Leather goods sector of Bangladesh

INDUSTRY PAPER:
THE LEATHER GOODS SECTOR (NON FOOTWEAR) OF
BANGLADESH

INDUSTRY PAPER:
THE LEATHER GOODS SECTOR (NON FOOTWEAR) OF
BANGLADESH
Prepared for:
Mohammad Saif Noman Khan
Assistant Professor
Prepared by:
Amreen Akhtar ID: 24
Md. Mushfiq Alam Arko ID: 34 (Group Leader)
01703803619
Nisa Nur Majumder ID: 36
Tapas Debnath ID: 40
Syeda Nawrin Huq ID: 41
Batch: MBA 52-D
Institute of Business Administration
University of Dhaka
January 2, 2015

iii
Contents
Executive Summary.............................................................................................................................. viii
1.0 INTRODUCTION............................................................................................................................1
1.1 Origin of the Report ......................................................................................................................1
1.2 Objective of the Study..................................................................................................................1
1.3 Scope................................................................................................................................................1
1.4 Methodology...................................................................................................................................2
1.5 Location of the Industry ..............................................................................................................2
2.0 LEATHER INDUSTRY ..................................................................................................................3
2.1 Global Market in Brief...................................................................................................................3
2.2 Global Leather Goods Market ....................................................................................................3
2.2.1 Worldwide Leather Export and Import .............................................................................4
2.2.2 Recent Development.............................................................................................................6
2.2.3 Product Groups ......................................................................................................................8
3.0 BANGLADESH LEATHER INDUSTRY ........................................................................................11
3.1. History of Leather Industry in Bangladesh .........................................................................11
3.2. Leather Industry in Brief...........................................................................................................12
3.3 Market Structure..........................................................................................................................16
3.3.1 Demographic Concentration.............................................................................................16
3.3.2 Leather Goods Market Size in Bangladesh 2013.........................................................16
3.4 Major Institutions involved in leather sector .......................................................................20
3.4.1 Leather Associations of Bangladesh..............................................................................20
3.4.2 Leather Institutions..............................................................................................................25
3.4.3 Leather Research Institutes ..............................................................................................26
3.4.4 Government Bodies.............................................................................................................27
3.4.5 Private Organizations..........................................................................................................30
3.5 Leather Products in Bangladesh .......................................................................................30
3.5.1. Small Leather products .....................................................................................................31
3.5.2. Medium Leather Goods.....................................................................................................31
3.5.3 Heavy Leather Goods..........................................................................................................31
3.6 Marketing Leather goods ..........................................................................................................32
3.6.1 Research.................................................................................................................................32
3.6.2 Strategies for Selling Products .................................................................................33

iv
3.6.3 Parameters.............................................................................................................................34
3.6.4 Marketing Tools....................................................................................................................34
3.7 Distribution Channel...................................................................................................................35
3.7.1 Raw Hide and Skin Collectors and Suppliers...............................................................35
3.7.2 Importers of Chemicals ......................................................................................................35
3.7.3 Leather Processing Units or Tanneries .........................................................................36
3.7.4 Wholesaler of Leather and Accessories ........................................................................37
3.7.5 Handmade Footwear Manufacturers...............................................................................37
3.7.6 Industrial Footwear Manufacturers .................................................................................38
3.7.7 Semi-industrial Footwear Manufacturers ......................................................................38
3.7.8 Handmade Leather Goods/Crafts Manufacturers........................................................38
3.7.9 Industrial Leather Goods Manufacturers.......................................................................39
3.7.10 Semi-industrial Leather Goods Manufacturers..........................................................39
3.7.11 Wholesaler of Footwear ...................................................................................................40
3.7.12 Retailers of Footwear, Leather Goods, and Leather Garments.............................40
3.7.13 Export Agent .......................................................................................................................40
3.8 Value Chain...................................................................................................................................41
3.8.1 Financial Analysis of Value Addition ..................................................................................44
3.9 Brief of Top Industry Players ...................................................................................................48
3.9.1 APEX Leather ........................................................................................................................48
3.9.2 Bata Shoe Company (Bangladesh) Ltd..........................................................................49
3.9.3 Leatherex Footwear Industry............................................................................................50
3.9.4 Picard Bangladesh Limited ...............................................................................................51
3.9.5 Ramim Leather & Finished Goods Corporation...........................................................51
3.9.6 Fortuna Bangladesh............................................................................................................52
3.10 Legal Environment....................................................................................................................52
3.10.1 Bangladesh Environment Conservation Act, 1995...................................................52
3.10.2 Relocation of Tanneries ...............................................................................................53
3.10.3 Related Tax and other issues .....................................................................................54
3.10.4 Price Control ...................................................................................................................54
4.0 INDUSTRY RISKS ............................................................................................................................55
4.1 Political Situation ........................................................................................................................55
4.2 Diseases and accidents.............................................................................................................55

v
4.3 Cheap Chinese Products (Dumping)......................................................................................56
4.4 Smuggling of Leather.................................................................................................................56
4.5 Lack of Technical Knowhow in Designing ...........................................................................56
4.6 Low investment in R&D .............................................................................................................56
4.7 Foreign Currency Fluctuation..................................................................................................56
4.8 Small Market .................................................................................................................................57
5.0 CRITICAL SUCCESS FACTORS ..................................................................................................58
5.1 Competitive Pricing ....................................................................................................................58
5.2 Quality of Products.....................................................................................................................58
5.3 Strong Distribution Channel.....................................................................................................58
5.4 Cost Control..................................................................................................................................58
5.5 Meeting Ecological Standards.................................................................................................59
5.6 Ensuring Government Support................................................................................................59
6.0 OVERALL MARKET SCENARIO ..................................................................................................60
6.1 Business Opportunities.............................................................................................................60
6.2 PESTEL Analysis.........................................................................................................................66
6.3 SWOT Analysis ............................................................................................................................68
6.4 Limitations Faced by the Industry ..........................................................................................70
7.0 SUMMARY OF THE FINDINGS .....................................................................................................72
BIBLIOGRAPHY......................................................................................................................................73
APPENDICES...........................................................................................................................................74

vi
List of Figures
Figure 1: Export trends of countries in 2012....................................................................................5
Figure 2: % Contribution to GDP .......................................................................................................13
Figure 3: Export Growth Rates of Leather and Leather Goods for the Years 1998-2005
(Source: Bangladesh Bureau of Statistics and Export Promotion Bureau)...........................14
Figure 4: GDP Growth Rate of Bangladesh (Source: BBS) ........................................................60
Figure 5: Minimum Wage Rates (Source: China Labor Bulletin)..............................................62
Figure 6: Leather Goods Manufacturers in Bangladesh (Source: Bangladesh Bureau of
Statistics) .................................................................................................................................................64

