developing countries and the scale of operations being conducted in those countries, Vietnam and Bangladesh have shown now and then their capabilities in the textile industry. At present, Bangladesh is ranked second only to China in the world to be the largest producer of garments worth US$20 Billion industry and around 80% of the earnings are made through exports worldwide. Both Bangladesh and Vietnam have plenty of resources and opportunities along with effective government policies. Both the nations have a large labor workforce. The cost of natural gas and energy is also cheap in these nations. Both the countries are populated making them labor sufficient and both produce labor intensive goods. Vietnam has increased its investments by huge numbers in the textile sector to give a major boost to them in order to make them compete in the global markets against China and India. These funds are used in R&D by the Vietnamese industry to further increase the quality of the cotton fabric to gain a quality boost in the international market. New funds are utilized by the existing companies to re-structure, analyze, and re-build and to strengthen existing operations mechanism making it more effective (Van, 2018), (Bureau, 2019).
Textile industry in Bangladesh is till date dependent on the import of raw materials like fabric and yarn, but the nation has now decided to set up major projects of large-scale spinning and weaving industries. Bangladesh had major advantages against its rival developing nations which helped it become the world’s second largest producer of the readymade garments. These advantages were the viability of huge labor force in their nation and also the availability of very cheap labors willing to work at low wages. Another major advantage it had was that of low energy and water costs. Bangladesh has ample amount of installed power capacities, its friendly countries agreements on power trade ensures security of energy source (“Working conditions in Bangladesh (ILO in Bangladesh)”, 2020).
Recommended approaches to ethical considerations of local stakeholders
To invest in the best ways, Bangladesh and Vietnam must also comply with the ethical guidelines laid down to maintain the social responsibility in order to produce the garment and apparels. Having to perform keeping sustainability in mind it is crucial to understand that the textile units in Vietnam and Bangladesh do not fail the CSR role of the company. The use of heavy machinery and the installation of such machines could harm the environment and also damage it. This would ultimately lead to consumers being skeptical of buying the products and also harming the goodwill of the organization. This is why complying with the company to manufacture the product in such a way that the local stakeholder understands what kind of responsibility they account to and necessary. This could only be achieved by educating the local stakeholders. This information to ascertain that the textile industries are treated equally, that there is no environmental degradation, that the consumers are not being cheated, is the sole responsibility of the textile industry.
The taking over of various businesses from China has been a key turning point in the global markets. It has increased the scope and scale of performances of the local stakeholders. The producers, manufacturers, suppliers and the customers all will be affected by this change. The major competition of China is here in Vietnam and Bangladesh. These two fast developing economies are cutting the edge with China (Trinh, Trinh & Tilleke & Gibbins, 2020).
Are they successful and how can they be improved?
The textile and apparel industries in Vietnam are among the major industries in the nation, it adds immense value to the nation’s GDP and Exports, it creates a large employment source among its public. However, the industry continues to struggle at some points which are, mode of production used by the industries in Vietnam that is the CMT method, this method adds the lowest value to the products. This could be improved if the industry changes its mode of production to some other method which is more effective than the CMT. Another major struggle the industry faces is that of irregular wage increment of the labor in accordance with the growth of the nation, this issue can be resolved and improved it the industry properly analyses the rates of growth of the nation with the rate of growth of labor wages. Another major improvement the nation has to make is that of the size of its industries, industries have to be funded more to grow and expand into major large companies so as to make them capable to cope up with global competition (Matsangou, 2015).
The textile industry of Bangladesh is facing its most competitive times with the growth of Vietnamese and Pakistani textiles. Although the industry in Bangladesh has shown enormous growth over the last decade, there still is some scope of improvements in the industry. These include the high cost of manufacturing in the Bangladeshi textiles due to a rise in electricity costs in the nation. Energy tariff needs to be brought down in order to minimize the cost of production in Bangladesh. High depreciation on the assets like heavy machinery have also plunged the costing factor of the produce. Also, the effect of high inflation and high interest cost adversely affects the expansion of the textiles in Bangladesh. Attracting foreign buyers have been getting tough every passing day. The industries are in desperate need of funds for R&D in cotton and fabric to improve the quality of the same. The day by day devaluation of the Bangladeshi Taka has led to less foreign investors entering the industry. All these areas need major improvements to make the revival of Bangladeshi textile Industry (Narasimhan, 2019), (Suhrawardi, 2020), (OBE, 2020).
References
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