Banglacraft

Bangladesh Handicrafts Manufacturers and Exporters Association-BANGLACRAFT represents handicrafts sector of Bangladesh, established in 1979. A class member of FBCCI
Bangladesh Handicrafts Manufacturers and Exporters Association-BANGLACRAFT represents handicrafts sector of Bangladesh, established in 1979. A class member of FBCCI

  1. Are you aware of all requirements in Bangladesh for registration as an exporter?

The export documents required in Bangladesh depends up on the nature of goods exporting (General goods, Personal effects, Livestock, handicrafts etc.), regular trade policy of Bangladesh Government, specific goods exporting from Bangladesh (health products, food products, chemicals etc.). And the documentation procedure to export goods in a country is almost same in all countries worldwide. Certificates and license required for exportation of goods and services is uniformed by all WTO countries in almost all areas.

If you need to export goods or services, a onetime registration procedure is being completed in most of the countries.  Such export license may be obtained from concerned government department; this required in Bangladesh as well.

Required documents for registration as an exporter from Bangladesh:

1. Trade License

2. TIN Certificate

3. VAT Certificate

4. Bank Account and Bank Solvency Certificate

5. Membership certificate from local Chamber of Commerce and Industry or relevant Trade Association

6. Export Registration Certificate (ERC)

7. Export Promotion Bureau (EPB) Membership  

8. Invoice  

9. Packing List

10. Export Permission-EXP Form

11. Certificate of Origin

12. Generalized System of Preferences (GSP) Certificate

  • Have you identified one or more segments/markets for your product?

You should be aware that European countries have different roles on the market for Home Decoration & Home Textiles (HDHT). Some are mainly importers and others are mainly manufacturers. Western European countries are mainly importers and re-exporters. Most Western European importers do not just sell their products in their own country, but they distribute them across the continent. This explains why in HDHT, small countries like the Netherlands often import much more than they consume.

In terms of marketing, you need to know that countries are not markets. In HDHT there are different market segments, ranging from low to high. Every European country has these segments, although their size may vary per country. Therefore, it makes much more sense for you to select a segment in your product group and connect to the importers and distributors in that segment, instead of in a specific country. These distributors will then sell in that segment across Europe.

Key segments are:

  • Basketry – the lower segment and the (higher) middle segment
  • Rugs and mats – the lower segment and the (higher) middle segment
  • Home textiles – the (higher) middle segment
  • Shopping bags/totes – the higher low and lower middle segment
  • Garden products – the higher low and the complete middle segment

Focusing on market segments is the most accurate manner of targeting the market. At the same time, it can be good to know the leading European importers (and trade hubs) are countries like Germany, France, the United Kingdom, the Netherlands, and the emerging market of Poland.

We recommend the following:

  • Refer to CBI’s market intelligence on Home Decoration & Home Textiles for an overview of promising export products for the European market. Studies include information on topics such as trade flows, segments and market access requirements. The Market channels and segments module provides more information on segmentation of the European market. Product factsheets contain suggestions for specific product groups.
  • Use ITC’s Trade Map, a powerful interactive tool that allows you to conduct market research yourselves. It presents indicators on export performance, including yearly export/import values and volumes, (average) annual growth rates, and more information based on customs data around the world. You will be able to find potential markets across the globe yourselves.
  • Have you identified the most suitable supply chain / distribution channel for your preferred segment(s)?

In the European market for HDHT, import traditionally flows through wholesale importers and larger retailers or retail chains. Nowadays, smaller (independent) retailers are also increasingly buying directly from producers in developing countries. Another way to reach European consumers is via business-to-consumer (B2C) e-commerce.

We recommend consulting the following sources:

Finding European buyers for your home decoration and home textile (HDHT) products is not easy. Being successful depends on factors such as the quality of your product, the number of suppliers already on the market, and the competitive landscape. The following tips will help you along by giving you an overview of the steps to take in your search.

Read CBI’s Tips to find buyers for information on how to:

  • Clearly define your offering
  • Determine your segment
  • Target the right buyers
  • Invest in your online presence
  • Attend trade fairs and industry events
  • Visit the websites of sector associations
  • Be selective when using databases
  • Use matchmaking services
  • Look for organisations that can support you
  • Are you aware of the trends and seasons for your product?

Trends are the continuous changes in consumer behaviour and lifestyles, and they can create opportunities for your sector and products. These trends are the drivers of the global demand. It is therefore important to stay up to date on these developments in the market. You can stay informed on the latest trends by studying print and online sources, such as home magazines and websites. You can also visit trade fairs, where you will find the latest trends and how they will develop in different parts of the world. Respond to these trends and adapt your products accordingly.

Key trends in HDHT include:

Sustainability: People and planet

European consumers are increasingly adopting more sustainable lifestyles. Consumers and designers are making more sustainable choices, especially in higher-end segments. There is an increasing concern and awareness of the negative impacts of production and consumption, further emphasised by the pandemic.