vii
List of Tables
Table 1: Imports and Exports of Leather and Leather Goods Worldwide (Source: UN
Comtrade)...................................................................................................................................................4
Table 2: Major Exporting Countries in 2012 (Source: UN Comtrade) ........................................5
Table 3: Importing countries 2012 (Source: UN Comtrade)..........................................................6
Table 4: List of Leather Product Groups and Products.................................................................8
Table 5: List of Leather Goods Produced in Bangladesh ...........................................................15
Table 6: Footwear Sector Growth (Source: Bangladesh Bureau of Statistics) .....................18
Table 7: Leather Goods Subsector Growth (Source: Bangladesh Bureau of Statistics)....18
Table 8: Employment in the Leather Sector Value Chain (Source: GTZ)................................19
Table 9: Distribution of Value Addition across all Value Chain (Source: GTZ).....................19
Table 10: Major Associations in the Leather Sector (Source: GTZ) .........................................20
Table 11: List of Major Leather Institutes (Source: GTZ) ............................................................25
Table 12: List of Major Leather Research Institutes (Source: GTZ) .........................................26
Table 13: List of Government Bodies Working in the Leather Sector (Source: GTZ)..........27
Table 14: Distribution of Value Addition across Different Stages of the Value Chain ........43
Table 15: Cost Analysis of Leather and Leather Products of the Entire Industry in BDT
(Source: Bangladesh Bureau of Statistics).....................................................................................48
Table 16: Export of Leather, Leather Footwear and Leather Goods (Source: EPB) ............61
Table 17: Sectoral Employment and Investments in EPZs (Source: BEPZA, Ministry of
Finance)....................................................................................................................................................63
Table 18: Employment, Output, Tax and Salaries Provided by Leading Industries (Source:
Bangladesh Bureau of Statistics)......................................................................................................64

viii
Executive Summary
This report collected all the information available of the leather industry, concentrating upon the
non-footwear product segment that is important for all the stakeholders of the industry. The
leather sector has been declared a “thrust” sector by the government which lead to a number of
incentives provided by the government along with the regular incentives provided for the
industries, including:
 7% interest rate for commercial loans as declared by the central bank.
 15% cash incentives for exports.
 Full repatriation of profits for foreign investors, and that too without prior permission from
the central bank.
 Duty free import of capital machineries during primary set up.
 Relief from double taxation.
 GSP facilities
Furthermore, EPZs in the country provide the following major incentives:
 10 years of tax holiday for industries set up before 1st
Jan, 2012.
 For those set up after 31st
Dec 2011:
Tax Exemption Period Rate of Tax Exemption
First 2 years 100%
Next 2 years 50%
Next 1 year 25%
 Duty free import of construction materials, machineries, office equipment, spare parts,
raw materials and finished goods.
 Relief from dividend tax.
 Duty and quota free access to EU, Canada, Norway and Australia.
The leather industry in the country starts with the collection of raw hides by the tanneries that
process it using mostly imported chemicals and machineries into finished leather. Currently
there are restrictions upon export of unprocessed or semi-processed hides. Major portion of the
finished leather is exported to EU countries, while the remaining are used to produce leather
footwear and leather goods majority of which is exported as well.
Leather goods market is very minimal in the country, most of which is comprised of corporate
gift items like leather book cover for diaries, cardholders, wallet etc. Consumer items include
wallet, side bags for women, belts etc. Major segment of the leather market consists of micro
and small enterprises at 54% of the total number. These enterprises mostly sell directly to
corporate clients and to major consumer brand shops like Aarong, Deshal, Jatra etc. The major
brands then sell these products to the consumers under their name. To increase the profit
margin and cut off the intermediaries, some small business set up a brand, Leather Cave,
together and sells all their products under the same brand name directly to consumers.
The country has seen strong growth at over 5% over the last decade and enjoyed strong growth
in the exports of leather, leather footwear, and leather goods. Exports of leather goods
increased from USD 3.43 million in 2002-2003 to USD 129.16 million in 2010-2011 and ended

ix
up at USD 186.6 million in 2013-2014 despite high political turmoil, natural disasters, global
recession in the recent past.
The country enjoys major advantage in this labor-intensive segment, as the wage rate of
Bangladeshi workers at about 85 USD is far lower than that of the Chinese, Vietnamese and
Indian competitors. Furthermore, the leather from Bangladeshi hides is of superior quality due to
environmental factors like humidity. This allows for the products to be priced at higher rates,
bringing in extra revenues.
There are a lack of ETP usage and control in the leather industry. As a result, the pricing of
leather goods get affected. The government is working on the shifting of the tanneries to Savar,
from Hazaribagh. This will allow for the products being marked as more eco-friendly, leading to
them being priced much higher. However, the shifting of the tanneries will affect the micro and
small enterprises producing leather goods as they will not be accommodated in the government-
sanctioned land and will have to avail expensive lands outside the tannery region.

1
1.0 INTRODUCTION
As a developing country in the third world nation, Bangladesh has a steady GDP growth at a
significant rate of 6 percent in the last five years. The leather industry is one of the driving forces
for the GDP growth rate of Bangladesh, ranking 4th largest export earnings in 20131
contributing about 6% of total export earnings last year.
Bangladesh has a long established tanning industry producing around 2-3% of the world`s
leather from a ready supply of raw materials, the leather is widely known around the world for its
high quality of the fine grain pattern uniform fiber structure, smooth feel with natural fine texture.
About 95% of leather and leather products of Bangladesh are marketed abroad, mostly in the
form of crushed leather, finished leather, leather garments, and footwear. Most leather and
leather goods are exported to Germany, Italy, France, Netherlands, Spain, Russia, Brazil,
Japan, China, Singapore and Taiwan.
The leather industry is perfectly suitable to Bangladesh with its abundance of labor and natural
resources at internationally competitive rates; the leather industry of this country provides a
strong stream of good quality leather and has all the potential to be one of the significant export
earners in the global leather sector.
1.1 Origin of the Report
The report “THE LEATHER GOODS SECTOR (NON FOOTWEAR) OF BANGLADESH” was
commissioned by Mohammad Saif Noman Khan, Assistant Professor, Institute of Business
Administration, University of Dhaka as a term paper for the course Financial Managerial
Communication (C-501). This report was written by, Amreen Akhtar (ID-24), Md. Mushfiq Alam
Arko (ID-34), Nisa Nur Majumder (ID-36), Tapas Debnath (ID-40) and Syeda Nawrin Huq (ID-
41) of the MBA batch of 52D of Institute of Business Administration, University of Dhaka.
1.2 Objective of the Study
This report will act as an industry paper, gathering all necessary information concerning all the
stakeholders of the industry.
1.3 Scope
This report has concentrated mostly upon the “non-footwear leather goods industry”.
1
(Technical Report: Leather Sector Includes a Value Chain Analysis and Proposed actions)

2
1.4 Methodology
The data illustrated in this report are both from secondary and tertiary sources and have been
cited where appropriate. Secondary data has been collected from UN Comtrade, World
Statistics Compendium from FAO, Future Trends of the World from UNIDO, Bangladesh Bureau
of Statistics, Bangladesh Bank, Ministry of Finance and the Ministry of Industries of the
Government of Bangladesh. Tertiary data has been collected from reports published by GTZ.
1.5 Location of the Industry
Bangladesh, with a population of about 152.5 million in a total area of 147,570 square kilometer,
is heavily populated country. The leather industry is concentrated at Hazaribagh in Dhaka, with
186 tanneries out of 207 is located in Hazaribagh. In an area of only 70 acres land, Hazaribagh
produces about 84% of the total supply of the processed leather.
Even though the accommodation of the tanneries provides many benefits such as raw
materials, sharing knowledge, spare parts by the investors, along with development of vertical
and horizontal integrations of the industry.
Apart from only these few benefits Hazaribagh is a not the perfect place for the leather industry,
as the area lacks of proper sewerage facilities as it was previously built for residential area and
the number of Tanneries are increasingly exponential, this causes the land area to be limited,
making it not possible for effluent treatment2
.
2
H. L. PAUL

