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DESPITE the fact that Japan-Bangladesh trade volume goes in favour of Japan, Bangladesh counts on Japan's investment, particularly to make its different sectors capable of meeting the needs of the competitive global market. But Bangladesh's strategy of "slow and steady wins the race" has also gradually helped the country to improve the export indicators
That is why sales of advanced machinery and technologies of Japan have been increasing after the phase-out of Multi-fibre agreement (MFA). Bangladeshi products like leather bags and shoes and readymade garments have gradually been able to enter the Japanese market taking the tastes of the Japanese people and their culture into consideration.
This was the observation gathered from the executives and representatives of Japanese companies and Bangladeshi entrepreneurs including Juki, Shima Seiki, Brothers, Itochu, Hara International while exchanging views at Japan Trade Fair 2005 held at Sheraton hotel recently.
ABM Shamsul Alam, General Manager of Juki Bangladesh Ltd, said sales of Juki machines of Japan have increased to 10 to 15 per cent after Bangladesh joined the race of the global competition in the RMG sector. He said Juki's contribution in the world market is about 33 per cent but it is 60 per cent in Bangladesh for the tremendous success of Japanese technology.
Industrial sewing machine is the core business of Juki and its support is the entire range of apparel and non-apparel process from planning, cutting, sewing, finishing and transport, said the General Manager, admitting that Juki sales that were hit by the cheaper price of Korean and Chinese machines, have now been improving because of entrepreneurs' understanding of quality products.
The experience of Ito Corporation Ltd has also been same. A sales representative of the company said that sales of machines like knitting machines of Shima Seiki Manufacturing Ltd has increased in the last one and a half year due to the country's promising export market.
Echoing the Ito Corporation's belief that sales of flat knitting collar, gloves, sock machines of Shima Seiki will also increase in the country as Bangladesh garment sector has great future for these products, he added.
Although Japanese entrepreneurs was now looking for ways to improve the business situation, the Bangladeshi businessmen have now started getting results for their long efforts to understand the Japan market. It happened in the case of Hara International Ltd., which now exports leather bags and shoes to Japan.
Its President Sheikh Shamsuzzaman Nayan said it took three years for him to get the first Japanese order. But after supplying the frames of 200 leather smash bags of his own design successfully, he earned the confidence of the importers and finally supplied finished products.
Now Nayan has earned an order of 2,000 handmade bags of his Hara brand to supply to Sanyo Shokai, a famous Japanese store of quality goods.
Nayan started his factory with only two plants in 1999, but his constant contacts with possible buyers and understanding of the need of the customers have helped him to enter into the Japanese market from 2002. He has now his own show rooms in Bangladesh and Japan as well where bags and shoes are now being sold.
Bay Tanneries Ltd is also another success story of the country in leather export to Japan. Leather footwear export to Japan has been increasing during past few years from 2000 due to its low cost in comparison with China. Ziaur Rahman, Executive Director of Bay Tanneries Ltd showed that Bangladesh exported leather footwear to Japan amounting US 11.82 million which is more than 23 per cent of the country's total leather export.
Like Hara International, Bay Tanneries Ltd executive also pointed out that language barriers and long negotiation periods that Japanese buyers usually take were the first hand problems they faced to enter the Japanese market. They however emphasised frequent holding of exhibitions and exchange programmes of trade delegations in both countries to improve the situation more in favour of Bangladesh.
Presently, Japan considers Bangladesh as a significant place for investment due to cheap cost of labour and existence of export processing zones and facilities including tax holidays for 10 years. Bangladesh is also considered as a potential market to redirect Japanese investment from some of Asian countries like China, Thailand and Vietnam.
A report of Japan-Bangladesh business associations including Japanese Commerce and Industry Association (SHOO-KOO-KAI) showed that tremendous economic development and concentration of massive FDI within a short time in China, increasing labour costs in Thailand and inadequate domestic market for high income group in Vietnam, led Japan to think of investing more in Bangladesh.
But the Japanese entrepreneurs stressed the need for improving law and order situation and avoiding political confrontation as well as creating a broader domestic market for Japanese investment.
During the fair, representatives of Japan-Bangladesh business associations also suggested that further improvement of business climate in Bangladesh be made from the viewpoints of Japanese investors. Japanese entrepreneurs consider speed in service, a smooth port service and supportive policies of the government like a mechanism to handle disputes, customs clearances, government purchase, speedy settlement of Letterof Credit payment, etc., as improvement of business climate.
But the Bangladeshi organisations also demand government intervention in improving business environment both for attracting Japanese investment and spreading market of Japanese products.
Nippon of Haq Bay Automobiles Ltd said the recent oil price hike, dollar price revision and shipment costs and other taxes have increased the taxes of reconditioned cars more than 100 per cent. He said that reconditioned cars of Japan meet the demand of majority people in Bangladesh. "Who buys the brand new car? Only a few high profile people", Nippon said urging government intervention in this regard.
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