The sector’s use of natural materials such as jute and grasses fits in well with this trend, as well as the use of recycled fibres or leftovers from the production of other textile products. Natural dyes add an extra sustainable feature to the products. Social responsibility is another key aspect of sustainability, particularly in the production of handmade items. Refraining from using child labour is especially relevant in the carpet and rug sector.

Storytelling through traditional designs, craftsmanship and materials

Ethnic motifs and traditional craftsmanship are popular on the European market. This is a long-term trend where consumers are increasingly interested in the story behind the product, which adds to its uniqueness.

Handmade products often showcase a sense of origin via ethnic patterns, weaving techniques or unique materials. Such items are often made by women in rural areas. This lends itself well to telling the story about the importance of meaningful work and income in developing countries. Producers can also play into this trend by experimenting with traditional designs and reworking them in a modern way, including playing with the colours. This combination of traditional and modern can have a broader appeal on the European market.

Home sweet… garden

The garden has become an extension of the home. The lines between the indoor and outdoor areas of the home are blurring, so it looks as if the garden is also part of the living room, often decorated in the same (or a similar) style. This trend of blending indoor and outdoor styles, represents a much broader segment, ranging from mid-mid upwards. It also applies to smaller urban outdoor spaces like balconies and patios.

Basketry: De-cluttering the home and the mind

Wellness drives the megatrend of consumers improving their physical and mental health in how they live and how they consume. European consumers increasingly struggle with the combination of small urban living spaces and high levels of consumption. Products like baskets help them achieve and maintain a tidy home.

Home textiles: Slow cooking and dining

A key trend in the HDHT sector is the increased interest in “slow” cooking and (social) dining. It involves preparing healthy meals and taking the time to sit and enjoy dinner with family and friends, boosting physical and mental wellness. It also relates to the ‘Home Sweet Home’ trend, where consumers try to make the home a place where genuine connection takes place with family and friends.

Downward price spirals are a challenge

Commoditisation poses a challenge for some HDHT products, especially in the functional segment. Particularly in the lower ends of the market, this is due to the dominance of a few large-scale suppliers from the Far East. In exchange for volume, they are able to accept small margins by fine-tuning their processes and/or squeezing production costs. This makes the room for differentiation in the lower-end market very small.

Prices are also under pressure in the mid-end market. Players in this segment often struggle to differentiate from their competitors. This can result in price pressure, a marked decrease in product quality and a lower value perception.

Buyers: Co-creation

European buyers are increasingly trying to distinguish themselves from their competitors. To do so, they focus on their own image and design. They look for producers they can cooperate with to develop their own products, so-called ‘co-creation’. This makes it extra important to showcase your special skills, production techniques and the variety of raw materials you work with.

Buyers: Smaller quantities and shorter lead times

European buyers change their collection at an increasing pace. They also try to minimise the risk of having a lot of stock. As a result, they are looking for shorter lead times and lower minimum orders. This is a distinct advantage for small to medium-sized producers, who are more flexible and can generally supply smaller quantities than bigger producers.

Buyers: Range and concept development

More and more buyers (especially in the higher middle segment) are selling concepts to their clients, rather than single products. They do this for marketing and positioning purposes and to push their sales. To benefit from this trend, producers can create ranges that combine e.g. cushion covers and throws, or kitchen linen and table linen. These items could be produced in either the same or in complimentary designs and materials.

We recommend the following:

  • Read CBI’s study on Which trends offer opportunities on the European HDHT market. Product factsheets contain information on trends for specific product groups.
  • Follow or become a member of national and international associations in your sector. They provide information on the latest trends, regulations, market performance reports and much more.
  • Do you know how to develop a product (range) suitable for the European market?

To enter the European market, you need a good understanding of product and range development for these consumers:

  • Analysis of your own strong points
  • Steps of product / range development
  • Planning (who, what and when: external assistance / designer briefs)
  • Role / input export marketing plan
  • Role / input market research sources
  • Elements to translate relevant trends into product(s) / range and how to increase (perceived) value
    • Raw materials
    • Techniques
    • Finishing
    • (Packaging) Importance of retail
  • Do you know how to procure the most suitable raw materials and semi-finished products, in the right amount?

The manufacturers’ supply chain largely comprises three different raw materials: jute, grass, and cotton. They typically source all three types of materials, either because they make various types of products, or because they combine different raw materials in their products.

Jute

Bangladesh produces the highest quality jute in the world. The country is responsible for about ¾ of the world’s jute exports and consequently is home to the best jute processing industry. This allows Bangladeshi manufacturers to create a variety of home products. Such ‘jute diversified products’ are particularly suitable for the mid- to high-end HDHT market in Europe. However, because the jute chain mainly focuses on the export of raw jute, the supply to HDHT manufacturers is not a priority for suppliers.

Grasses

Commonly used grasses include seagrass (hogla), catkin (kaisa) and mela grass. They are mainly harvested from the wild, where they grow on the temporary dry areas in riverside areas and are generally considered to be weeds without any particular purpose. Their use in the industry therefore benefits people living along rivers, who can freely harvest the renewable material on the riverbanks. Some even collect grass seeds and grow grass as a crop on the free land along the riverbanks.