3
2.0 LEATHER INDUSTRY
2.1 Global Market in Brief
Global Leather industry dealing with raw leather, finished leather and leather products is
flourishing. Leather and leather products are widely traded globally and used universally.
Playing a prominent role in the world economy, the leather and leather goods industry chalks up
approximately USD 100 Billion3
trade per year (UNIDO, 2010).
With the world population increasing dramatically in the 20th century and the current economic
and population growth trend of developing countries will ensure the increase in the growing use
of leather and leather products (FAO, 2013). The growing population and the overall increase in
wealth leads to the increase in the consumption of meat and hence kept the supply of raw
material fairly constant4
. Predictions indicate that the supply of raw material will continue to
grow following the trend of population growth, though higher costs and decreasing pasturing
land and higher consumption of poultry and pork in Asia and Africa seem to exist.
These might eventually lead to sourcing of raw materials from alternate markets and animals
like camel, deer, kangaroo etc. (UNIDO, 2010). Globally, the supply of leather has increased by
0.8% per year between the years 1986-2003 from bovine, 0.3% from sheep and 3.6% from goat
and 38% of output of raw lather was traded globally in 2001-035
which exceed by over a third of
the figure in 1980s. However, goatskin exports have decreased as countries are holding on to
their raw materials for local industries for processing and production of finished goods (FAO,
2013).
2.2 Global Leather Goods Market
In the professional jargon of the leather industries, the term “leather goods” covers a wide range
of Items such as all kinds of handbags, attaché cases, luggage and other travel goods, flat or
small items(e.g., purses, wallets), belts, etc., but excludes other leather products, such as
leather upholstery and Leather clothing (UNIDO, 2010).
In most languages, this term simply means “items made of leather”, e.g., Indonesian,
“barangkulit,” in Arabic, “mewed min Jeld,” in German, “Lederwaren,” and in the French term
“maroquinerie” since it comes from the word “Maroc” (Morocco), where quality goats were
reared and source of the marvelous quality leather called “le maroquin.”
The history of leather industry is distinctive with the regular shifts in end uses and materials,
from the age of horse and foot transport to the automobile era, from the use of leather products
for specific functional purposes in the current market of luxury goods. Large amounts of leather
goods have been and are still made in small craft shops. Therefore, statistics are scarce, not
always reliable, or based on informal communications. Due to the wide variety of products, with
3
Future Trends in the World Leather and Leather Products Industry and Trade, UNIDO, 2010
4
World Statistical Compendium for raw hides and skins, leather and leather footwear, FAO 1993-2012
5
FAO

4
different functions, sizes, constructions, and material structures, available production and trade
statistics are expressed in value rather than in natural (volume) terms (UNIDO, 2010).
2.2.1 Worldwide Leather Export and Import
The value of the world trade in leather and leather products is expected at around US$100
billion, and the industry has been rapidly growing improving and developing countries. From
Table 1, it is seen that the import value increases from $13.9 billion to $22.7 billion in 14 years
period from 1998 to 2012 (COMTRADE, 2014), similarly the export value increases by $8.9
billion. This increase shows that the leather industry is becoming one of the word most
influential sector that is plays a vital role in improving the own country’s GDP.
Table 1: Imports and Exports of Leather and Leather Goods Worldwide (Source: UN Comtrade)
Global Export
During the last 4 years Italy remain the dominant player in leather products exports as table 3
and figure-2 shows that Italy earned the most export revenue by $ 4638.2 million, this shows
that Italy gives excellent service to its customers.
Even though the growth percentage has decreased by 1.2% in 2012 compared with 2008. But
Italy predominates the World share by 19.6% export revenue.
Year 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12
Values in
Bln US$
Impo
rt
13.
9
13.
2
15.
2
16.
4
16.
2
18 19.
8
19.
9
21.
7
23.
2
21.
6
15.
1
19.
7
23.
3
22.
7
Expo
rt
14.
8
14.
1
16.
4
17.
3
16.
8
18.
5
20.
5
20.
6
22.
8
25 23 16.
4
23.
4
24.
1
23.
7
As a
percenta
ge of
World
Trade
Impo
rt
0.3 0.2 0.2 0.3 0.2 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.1 0.1 0.1
Expo
rt
0.3 0.3 0.3 0.3 0.3 0.2 0.2 0.2 0.2 0.2 0.1 0.1 0.2 0.1 0.1

5
Table 2: Major Exporting Countries in 2012 (Source: UN Comtrade)
Value (Million $)
Average
growth %
(08-12)
Growth % (11-
12)
World share
World 23718.7 0.8 -1.5 100
Italy 4638.2 -1.2 -8 19.6
China, Hong Kong
SAR
2321.1 3.1 -0.3 9.8
Brazil 2071.5 2.6 1.4 8.7
Nigeria 1129.8 13.5 44.9 4.8
India 1071.8 7.9 6.1 4.5
USA 982.5 2 -3.9 4.1
Rep of Korea 923.7 2.4 8.2 3.9
Germany 849 -1.2 -8.5 3.6
Argentina 825.8 -2 -10 3.5
Other Asia 713.2 -3.3 -0.1 3
Spain 555.6 -0.2 -5.9 2.3
Thailand 511.1 4.3 2.5 2.2
Pakistan 457.2 4.5 -2.1 1.9
Austria 445.8 -7.5 -0.2 1.9
Figure 1: Export trends of countries in 2012
Similarly China earned
the second most
revenue of $2321.1
million. Particularly
footwear, because of its
high capacities
installed, infrastructure,
and component supply
industry. Nigeria on the
other hand shows
exceptional exponential
growth to 13.5% over
the last 4 years, by earning 1129.8 Billion, even more than India.
There is a decline of leather export trend in Western countries, the export earnings from 2008-
2012 of Argentina, Germany and USA. All though, Europe and USA have vibrant leather
products machinery, but there is a contracts between Classy Italian shoes in with cheap
Chinese footwear. These make Europe to loose share in the global market. In Asia China is the
most dominant followed by India, who has an average increase of 7.9% form 2009-2012.
0
5000
10000
15000
20000
25000
Export Amount
Export Amount

6
Global Import
Table 3: Importing countries 2012 (Source: UN Comtrade)
China is the undisputed leather
in the import of Leather products
and the biggest import market in
the world 13.2% in 2012. China
imports cheap quality shoes and
high quality designer leather
goods. The size of the markets
also varies due to population and
consumption trends, and fashion
plays a big part in the mass
market.
Similarly the EU partners, Italy,
Germany, Romania, Spain, there
import of leather materials has
declined drastically December
2008 to 2012. The biggest
consumers of footwear and
leather goods in the world are
China and Vietnam. EU nations
like Germany in particular, and
France, Italy to some extent, have had depressed economic climates and hence has limited
growth potential. USA on the other hand is one of the biggest individual market in the world for
leather products, with earnings of $651 million in 2012.
2.2.2 Recent Development
During the last 25 to 30 years, the leather goods industry has undergone major changes due to
factors such as:
• The overall rise of the standard of living along with labor costs in most leather and
leather goods producing
• Gradual development of marketing and brand strategies by businesses, both at national
and international arena, mainly due to the emergence of new advertising instruments
(e.g., television);
• The segmentation of the production process allowing outsourcing and transfer of know-
how to developing and least developed countries;
• The massive development in tourism with the advent of modern modes of transportation
including air travel;
• Modern production technologies and automation;
Country or
area
Value
(million
US$)
Avg. Growth (%)
World share
%
08-Dec
11-
Dec
China, Hong
Kong SAR
2989.3 4.2 -1 13.2
Italy 2547.7 -1.1 -13.2 11.2
Viet Nam 1583.6 15.8 75.9 7
Germany 810.4 -1.4 -16.4 3.6
Mexico 716.7 8 19.4 3.2
USA 651 -0.7 11.8 2.9
Romania 631.6 -5.3 -13.4 2.8
Spain 611.2 -1.6 -13.8 2.7
France 572 4.7 1.5 2.5
Poland 467.3 -3.2 -11.2 2.1
Portugal 466.2 2.5 -8.9 2.1
Rep. of Korea 443 4.3 -4.7 2
Thailand 422.8 5.6 1.9 1.9

7
• High quality production and efficiency with an overall increase in productivity with the
advent of modern high-tech machineries;
• The use of leather and leather goods in the automotive industry.
In this context, in order to survive in the competitive market and ever changing industry, it was
necessary to look for lower production costs in labor-intensive industries such as textiles,
footwear and leather goods. Moreover, and forced by competition, a great number of companies
started to brand themselves in order to make them better known by customers, requiring
massive expenditure on marketing along with even lower production costs to cope up. A Major
portion of the production companies shifted their production base to countries offering lower
labor costs and cheaper raw materials (UNIDO, 2010).
Destination countries were selected by assessing certain set criteria: proximity to market and
raw material, economic and political, efficient and highly productive labor and their
corresponding costs, the official language of the locality or destination country, quality of life and
living conditions (for expatriate production supervisors).
EU countries, mostly chose North Africa while North Americans, favored neighboring countries
in Latin America (Mexico, Brazil, Nicaragua, Colombia, etc.). However, some did not hesitate to
go further – to Mauritius, for example, where a major French company moved its production
facility of wrist-watch straps long before 1980s. Early in the 20th century, long before all these,
the US glove business had shifted first to Puerto Rico and later on to the Philippines.
Analyzing this gradual transition, we can come up with the following features:
• In the early stages, these transitions were not always successful and yet the relocation
trend continued; continually expanding due to faster transportation at lower costs for
raw materials as well as finished products;
• The modern and efficient mode of communication let to lower costs;
• Industrial cooperation (e.g., through UNIDO, ILO, and bilateral technical assistance
programs) made possible the transfer of technologies and know-how to developing
countries;
• Lucrative incentives granted by some countries to lure in foreign investors, in the form
of bonded warehouses, tax exemptions, and the export of 100% profits to the home
country in foreign currencies achieved their objectives.
In the last 20-30 years, production bases of most of the leather goods companies moved out of
industrialized countries, resulting in the closure of a great number of factories, inducing jobs loss
and the gradual disappearance of know-how, disappearance of know-how and the diminishing
significance or shutting down of some vocational training centers are complemented by the
emergence of local manufacturers and induction of foreign direct investments in the leather
sector with modern institutes dedicated to the development of trained personnel for this sector.

8
2.2.3 Product Groups
The history of the industry explains the underlining diversity that characterizes the segmentation
of product groups. This rationalizes the use the term “leather goods industries,” as the products
and related manufacturing techniques are very diverse and the segments that were not
available even a decade ago are now holding a major share of the total industry. The
aforementioned diversity is illustrated by Table 1: Leather Product Groups Starting from leather
parts used in sports equipment to bookbinding, leather goods now include a wide range of
products.
Some product lines have disappeared due to the emergence of synthetic material, a much
cheaper alternative. Industrial products of leather are now produced in such small volumes that
they fit with parchments in a micro-niche and are difficult to classify. Nevertheless, they should
not be ignored.
Table 4: List of Leather Product Groups and Products
Product Group Description Trade
Hand Bags Handbags with or without shoulder straps Leather Goods
Pocket or small
leather goods
Wallets, purses, coin purses, billfolds, key pouches,
credit card cases, pen cases, and other small articles
Travel goods Trunks, suitcases, travel bags, beauty cases, toilet kits,
and other travel articles
Sports bags Sports bags, casual travel bags, rucksacks
Briefcases and
portfolios
Portfolios, document bags, briefcases, attaché cases,
School articles School bags, rucksacks, and other school cases
Saddles Saddles, collars etc
Cat and dog articles
(Pet articles)
Leashes, collars, tags etc.
Hunting and fishing Gun cases, cutlery cases etc.
Stationery articles
and special cases
Writing pads, book covers, camera cases, spectacles
cases, cigarette cases, jewel cases, mobile phone
holsters or covers etc.
Military equipment Various holsters and straps for fire arms, boots etc.
Belts Women’s and men’s belts, men’s suspenders
Watch straps Watch straps made of leather and synthetics
Sports articles Balls for football, rugby
Book-bindings Book covers
Belts, washers etc Various leather products for industrial use. Industrial
leather
products

9
Handbags: Women’s handbags represent a huge leather goods market. Bags are not only a
useful accessory; they are also a sign of social rank. The use of bags is very much influenced
by fashion and culture, which themselves vary from one country to another. There are many
price segments in the market and a wide variety of styles and designs. Consequently, the
market for handbags retailing at US$1,000 and above has been growing quite rapidly in the past
five years.
Small leather goods: These are less dependent on fashion. Pocket leather goods, which are
mainly made of genuine leather, follow societal trends and utilizations, such as size of
banknotes or credit cards. The last ten years have seen the rise in importance of holsters for
mobile phones, MP3 players, and iPods. The super-luxury leather goods related to electronic
equipment is a segment that is expected to grow.
Travel goods: This category constitutes a large market that has developed in step with
travelling and tourism. The emphasis is basically on usefulness and ergonomics. The major
trends over the last years have been the introduction of wheels to all kinds of luggage and the
search for lightness. This has worked against leather. There have been considerable changes in
the last decade with the arrival of budget airlines and continuously changing security rules.
Short-haul passengers not wishing to check in luggage have created a market for maximum-
size hand/cabin luggage of high quality.
Briefcases and portfolios: This market is linked to travel and business. Laptops have created
a great need for cases with a specific design – they are mostly made from high-performance
textiles and synthetic materials. Similarly, women’s and men’s briefcases made of genuine
leather and synthetic materials hold an important place in the market. Changes in travel are
affecting this market in the same way as they do travel goods.
School articles: This category corresponds to that of the old “leather satchels.” Trends
changed in 1980 with the appearance of new and fashionable lines of school bags in France
and Germany. Today, the trend is the rucksack made of canvas and printed with various logos
and brand names. A number of the better-known brands today were initially military packs and
evolved into school bags made of materials such as corduroy.
Saddlery: This is a specialized market with a very specific clientele. Saddles and harness items
belong to the luxury segment due to their time-consuming manufacturing process. They are
hardly affected by fashion, so they can easily be made in countries with low labor costs. There
is still a premium market for superior quality saddles, especially the “English” saddle; most
manufacturers of high-quality saddles are in France, Germany and the UK. Argentina, Pakistan
and Morocco are now important suppliers of saddles, and India is also making efforts to get a
share of this specialty market.
Cat and dog articles: A fast growing market in industrialized countries (USA, Europe), where
people are increasingly fond of pets. Many of these products (e.g., collars, leashes, muzzles)
are made predominantly in developing countries. The pet-food sector, which uses raw hides, is
a separate, but important market.