Cotton

Although there is some local cotton production, Bangladesh relies almost entirely on imports for its cotton supply, mainly from India and African countries. Most of these imports are destined for the powerful apparel industry. Cotton is said to be the most expensive raw material, with jute coming second. Because importing cotton in small quantities is not an option, SMEs have to resort to local cotton re-sellers (whose main focus is the apparel industry) or organise themselves in buyer groups. They also use recycled cotton (yarns), old sarees and cutting waste from the apparel industry, which is cheaper and more easily accessible. This has the additional benefit of appealing to Europe’s environmentally conscious consumers.

Currently Bangladesh has a good position when it comes to the availability of natural raw materials from renewable sources. (Bangladesh uses just 16% of its natural materials.) However, there are still gaps (textiles!), and the current position is not guaranteed for the medium- to longer term. There is a lack of diversified products (design, and materials like rattan, bamboo, paper, recycled clothes).

We recommend the following:

  • More (alternative) fibres that can be used throughout the sector should be developed. This applies to all segments.
  • Scientific and innovative techniques to process/dry/store the natural raw materials for HD products. (E.g., a scientist has invented a biodegradable jute alternative for light plastic bags.)
  • Explore options for cooperation in purchasing and procurement (supply chain), and dyeing.
  • Proactively look for new developments and materials, this is of the utmost importance and should be one of the key activities.
  • Database of raw material sourcing, incl. information on the region, where the materials are available

Procurement management services:

  • What do you pay for the raw materials? Use of warehousing by an external party (meaning; not a producer/exporter) to supply smaller producers. Cooperative buying and storing.
  • What do you do with your waste?
  • Benchmark Garments.
  • Trends / good practices in international & local market
  • of your product?

If you want to sell your product on a foreign market, there are several requirements that you need to comply with. Depending on your product and your export country, some requirements are mandatory. Others are voluntary but meeting them can give you a competitive advantage.

Key requirements include:

General product safety

Europe’s General Product Safety Directive states that all products marketed in Europe must be safe to use. Unsafe products are rejected at the European border or withdrawn from the market.

Restricted chemicals: REACH

The REACH regulation lists restricted chemicals in products that are marketed in Europe. For example, you have to make sure you do not use azo dyes that release any of the 22 aromatic amines that are prohibited. REACH also prohibits the use of certain flame retardants in textile products intended to come into contact with the skin.

Textile Regulation

The European Textile Regulation requires textile products to have a label that states the full fibre composition of the product and, if applicable, the presence of non-textile parts of animal origin. The label should be durable, easily legible, visible and accessible. It should also be printed in all the official national languages of the European countries the product is sold in. For care labelling, you are advised to follow the ISO 3758: 2012 standards on the care labelling code using symbols for textiles.

Bangladesh LDC graduation

In light of the COVID-19 pandemic, Bangladesh’ LDC graduation has been postponed from 2024 to 2026. The European Union and the UK have agreed to allow Bangladesh to benefit from the preferential trade agreements (duty-free, quota-free access) for 3 years after graduation, until 2029. After that, an average of 8.7% duty would apply to Bangladeshi exports to Europe.

To continue benefiting from preferential EU-tariffs, Bangladesh needs to qualify for the EU’s Generalised Scheme of Preferences Plus (GSP+). In this special incentive arrangement, the EU cuts its import duties to 0% on more than 2/3 of tariff lines for vulnerable low and lower-middle income countries that implement 27 international conventions on human rights, labour rights, protection of the environment, and good governance. As the current GSP+ expires in 2023, preparations for its replacement are underway.

To find out more about the mandatory requirements in your target market, we recommend the following:

  • Refer to CBI’s module What requirements should your product comply with? for legal and non-legal requirements to enter the European HDHT market.
  • Consult the Trade Helpdesk of the European Commission, you will find the quality requirements for the EU for your product.
  • Consult ITC’s  Market Access Map, you will find the regulatory requirements for your target market and your product.
  • Are you aware of the labelling and packaging requirements for your product?

In many countries there are set labelling and packaging requirements for specific products. There are, for example, specific legislations for textiles.

Europe has specific packaging and packaging waste legislation to prevent or reduce the impact on the environment. Buyers may therefore ask you to minimise the use of packaging materials (paper, carton, plastic) or to use a different kind of (recycled) material. Europe also has requirements for wood packaging materials (WPM) used for transport, such as packing cases, boxes and pallets.

To find specific labelling and packaging requirements for your product in international markets, we recommend the following:

  1. An increased number of buyers will request extra guarantees, for instance through certifications in sustainable sourcing and Corporate Social Responsibility (CSR). Do your products comply with any additional requirements?

Many buyers have additional requirements that go beyond legislation and standards.  Examples of these additional requirements are sustainable sourcing and Corporate Social Responsibility (CSR). These standards are becoming increasingly important in global markets as there is increased attention for social and environmental conditions of producers and suppliers. These additional certifications increase your chances of success on your target market(s).

Key initiatives include:

Sustainability

An increasing number of European buyers demand adherence to sustainability schemes like Business Social Compliance Initiative (BSCI), Ethical Trading Initiative (ETI) and Sedex. You can use standards such as ISO 14001 and SA8000 to read up on sustainable options. However, only niche market buyers demand compliance with such standards.

In addition, there are several eco-labels used for textiles: The Global Organic Textile Standard (GOTS), OEKO-TEX, the European Union’s Ecolabel and Nordic Swan eco-label. GoodWeave (formerly known as Rugmark) works specifically to end child labour in the carpet industry in South Asia.

Fair trade

The concept of fair trade supports fair pricing and improved social conditions for producers and their communities. Especially when production is labour intensive, fair-trade certification from e.g., the World Fair Trade Organisation (WFTO) and Fair for Life, can give you a competitive advantage. In general, however, adhering to WFTO’s fair trade principles is sufficient.

To learn more about these additional (voluntary) requirements, we recommend the following:

  • Refer to CBI’s Sustainability  module to find out what additional (sustainability) requirements, initiatives and certifications are common in European markets.
  • Refer to ITC’s Standards Map for information on over 300 standards for environmental protection, worker and labour rights, economic development, quality and food safety, as well as business ethics. It includes global sustainability standards requirements and clarifies all types of relevant standards in international markets.
  • Access2Markets’ My Trade Assistant offers a list of legal requirements and additional requirements for each product code.
  1. Do you know who your competitors are?

The global market is characterised by fierce competition. You can expect strong competition from established suppliers, especially for large-scale products.

Price is a dominant factor when competing in the lower end, with producers from countries like China and Vietnam. Production needs to be efficient, and the cost of raw materials low. In the middle segment, adding value through design, materials and techniques is key. To further increase its exports, Bangladesh needs to capitalise on its strengths, such as the abundance of local sustainable materials and rural producer groups.

Basketry:

The competition from China and Vietnam is mainly in the lower segment, whereas Indonesia also exports basketry in the (higher) middle segment.

The Bangladeshi export of basketry of natural materials has seen a significant increase over the last 5 years, showing that the European market appreciates the products Bangladesh has to offer.

Bangladeshi producers are able to cater both to the lower end and the (higher) middle end of the market. When competing in the lower end with producers from China and Vietnam, it is important to realise that price is a dominant factor. So, competition in this segment is only possible when production is efficiently organised, and the cost of raw materials is low.

In the middle segment, producers from a country like Indonesia add value to their products through design, the use of more sophisticated materials and special techniques. For a country like Bangladesh to be able to further increase its exports and stay ahead of countries like Poland and it needs to capitalise on its strengths, such as the abundance of local sustainable materials and rural producer groups.

Rugs & mats:

When it comes to rugs and mats, Bangladesh has a couple of advantages over its competition from India and China. While China and especially India have an excellent supply of local cotton, Bangladesh has access to natural fibres from renewable sources such as jute.

Jute is a brilliant material to produce rugs and mats, and Bangladesh producers are also able to add value in terms of applying different techniques, such as screen printing, and several ways to ‘construct’ these mats and rugs. In addition, the garments industry is a good source for recycled cotton and cut-offs that can be directly used for weaving or crushed and spun into yarn.

So Bangladeshi producers are able to offer ‘value for money’ by developing attractive rugs and mats using relatively low-cost materials that (importantly) do not give a cheap impression. In this perspective, the design component is very important.

Home textiles:

Since Bangladesh barely produces any cotton, it is hard to compete with producers from other (Asian) countries. This means that there are limited possibilities to create niche markets for special products in the (higher) middle segment; by using alternative materials (such as blends of jute and cotton) or special (sustainable) techniques such as hand embroidery (heritage kantha technique), natural dyeing or combinations thereof.

Shopping bags / totes:

Producers from Bangladesh need to keep focusing on sustainable materials like jute, but can also research other eco-friendly, low-cost materials such as recycled cotton yarn (see for example CYCLO yarns). Since the demand for sustainable alternatives for (plastic) bags is expected to increase, these materials could give Bangladesh a competitive edge over the cotton products from India and China.

Garden products:

Producers from Bangladesh need to keep focusing on sustainable materials like Hogla (seagrass), jute, and Kaisa, but can also research other eco-friendly, natural materials such as banana fibre. Since the demand for sustainable alternatives for (for instance) plastic pottery and planters is expected to increase, these materials could give Bangladesh a competitive edge over the plastic products from China, as well as metal products from India and China.

We recommend identifying your competitors, by:

  • Referring to CBI’s module What is the demand?. You can also find competitors for your specific products in CBI’s product factsheets.
  • Using ITC’s Trade Map, where you can search for your competitors by product and by market.
  1. Have you defined what makes your company and product unique compared to your competitors?