10
Hunting and fishing articles: This is a specific market that is not really influenced by fashion.
These products are generally purchased by well-to-do people with a wide variety of
backgrounds. Stationery articles and special cases articles such as desk pads and note-pad
covers are today in decline due to the use of computers. But other articles, such as mobile-
phone holsters, are booming. The fountain pen has made a comeback and, with it, the demand
for protective carrying cases has re-emerged. Some evolution at the luxury end of this market
can be expected, as the balance between paper and the computer continues to change.
Military equipment: Historically, leather and the military have been of great importance to each
other in terms of saddles, harness, belting, holsters, footwear, and at one time armor. Today,
this is a very specific market, which has been growing considerably in the last ten years. The
main products are footwear and gloves (as personal protective equipment), which are now
usually made of highly technical leathers.
Belts: This is a steady and relatively large market especially in the traditional men’s belts
segment. Belts are not much influenced by fashion, since changes occur mostly in buckle
designs. The manufacturing process of such items has become highly mechanized.
Watch straps: This also constitutes a relatively large market that has only been slightly
threatened by metal or synthetic straps since it stabilized some years ago. The manufacturing
process, as in the case of belts, is highly mechanized, except for top luxury products (hand-
stitched straps made of exotic skins). Leather for watch straps has to be anti-allergic and to
have good levels of sweat resistance.
Overall, the leather goods industry is characterized by the diversity of its products. These items
are constantly developing according to consumer needs and, for certain articles, to fashion
trends.

11
3.0 BANGLADESH LEATHER INDUSTRY
3.1. History of Leather Industry in Bangladesh
Leather sector is a mature manufacturing sector in Bangladesh with an extensive heritage of
over 606
years. This is a bi-product industry which is agro based integrated with locally
sourced original raw materials (hides and skins) having incredible potentials for sustained
growth and export development along a noticeably long duration of time length.
Indian vegetable-tanned crust was being developed by the Indian- subcontinent small leather
industry over a hundred years ago to safeguard the hide in the safest way to suit Indian weather
conditions. The leather industry was subjugated by vegetable-tanned until mid-1960’s.
Bangladesh’s expansion of leather processing industry started in the later part of1940s. East
Bengal, the first tannery of the country, was set up by RP Sahaat Narayanganj in the 1940s7
.
It was afterward moved to Hazaribagh area of Dhaka, which evolved into the major mover of
tannery units through the installation of a large number of tannery units in the past years. Before
the Partition of Bengal (1947), hides and skins available in the former East Bengal, almost all
were exported to West Bengal, erstwhile West Pakistan, Iran and Turkey. During that time it
was mostly the non-Bengali tradesmen and traders scheme the tanning industry in East
Pakistan and export of leather. Nevertheless, a few small tanning units which were mostly
cottage type and used to process leather mainly for the domestic markets, belonged to Bengali
entrepreneurs.
Non-Bengali tanners processed wet-blue and for further processing and finishing for producing
different consumer goods sent them to erstwhile West Pakistan. Till1960, tanneries of erstwhile
East Pakistan used to process raw hides and cattle skins by applying salt and then freshening
them in the sun and the substance thus developed were known as shaltu8
.
In 1971, during the war of liberation, abandoning about 30 tannery units owned by them, the
non-Bengali tanners of Bangladesh left the country. After the war, the new government of
Bangladesh with a newly formed Tannery Corporation vested the management of these units,
addressing an indirect expectation to change the units into finished leather manufacture units.
Regrettably, because of lack of experience and corrupt practices the corporation could not serve
the purpose.
Later, the government closed down the Tannery Corporation and transferred the management
of most of these tanneries to Bangladesh Chemical Industries Corporation (BCIC) and three
of them to Bangladesh Freedom Fighters Welfare Trust. Both the authorities had miserably
failed to bring success in the tannery industry9
.The Government of Bangladesh forced export
duty on wet-blue leather in 1977 to encourage the production of crust and finished leather.
6
Banglapedia
7
Banglapedia
8
Ancient way of preserving raw cattle leather
9
www.sos-arsenic.net

12
The export from leather sector was almost 100% in the form of wet-blue, the chrome tanned and
semi-processed leather until 1980-85. Improvement of major policies took place in this sector
during the period of 1980-81, which resulted in affirmative development of the sector.
Due to the veto on wet-blue export from July, 1990, the leather industry of Bangladesh had
entered into second chapter of its development. Duringthemid-90s began a new era for leather
industries in Bangladesh as the modern leather manufacturing units were set up. Till the end of
the last century, the leather sector maintained a very feeble profile. So, the growth of this
industry was always minor.
As it has neither encouraged the emergence of new entrepreneurs in this sector nor has it
helped to raise foreign buyer’s confidence to invest, this trend in management of technology has
further worsened the state of the industry. Therefore, Bangladesh still remains a source of
processed leather and to a very inadequate extent, finished leather and leather goods in the
international market.
3.2. Leather Industry in Brief
The leather industry in Bangladesh is well recognized and is a significant foreign exchange
earner. The industry is completely in the private sector, which has been proven fully capable of
handling it. Out of the total 207 tanneries of Bangladesh, 186 are located chaotically in
Hazaribagh area in Dhaka where 84 percent of the total supply of hides and skins are
processed in a highly jam-packed area of only 70 acres of land.
The unplanned tanneries at Hazaribagh do not have sustaining infrastructures. No tannery in
the area has effluent treatment facilities (ETP), which is posing a grave danger to environment.
The industry is in the process of shifting to Savar in thought of the pollution it cast upon the
Dhaka City and because of a heightened lack of space for development and modernization.

13
Figure 2: % Contribution to GDP
The main raw materials for this industry are cowhides and goat skin. The annual domestic
supply of hides and skins is around 200 million square feet, consisting of 63.98% Cowhides,
32.74% goat skin, 1.09% Sheep skin and 2.219% buffalo hides. Local Consumption of leather is
around one fifth of the total output and the rest 80% is exported in the form of Crust leather
(75%), and finished leather (20%), footwear and leather goods (5%)10
.
There has been some significant improvement in animal husbandry and butcher's techniques in
Bangladesh in current times, but to reach the international standard, it may take quite some
time. The Black Bengal and other variants of goat skin from Bangladesh enjoy an exceptional
status for quality worldwide.
At present, the leather sector accounts for 3-4 percent of total export earnings. According to
Bangladesh Export Promotion Bureau (EPB), contribution of leather sector to total GDP was
0.32% in 2005. Figure-2 shows Contribution of Leather Sector to GDP from 1999 to 2005.
Over 50 manufacturers are producing various leather items such as footwear, travel goods,
suitcases, briefcases, fashion accessories, belts, wallets, hand bags, case holders etc. for
overseas export. Most of the minute tanneries are family owned and operated as cottage type
industries. Many of them are established as proprietorship or partnership. The larger tanneries
are mostly public or private limited companies. Only a few tanneries have proper accounting
practices and financial controls in place to identify their profitability and financial condition.
10
www.sos-arsenic.net
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
% of GDP 0.38 0.37 0.22 0.21 0.2 0.21 0.41 0.35 0.32 0.31 0.32
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
%ofGDP
% Contribution to GDP