Your unique selling point (USP) defines what makes your product better than your competitors’. It is what convinces buyers to do business with you instead of another company. Use your USP in your sales pitch and marketing to stand out from the competition. Your USP can be based on various characteristics of your product and company, as well as on broader factors. These are some of the key topics you can explore in your USP:

Product

You can create your USP around the characteristics of your product. For the HDHT market, it is important to show that you are authentic, particularly in the mid to high-end market segments, where your best opportunities are.

There are various ways in which your product can be special. For example, sustainability is currently a hot topic in Europe. Developing innovative concepts, for example, to extend the lifecycle of your products or add functionality, can make your assortment truly unique. Traditional techniques, motifs and materials can make contemporary products stand out by providing extra context and story.

Makers

The story and transparency of your value chain have become very important. Being transparent about your value chain builds trust. Showcasing your origin’s story is also a good way to promote your product; telling people where your product is made, who makes it and how, and why you make it. It allows you to communicate how you care for your staff and their families, and how you contribute to your local community. Having a fair trade or other social and environmental certification to support your origin’s story can be of great value.

Service

The service you offer can be a great USP. European buyers very much appreciate a responsible and reliable supplier that offers consistent delivery and quality. To excel in this area, you should provide great customer service and be able to solve problems quickly. Shorter lead times are becoming increasingly popular, as consumers expect products to be delivered quickly. Buyers are also changing their collections increasingly often, which requires lower minimum orders. Services like customised design and sample development are also highly appreciated in today’s market.

Price

You can also compete on price. However, competing on price alone is difficult, as you may enter a race to the bottom. If you focus on low price, you need to have a specific structural advantage related to that. Mostly this means a production process that is both very low cost and high capacity. The benefits of offering low prices should not outweigh poor sustainability performance.

Bangladesh’ core values

  • sustainable (green and social)
  • natural materials, abundant natural/recycled materials
  • value for money (value includes the green and social aspects)
  • for everybody, attainable, within reach, making a difference / affordable
  • traditional techniques
  • inclusive, producer groups (women, fair trade)

To learn more on how to determine your Unique Selling Proposition:

  1. Do you know which promotion instruments to use to reach your target market/segment in the European and other international markets? Do you have a promotion strategy and budget?

Promotional materials are essential for exporting. They should address the potential buyer in your target market. This means that your promotion items may differ from the ones targeting your local or regional buyer.

Nowadays a website is compulsory, and it should also be mobile friendly. Without a website, many buyers do not consider you a serious exporter. In the majority of global markets social media becomes a crucial aspect of a good marketing strategy. Social media can help you engage with your customers, generate conversation and find out what people are saying about your brand and business. Online presence is therefore essential for your export business. Also, please avoid using Hotmail, Yahoo or Gmail email accounts. Instead use an email with your own domain.

We recommend the following:

  1. Do you know how best to use trade fairs for your export business?

We highly recommend visiting key trade shows in your target markets. The main European HDHT trade fairs include:

Ambiente – includes fair trade (Ethical Style Guide)

  • Basketry
  • Rugs and mats
  • Home textiles
  • Shopping bags/totes (non-commodities)
  • Garden products

Heimtextil

  • Home textiles
  • Rugs and mats

Domotex

  • Rugs and mats

Spoga + Gafa

  • Garden products

On the website of EventsEye and AUMA you can find key exhibitions and trade shows worldwide. You can also find a list of European and international HDHT trade fairs in CBI’s Tips to find buyers.

  1. Do you know the procedures and steps involved in exporting from Bangladesh?

When you have found a buyer, you need to prepare for your first shipment to them. European buyers are generally professional, well-informed customers who will often offer a contract with a set of strict conditions, including payment terms and the type of insurance and packaging. You need to agree on these conditions with your buyer before signing the contract.

Key steps include:

  • Draw up a detailed order, agreement or contract
  • Negotiate the payment terms
  • Agree on delivery terms
  • Use safe, efficient and sustainable packaging
  • Insure your export
  • Study European Union customs policy
  • Look for organisations that can support you

We recommend the following:

  • Refer to CBI’s Tips to organise your export for information on how to prepare for your first shipment to your European buyer(s).
  • Do you have a documented export strategy plan and long-term planning for your export business?

Without any long-term commitment from your company and management it would be quite impossible to present a good export plan and proceed with structural exporting business. You require full dedication of the top management and use the firm’s resources effectively to be successful in export business. A good export plan on the other hand also guides your management in maintaining the commitment needed!

If you have no export plan yet, start working on this before proceeding with investing in export business. A well-written export plan assists you in defining goals and matching resources with these goals.

An export plan includes:

  • Best market selection and targeted segment (market research)
  • Competitor Analysis, SWOT analysis and PESTEL analysis
  • Unique Selling Proposition (what do you offer, what makes you different from your competitors).
  • Preferred distribution channel (distributors, retailers, end user, etc.). A distribution channel is the network used to get a product from the manufacturer to the end user.
  • Choice of promotional instruments and branding strategy (website, social media presence, brochures, catalogues, trade fairs, logo’s, corporate identity etc.).
  • Competitive pricing strategy, this is a strategy in which the competitors’ prices are taken into consideration when setting the price of the same or a similar product.

We recommend the following:

  • Refer to EMP downloads.
  1. Do you employ at least a knowledgeable commercial manager almost fully dedicated to export business?

For long term export success, we recommend hiring a dedicated export manager, who takes care of your internal organization, operations and contract fulfilment. The export manager also manages the export process, coordinates the international shipping of the goods and negotiates with shopping companies, distributors and importers. He or she should also be the focal point for all buyer communication.

Also their duties include conducting market research to identify new business opportunities and client leads, coordinating with company leadership to conduct risk assessments and maintaining beneficial relationships with clients, suppliers and other business partners. During the course of the day, he/she may negotiate with a variety of people, such as shippers, agents and vendors, and are expected to have excellent customer service skills in dealing with customers.

  1. Do you have the (production) capacity to meet the demands of your export business?

As we know production capacity is the maximum product output a company can produce using its available resources over a specified amount of time. This is an important metric because it informs a manufacturer’s critical business decisions in both the near and long-term. The number of products we can produce in a month, or the number of customers we can serve in a particular time it’s very important to meet the demands of the customer.

 Moreover, capacity is not same as capability. Rather Capability means whether we can do something, whereas capacity is about how much of that thing can be done. For example, we might be capable of making the best seasonal items, but perhaps we need to increase our capacity so that we can serve more of those products at peak times.

So the right capacity helps many aspects of our business and know the right capacity can help us in several ways like-

Sales—We’re ready for our customers whenever they’re ready to buy our products or services

Costs—We can avoid spending money on resources we don’t need

Cash flow—We don’t tie up money in excess stock if we don’t need to

Quality—We can meet our customers’ needs without compromising on the things they find valuable

Speed of service—Customers don’t have to wait

Reliability—We don’t have to turn customers away or disappoint them

Flexibility—We’re ready to respond to sudden spikes in demand if necessary

And customer demand should always drive our production capacity. Ideally, our capacity should match customer demand most of the time. Though, customer demand doesn’t stay constant. But to optimise the capacity, we need to understand customer demand and predict when and why it might change. We can then plan our capacity over the long term, as well in the short term to deal with specific peaks or troughs. If customer demand is changing rapidly or is unpredictable, we may need to either chase demand or stay flexible. To know our production capacity at actual is as important as we know our total sale items after a season.

  1. Do you use digital tools in your export business?

Doing business has become increasingly digital in recent years, especially since the COVID-19 pandemic. Lockdowns and travel restrictions have forced both businesses and consumers to accelerate their digitalisation.

Key ways to digitalise your export business include:

  • Be aware of digital developments in the sector
  • Invest in software solutions that suit your company
  • Use digital communication tools
  • Participate in digital trade fairs to find new buyers
  • Showcase your products on digital B2B marketplaces
  • Study how you can tap into the digital B2C sales market
  • Use big data for market research
  • Stay up to date on the use of new technologies in HDHT
  • Use the help of specialists in your digital transformation

We recommend the following:

  • Is your production organised efficiently and flexibly?

A flexible organisation is one that is able to adapt and respond relatively quickly to changes in its external environment in order to gain advantage and sustain its competitive position.

Flexibility in manufacturing means the ability to change the production volume and change the design of certain product being manufactured.

On the other hand, production efficiency is an economic concept that indicates the maximum level of output a manufacturer can produce without lowering the output of another product. Also its refer to the level a manufacturer utilizes full production capacity.

Further explanation:

  • Explore efficient production for the low-end segment, which requires machinery (2-4y to arrange this)
  • Scientific and innovative/improved process for natural dye for HD and HT products
  • Technology transfer (national and international)
  • Semi-automated production, continuously
  • Sharing good practices, support by PUM, assistance from technical institutes
  • Have you identified the best freight options available to you, for your product(s)?

Smooth and efficient shipping is very important and can make a huge difference.  For HDHT shipments from Bangladesh to Europe, the most common mode of transportation is by sea. Using a good customs broker and freight forwarder is the key to ship your goods. These companies are experts in documentation, freight rate negotiations and offering the most (economical) efficient way to get your product to the buyer.

Some products need to be transported under specific conditions, such as under a specific temperature or in special containers. You should inform your logistics provider of the special conditions that your products need to be transported under throughout the import-export process. Failure to do this can lead to the quality of your products declining when they reach the importer. This can have a negative impact on your business relationships with your clients.

The services per freight forwarder can differ significantly from one to another. Some only arrange transportation, while others take care of the full logistical process, including shipping documents from door to door. If your transportation requires several shipping modes and/or warehousing is needed, make sure that your freight forwarder offers multi-modal shipments and other logistical solutions.