14
Now a days, leather and leather products are exported to about 53 countries of the world. The
chief importing countries are: Italy, Brazil, Germany, Singapore, China and the USA. Export
Promotion Bureau sources state that export income from leather goods was US$287.78 million
in 2004-2005, and of that, about 80% are from leather and the rest is from completed leather
goods.
Figure 3: Export Growth Rates of Leather and Leather Goods for the Years 1998-2005 (Source: Bangladesh
Bureau of Statistics and Export Promotion Bureau)
Figure-3 exhibits the initially decline of the export growth rate of Bangladesh leather sector in
the year 1998-1999 as there was economic depression in Bangladesh due to substantial flood.
In the year 2002-2003 export growth rate was downbeat because of the worldwide economic
recession as a result of the War in Iraq, the Twin Tower (9/11) incident, increase of international
terrorism, fundamentalist orientations, etc.
Export growth rate for the year 2004-2005 was 8.22%. Foreign investment to the manufacturing
leather sector of Bangladesh has been very narrow. Till March 2003, the total foreign
investment in the industrial leather sector was $136.12 million, which is only 1.33 % of the total
foreign direct investment into the country. The growth rate was highest in 2000-2001
(16.32%)11
.
The Leather sector is also a foremost employer of semi-skilled workers, which is a fundamental
step towards alleviating unemployment. Information obtained from a number of trustworthy
11
Export Promotion Bureau
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04 2004-05
Growt Rate in % -5% 11% 15% -15% -9% 15% 9%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
%ChangeinExports
Export Growth Rate of Leather and Leather Goods in
Bangladesh

15
sources exhibits that in total (accumulated) 741,000 people are directly or indirectly in leather
and its sub-sectors are employed. 200,000 people are involved in rawhide collection and supply
and 50,000 are operational in tanning industry. About 300,000 workers are related to retailing of
leather.
Table 5: List of Leather Goods Produced in Bangladesh
At present it is anticipated that about
150,000 persons are employed in the
footwear industry, 30,000 persons are
in leather goods industry and another
8000 persons are involved in
exporting of leather and byproduct
processing12
. In spite of having a
great prospective for growth, the
net outcome of development efforts
undertaken for the leather export
sector of Bangladesh have been far
from remarkable due to the
unfortunate quality of processing,
illegal export to India, reduced
technological base, insufficient
financing, low value addition,
requirement of marketing skill,
incorrect planning and improper
execution.
Bangladesh exports significant
amount of leather, which is used as a
go-between product for producing
special types of leather goods and
footwear by the developed countries.
Besides, Bangladesh manufactures an
extensive and diverse range of leather
goods for the export market albeit in a
restricted quantity.
12
(Source: BCLT, LSBPC, ILO, BBS, GTZ, RSMA and ITC-ATF)
Sl For Domestic
Market
Sl For International
Market
1 Ladies Shoes 1 Processed Leather
2 Leather Jacket
2 Gents Shoes 3 Leather Blazer
4 Leather Skirt
3 Sandals /Slippers 5 Leather Trouser
6 Apron
4 Belts 7 Purse
8 Money bags
5 Travel Bags 9 Belts
10 Briefcase
6 Purse 11 Travel bags
12 Office bags
7 Money Bags 13 Suitcase
14 Ladies shoes
8 Office Bags 15 Gents shoes
16 Sandals /Slippers
9 Suitcase 17 Camera case
18 Racket cover
10 Briefcases 19 Card holder
20 Pen holder
11 Gift Items 21 Passport case
22 Document case
12 Processed Leather 23 Spectacle case
24 Gift Items

16
3.3 Market Structure
3.3.1 Demographic Concentration
Traditionally, the tannery industry got intense in the Hazaribagh area of Dhaka city where
almost 90% of all tanneries are situated. This concentration happened in an unplanned style
posing severe threat to the environment. Hence, the government has taken a step to shift the
industry to a leather estate at Savar outside the city. Nearly 90% of all leather footwear making
units is located in and around Dhaka city with some leather footwear production units existing in
Khulna and Chittagong city and in Bhairab of Kishoreganj district.
Inside Dhaka city) in two areas known as Siddique Bazaar and Bongshal where concentration of
small leather footwear making units (having 10-49 workers), half of these small units are
located. Others areas of concentration of small and medium leather footwear making units in
and about Dhaka city include Lalbag, Nazirabazar, Sitpatli, Bangladuar, Alu Bazar, Dakkhin
Moishundi, Pagla and Nawabpur.
3.3.1.1. Modern Leather Industrial City-Savar
In the year 2003, the Government of Bangladesh announced that the tanneries situated in
Hazaribag will be shifted to modern and a purpose-built cluster in Savar, 10 kilometers from
Hazaribag, on the banks of the river Dhaleswari. The key emphasize of the Savar cluster was to
be the Common Effluent Treatment Plant (CETP), compliant to international environmental
standards. The Bangladesh Small and Cottage Industries Corporation (BSCIC) is the
implementing agency for the project.
It will hold up 195 tanneries with an employment probable of 100,000 people. However, transfer
and moving to designated modern tannery cite with on handout old machineries from the
existing Hazaribagh cite is a huge challenge, and a matter of big investments for the tannery
owners. The sooner it takes place the better.
3.3.2 Leather Goods Market Size in Bangladesh 2013
Other than the existing subsectors in leather sector no pioneering sub-sector is found emerging
very soon, although a few big companies from Taiwan and China beforehand invested in this
sector, and a few factories had started producing out soles which is a very significant and
welcoming start of new addition in the footwear sub-sector. The rearward linkage industries are
nearly empty, and ready for investment.

17
3.3.2.1 Tannery Subsector
Among the total 220 tanneries in Bangladesh, 187 tanneries are situated in Hazaribagh, Dhaka.
The main raw materials for
this sector are cowhides
and goatskins. 112-115 big
units have amenities for
processing only wet blue
leather. The residual 91-95
small, medium and large
units have sound facilities
to produce crust and
finished leather.
The annual domestic
supply is around 220
million square feet of hides
and skins, consisting of
63.98% cowhides, 32.74% goat skins, 1.09% sheep skin and 2.219% buffalo hides. While 50%
of this is consumed locally and rest 50% is exported to 53 countries in the form of semi-finished
leather (75%), finished leather (20%), and footwear, handbags, accessories, and other leather
goods (5%)13
.
The Hazaribagh tanneries can reportedly process 94% of the hides and skins accessible in
Bangladesh. However, free of this capacity, there are issues effecting the collection of hides and
skins before they arrive at the tanneries.
The global leather and its product market size is considered to be as ~US$ 100 billion, and the
share of Bangladesh business is 0.56% (COMTRADE, 2014) . The objective of Bangladesh is
increasing that market share to 2% by 2013 represents an striving increase in export value. This
subsector generated direct employment of about 50,000 people.
Environmental pollution is one of the major concerns of this sector, according to DOE, the
tanneries release nearly 22,000 cubic meters of unprocessed and highly toxic (contains
chromium) into the water body on a regular basis. On the other hand, it produces 100 tons of
solid waste every day in the form of trappings of finished leathers, shaving dust, hairs, trimmed
animal flesh skins/hides to infect the soil and the water.
13
Draft Leather Policy 2006-2010 by LSBPC, MoC & GoB