Some of the services that they can provide include:

  • Giving advice for proper packaging, labelling, loading, and storage of goods
  • Recommending the best means of transport and best routes for a shipment
  • Booking cargo space
  • Negotiating freight charges
  • Arranging and tracking international transportation
  • Preparing shipping and export documents
  • Warehousing, including fulfilment warehousing or 3rd party logistics warehousing
  • Arranging cargo insurance
  • Giving customs advice

We recommend the following:

  • Consult the concerned ministries and freight forwarders associations.
  • Refer to CBI’s Tips to organise your export for information on how to prepare for your first shipment to your European buyer(s).
  • Do you understand your responsibility and obligations under the INCOTERMS 2020?

INCOTERMS are internationally recognised terms for international transactions between an importer and exporter. Per situation (shipment, buyer, etc.) different rules may apply. Make sure to know what you agree upon and what your responsibilities and obligations are under that agreement.

Your Incoterms depend on the type of buyer you work with:

  • Importers/wholesalers generally prefer FOB or Free Carrier (FCA). Under FOB, you pay for transporting the goods to the port, plus loading costs. After that, the buyer is responsible. With FCA, you must clear the goods for export and hand them over to the carrier.
  • Retail multiples may prefer Cost Insurance Freight (CIF), where you include the shipping and insurance charges in your quotation.
  • Small retailers may ask for the goods to be delivered to their doorstep via Delivered Duty Paid (DDP) or Delivery At Place (DAP).
  • Importers who consolidate orders at your warehouse or in your area often prefer Ex Works (EXW).

We recommend the following:

  • Are you aware of the various freight and logistics documents required for export?

Exporters have to comply with the existing rules and regulations of concerned departments under the different ministries for their exporting products. In every stage of the export procedure you will need certain export documents. The documents required range from an exporters’ certificate to a bill of lading (for shipment). Make sure you familiarise yourself with these procedures and documents. Your logistics provider can also assist you with the required documents.

Documents needed for European customs clearance are:

  • commercial invoice: a record of the transaction between you and the importer, with basic information such as your name and address, a description of the goods, and the total value;
  • transport documents: a set of documents including the bzill of Lading (for sea freight), air waybill, road waybill or rail waybill;
  • packing list (P/L): a commercial document with information on the imported items and the packaging details of each shipment, such as weight, dimensions and contents of the packages;
  • customs value declaration: a document stating the value of the goods, including all the costs incurred, which must be presented if the value of the imported goods exceeds €20,000;
  • proof of origin: a document certifying that the goods originate from a particular country or territory, as lower customs duties may apply based on the rules of origin;
  • freight insurance: an insurance invoice is required only when the relevant data are not included in the commercial invoice indicating the premium paid to insure the merchandise;
  • customs import declaration: a single administrative document (SAD) with information such as the identifying data of the goods and the parties involved.

We recommend the following:

  • Do you know how to make a professional quotation?

To offer your products to a potential buyer, you need to provide a quotation. Your quotation has to provide all relevant product specifications. The product description should be extensive enough to clearly differentiate product A from product B. It should give the buyer a good understanding of the material, dimensions, techniques, colours and other relevant details of your product, illustrated with a picture of the product. You should also include your trading terms, which specify details such as sampling options and payment terms.

Your quotation should also contain your prices, including the currency and a clear indication of which costs are included. This depends on the Incoterms.

We recommend the following:

  • Do you understand the concept of export pricing? Do you know which costs to add to determine your export price?

In any situation where you are likely to meet buyers, it is important that you have your pricing information ready. Export pricing and domestic pricing are different; different market conditions, different costs, different quoting formats all impact what you will charge to your customer.

Preparing export pricing information starts with preparing accurate cost information. What does it actually cost to procure, process and deliver your goods? What is the break-even analysis for your entire business? A break-even analysis is used to determine the number of units or value of revenue is needed to cover your total costs (fixed and variable costs). What margins have you attributed above break-even? Without knowing these details, you are at a disadvantage when presenting pricing information to existing or potential customers.

Your export cost price includes items such as packaging, warehousing, transportation, levies, forwarding cost, cost of finance, export documentation processes, promotion, visiting the market(s) etc.

The European consumer price of your HDHT products is generally about 4-6.5 times your selling (FOB) price. Besides energy, labour and transport costs, FOB prices depend heavily on the availability and cost of raw materials.

Consumer prices generally consist of:

  • your FOB price
  • shipping, import, handling costs
  • wholesaler margins
  • retail margins
  • VAT – varies per country, varies per country, about 20% on average

We recommend the following:

  • Read CBI’s product factsheets for information on pricing for specific product groups.
  • Is your company financially stable and do you have access to sufficient financial resources to export?

Before you proceed with investing in export business your firm needs to be financially stable. Ideally your company already has a profitable domestic market and the financial management of your company has been active and stable for a number of years. 

Make sure you have sufficient resources to export. You will need money to cover marketing and market entry costs, as well as working capital. Try to seek advice from financial advisors with regard to export financing as well.

  • Do you understand the payment options and terms for international transactions? Can you find ways to reduce the financial risks of international trade?

The most commonly used payment terms in HDHT are:

Cash in advance (CIA)

When you agree on CIA, the buyer pays before receiving your shipment, which limits the risks for you, as the seller. In Europe, it is not uncommon to ask for payment or partial payment in advance. For example, an advance payment of 50% is typical in the fair-trade sector. Mainstream buyers usually do not pay more than 30% in advance.

Cash against documents (CAD)

This method, also known as documentary collection, guarantees physical control of the goods until you get paid. Under CAD, you submit key export documents (such as the invoice and shipping papers) to your bank. After your bank has received the payment, your buyer can access the documents. If your buyer does not pay, you can return or store the products, although this obviously increases your costs. Combining 50% CIA with 50% CAD is a relatively safe method for both you and your buyer.

Letter of credit (LOC)

An LOC is another fairly safe method of payment. This letter guarantees that your buyer’s bank will cover the payment if your buyer is unable to. You are paid based on documentation that proves you have met the requirements agreed upon in the LOC, such as shipping papers. There are various types of LOCs. Most importantly, your LOC should be irrevocable. This means that the issuing bank cannot make any changes without your approval. A downside to doing business via LOCs is that bank fees can make them relatively expensive.

Cash on delivery (COD) and open account (OA)

COD and OA terms are the riskiest options for you. As the name implies, under COD your buyer pays when your shipment is delivered. In an OA arrangement, payment is made within a set time — usually 30, 60 or 90 days from the date of invoice — which is also known as deferred payment. You should generally avoid these types of agreements.

We recommend the following:

  • Do you fully understand the legal rights and obligations of your export contract?

When a buyer places an order with you, that is an agreement or contract. Whenever you enter into any kind of agreement, it is important that both parties know and agree to the terms of that contract. Buyers may see drawing up an extra contract in addition to the order as an extra step or even a hurdle. However, in case of a series of orders or recurring orders within a set time frame, it makes sense to draw up an agreement or contract that further specifies what you have agreed to with your buyer.

The most important details to include in your order, agreement or contract are:

  • name and addresses of both parties
  • product specification
  • quantity — both in figures and words
  • total value — including the currency
  • payment terms
  • delivery terms  — based on the Incoterms
  • taxes, duties and charges — who is responsible for what
  • delivery procedure — places of dispatch and delivery, and a definition of the period of delivery
  • packaging, labelling and marking requirements
  • insurance  — who insures what, the type of risk covered and the extent of coverage
  • documentary requirements — including the documents needed for customs clearance
  • general terms and conditions
  • legal signature of both parties
  • any special arrangements, provisions, requirements, rules, specifications, and standards you have agreed upon

To be prepared if things do not work out as planned, you should also include clauses for:

  • force majeure — when parties are relieved of their liability for a delay or failure to perform they did not give cause to
  • governing law — which law applies (that of your country or your buyer’s country)
  • place of jurisdiction — the competent court in case of a dispute between the parties
  • arbitration – an alternative to legal proceedings before a general jurisdiction court

We recommend the following:

  • Refer to ITC’s information on model contracts for doing international business for more information on the several components of an international export contract and to download an example of a contract, consult.
  • Ask a lawyer who is experienced in international trade to help with your first contracts.
  • Do you have your own export terms & conditions?

Terms & conditions are a key part of any purchasing agreement or contract between you and your buyer. They provide clarity to all parties and save time. Having your own set of terms & conditions gives you a more secure bargaining position in the negotiations with your buyer.

Why should you have your own terms & conditions?

  • Trading (or negotiating) on your own terms

Providing your own terms & conditions will give you a head start in the negotiations, even if your buyer may not agree to everything. If you do not have your own terms & conditions, you have to accept those of your buyer.

  • Avoiding misunderstandings, assumptions, and miscommunications

This is extremely important, especially in the event of a dispute.

  • Saving time in the communication with your buyers

Proper terms & conditions answer many questions any buyer might have.

  • Making a professional impression

Having proper terms & conditions will show your buyer that you know what you are doing.

We recommend the following:

  • Refer to CBI’s study on Terms & conditions for more information, examples, and a downloadable template.
  • Do you know which organizations in Bangladesh can support you with your exports and what they can do for you?

1. Export Promotion Bureau-EPB

2. BANGLACRAFT

3. JDPC

4. ECOTA

Members benefit of these organizations-

  • Provide membership certificate
  • Member’s get Generalized System of Preferences-GSP recommendation on the export
  • Recommendation for incentives on the export
  • Can participate in various workshop and seminar
  • Participation in relevant training regularly organized by these organizations
  • Can participate in national and international trade fairs
  • Letter of recommendation for individual participation in international fairs
  • Member’s get special subsidiary from Export Promotion Bureau-EPB for international fairs
  • Get chance to participate and communicate with other sector experts and icons.
Scroll to Top