18
3.3.2.2 Leather Footwear Subsector
The footwear sub-sector of Bangladesh earned revenues in surfeit of USD 335.51 million in
2012-13. The biggest destination for footwear exports with a 60% Share the EU, followed by
Japan with 30%, and the rest of the world totaling for 10%. Bangladesh has a >1% share of the
world footwear market.
Meeting with council of the footwear sub-sector highlighted a positive response about business.
The businesses analysis of their products shows that the price and quality segments need to be
handled aggressively.
Footwear manufacturers in the country rate themselves as being able to take action quickly to
buyer inquiries, having the ability to offer competitive prices, quality products, and quick
fulfillment of orders. The growth of this sector is very heartening and shows off the core
potentiality of the sector.
Table 6: Footwear Sector Growth (Source: Bangladesh Bureau of Statistics)
2003-
04
2004-
05
2005-
06
2006-
07
2007-
08
2008-
09
2009-
10
2010-
11
2011-
12
Footwear
(all)
68.3 87.78 95.45 123.03 159.16 182.92 204.09 297.8 335.51
Growth in
%
46.56 28.52 8.73 28.89 29.37 14.93 11.57 45.92 12.66
3.3.2.3 Leather Goods Sub-Sector
The sub-sector leather goods in Bangladesh earned export revenues of USD 99.39 million
during 2011-12. This sub-sector displays variety in enterprise dynamics that is exclusive, in that
it encompasses very few enterprises that are very sophisticated in product expansion and
developed processes, as well as those that are smaller and still trying to characterize their
competitive competencies. The sector is very potential, and the growth of this sector is very
encouraging:
Table 7: Leather Goods Subsector Growth (Source: Bangladesh Bureau of Statistics)
2008-09 2009-10 2010-11 2011-12
Growth in % 111.72 54.2 91.29 79.4
The future is supposed very positive, with possibility for more than 100% increase predictable in
2012-13. Nearly all manufacturers are EU focused in their exports, and have been to fairs to
promote their products. They are presented with preparatory design and industrial assistances
subsequent to their participation. This experience was seen as important in light of the fact that
they need to develop core competencies at the enterprise-level was a valuable lesson. Another

19
lesson that came through to the participants was the requirement for product demarcation at the
enterprise-level.
This sub-sector is eager on developing partnership with its peers in Asia (India, China, and
Vietnam), and believes that in craftsmanship that technical assistance may be more appropriate
if sourced from the region. The representatives of leather goods firms also uttered the need to
organize fair(s) in Bangladesh regularly, and attracting buyers to visit in concurrence with the
Chennai leather fair, in India. Japan.
Table 8: Employment in the Leather Sector Value Chain (Source: GTZ)
Stages in Value Chain
Total Number of People
Employed (Estimated)
Average Value
Addition at Each
StageDirect Indirec
t
Total
Raw hide Supply 70,000 130,00
0
200,000 3%
Tannery/Leather Processing 30,000 20,000 50,000 Wet Blue
7% Crust Leather
8% Finished
Leather 9%Wholesaling (Leather, Footwear
and Leather Goods)
3,000 - 3,000 Leather 29%
Retailing (Leather, Footwear and
Leather Goods)
300,000 - 300,000 16%
Footwear Production (Mechanized,
Semi- mechanized & Handmade)
130,000 20,000 150,000 35%
Leather Goods Production (Semi-
Mechanized & Handmade)
25,000 5,000 30,000 42%
Exporting and By products
Processing - 8,000 8,000 13%
Total number of people
employed
558,000 183,00
0
741,000 -
Table 9: Distribution of Value Addition across all Value Chain (Source: GTZ)
Sl Stages
Distribut
ion of
Value
Addition
%
Sl Stages
Distribut
ion of
Value
Addition
%Tannery Footwear Industrial (Export
Market)
1. Raw hide to wet blue stage 24 1. Tannery to footwear
production
100
2. Wet blue to crust leather
stage
33
3. Crust leather to finished
leather stage
43
Total 100 Total 100
Footwear Handmade (Local
Market)
Leather Goods Handmade
(Local Market)

20
1. Input supplier to footwear
production
58 1. Input supplier to Lather
goods
production
71
2. Footwear production to
footwear
wholesale
10 2. Leather goods production
to
retailing
29
3. Footwear wholesale to
retailing
32
Total 100 Total 100
Footwear Industrial (Local
Market)
Leather Goods Semi-
industrial
(Export Market)1. Tannery to footwear
production
65 1. Tannery to leather goods
production
100
2. Footwear production to
wholesale
9
3. Wholesale to retailing 26
Total 100 Total 100
3.4 Major Institutions involved in leather sector
3.4.1 Leather Associations of Bangladesh
Table 10: Major Associations in the Leather Sector (Source: GTZ)
Name of the
Organization
Major Five Stated Activities Contact Address
Bangladesh
Finished
Leather,
Leather goods
and Footwear
and Exporters’
Association
(BFLLFEA)
 To promote, protect and safeguard the
interest of all the members of the
association who are engaged in the
manufacture and export of crust and
finished leather and leather goods.
 To keep and maintain the highest
standard of unity, mutual cooperation
and goodwill among the members of
the association in the conduct of their
business carried on by them.
 To promote a cognizance of mutual
assistance and cooperation among the
members and maintain the uniformity
of rules of business and discourage
unhealthy competition among the
members of the association.
 To render such assistance, cooperation
and advice to government authority or
any other public or private authority in
order to enable them to promote,
protect and safeguard the interest of
the members of the association
members and customers.
 To arbitrate all disputes and differences
Mr. Md. Tipu Sultan,
Chairman Bangladesh
Finished Leather, Leather
goods and Footwear
Exporters’ Association
(BFLLFEA) House#61,
Road#2A, Dhanmondi
R/A, Dhaka-1209
Phone: +8802-8622167
Fax: +880-2-8622168
E-mail:
bfllfea@citechco.net

21
that may arise between the members
of the association and/or between the
members
Bangladesh
Tanners
Association
(BTA)
 To work for over all welfare of the
members of leather industry.
 To apprise the government about the
importance and contribution of leather
industry in order to raise benefits of the
members.
 To popularize leather, leather goods
and footwear of Bangladesh in
international markets; marketing of the
same.
 To resolve disputes related to
transactions among the members.
 To perform social works for general
public in times of famine, earthquake,
storm etc.
Mr. Md. Harun
Chowdhury
Chairman Bangladesh
Tanners Association
(BTA)
99, Hazaribagh, Dhaka-
1209
Phone: +880-2-8626878,
9660754 (Off)
Fax: +880-2-8616348,
8618546
Leather Goods
and Footwear
Manufacturers’
& Exporters’
Association of
Bangladesh
(LFMEAB)
 To help in gaining export market for the
members by sending delegates to
various countries, attending
international fairs, seminar etc.
 To assist members get customs, bond,
and warehouse license and renew
them.
 To help members in resolving various
problems and difficulties related to
customs, duties and taxes.
 To authenticate GSP application and to
help out members for getting cash
incentive and other financial benefits
from government.
 To maintain liaison with exporters and
to work with Export Promotion Bureau.
Mr. Saiful Islam
Vice-President Leather
Goods and Footwear
Manufacturers’ and
Exporters Association
of Bangladesh (LFMEAB)
Erectors House (9
th
floor), 18, Kamal Ataturk
Avenue,
Banani C/A, Dhaka-1213,
Bangladesh
Phone: 9354993-4 (off),
01711522170
Fax: +880-2-9332569
Bangladesh
Hide and Skin
Merchants
Association
 To handle tax problems for the
member.
 To prevent extortion and other
problems associated with riverine
transportation as un-processed/semi-
processed hide can be considered as
perishable goods.
 To resolve problems related to debt
and receipts with the tannery owners.
 To organize joint committees for
Mr. Md. Aftab
Vice Chairman
Bangladesh Hide and
Skin Merchants
Association
88/A, Water Works Road,
Posta, Dhaka-1211,
Bangladesh
Phone: 9663203,
01711-523673

22
controlling seasonal businessmen
(those who do business only during
Eid-ul- Azha) and to try to control
market.
 To co-ordinate with the Ministry of
Commerce to stabilize the salt market
so that the supply and prices of salt
remains unaffected.
Bangladesh
Chemical
Importers &
Merchant
Association
 To resolve import duty reduction issue
through discussion with National Board
of Revenue (NBR).
 To see that no leather chemical is
imported or sold illegally.
 To resolve transaction problems
through mediation with owners of
leather companies and to create and
maintain good relation with them.
 To help out members for problems
regarding chemical import through
discussion and to help out members
from association fund when it is
required.
 To supply information about retention
and expansion of trade and commerce
and to discuss with government for
avoiding uneven competition.
Mr. Mizanur Rahman
Mesban
President Bangladesh
Chemical Importers &
Merchant Association
1209
Tel: 8650712,
0189145007
Bangladesh
Leather
Manufacturers
Association
 To preserve and enhance the interest
of the members.
 To act as Collective Bargaining Agent
(CBA) for discussion with government
about Tax, VATs etc.
 To participate in local business.
 To resolve problems relating to
outstanding payment in terms of credit
sales and credit purchase.
 To assist members’ legal issues.
Hazi Md. Ali General
Secretary Bangladesh
Leather Manufacturers
Association
53, Sher-e-Bangla Road,
Hazaribagh, Dhaka- 1209
Tel: 8619784
Bangladesh
Hide and Skins
Retail
Dealer
Merchant
Association
 To communicate with the govt. about
the interest of the association
members.
 To co-ordinate with the Government for
ensuring supply of salt at a reasonable
price to the members of the
associations when the price of salt
rises.
Mr. Md. Aslam
General Secretary
89, Water Works Road
Posta, Dhaka-1211

23
 To resolve disputes related to
transactions in tanneries among the
members through discussion.
 To take steps for getting help from the
government to prevent extortion during
transportation and to ensure fast
supply of leathers from remote areas of
the country as they are perishable
goods.
 To help out association members
financially (not business related) when
it is required
Leather
Technologist
Society
Bangladesh
 To help out leather technologists in the
leather, footwear and leather goods
sector when they have problems
related to their job with the tanner
owners.
 To provide financial support to leather
technologists if required (such as for
treatment).
 To help out fresh leather technologists
by providing information about jobs
available in different leather, leather
goods and footwear industries; and
sometimes helps them to get jobs.
 To arrange scholarships for poor and
meritorious students of leather college.
 To arrange recreational events for the
members of the association (For
example, arranging annual picnic).
Mr. Mir Asadur Rahman
Asad
General Secretary
Leather Technologist
Society Bangladesh
Kohinoor Tannery Block,
1
st
Floor, 130 Hazaribagh,
Dhaka-1209
Tel: 9663432
Hazaribagh
Tannery
Workers Union
 To take steps so that no child laborer is
engaged in tanneries.
 To bargain with tannery owners for
increasing labor wages and other
benefits.
 To make tannery owners aware about
labors heath security and to arrange
meetings to create awareness among
laborers.
 To participate in workshop, meetings
and seminars on leather related issues
organized by government.
 To apprise government regarding to
continuity of service of laborers and
Mr. Mr. Abdul Maleque
General Secretary
Hazaribagh Tannery
Workers Union
180/A, Hazaribagh
Dhaka-1209
Tel: 8614311

24
treatment facilities when tanneries will
be shifted to Savar, Dhaka.
Bangladesh
Leather and
Leather Goods
Manufacturers
Cooperative
Society Ltd.
 To discuss with the government and
related parties for increasing export
related benefits for those association
members who are commercial
exporter.
 To solve problems related to
transactions among the members
through understanding.
 To maintain communication with the
government about allocating plots to
the association members when the
leather industry will be shifted to
Hemayetpur.
 To maintain liaison with other
associations of the leather industry.
 To supply information about marketing
to the association members.
Mr. Md. Shahjahan
Bhuiyan
President Bangladesh
Leather and Leather
Goods Manufacturers
Cooperative Society Ltd.
1209
Mobile: 01711137005,
01711695120
Bangladesh
Leather
Exporters’
Association
 To act as mediator if there is any
problem among the members.
 To discuss with government for the
benefits of association members.
 To maintain liaison with other
associations of leather industry.
 To advise exporters about shipment,
leather market etc.
 To develop combined funds to
undertake projects for the welfare of
association members.
Mr. A. B. M. Masud
General Secretary
Bangladesh Leather
Exporter Association
38, Sonaton Gar Road,
Dhaka-1209
Tel: 9661114

25
3.4.2 Leather Institutions
Table 11: List of Major Leather Institutes (Source: GTZ)
Name of the
Organization
Bangladesh
College of Leather
Technology
 To prepare leather
technologists for leather,
leather gods and footwear at
the degree level.
 To conduct research for the
development of leather,
footwear and leather
products.
 To provide different services
to ministry of Education,
Ministry of Industry, Ministry
of Commerce and National
Board of Revenue (NBR).
 To maintain liaison with
different government
organizations.
 To provide services for
through Leather Service
Centre with the help of Italian
supported project
(International Trade Centre-
ITC)
Dr. Khan Rezaul Karim
Principal
Bangladesh College of
Leather Technology
45-50, Hazaribagh, Dhaka
Tel: 8617439, 8620114

26
3.4.3 Leather Research Institutes
Table 12: List of Major Leather Research Institutes (Source: GTZ)
Name of the
Organization
Leather Research
Institute, BCSIR
 To initiate, promote and guide
scientific, industrial and
technological research on
establishment and development
of industries.
 To establish, maintain
and develop laboratories,
workshops and institutes,
centers and organization for the
development of scientific and
industrial research.
 To adopt measures for the
commercial utilization of
discoveries and invention.
 To collect and disseminate
information of scientific,
industrial and technological
matters and publish scientific
papers, reports and periodicals
on such matters.
 To encourage establishment of
industrial research
organizations
Mr. Samsul Haque
Director General – In
charge
Leather Research
Institute, BCSIR
Nayerhat, Savar,
Dhaka-
1350
Tel: 8625038-9
Fax: 7708754
Bangladesh Livestock
Research Institute
 Animal health and disease
control.
 Economic of livestock and
marketing of livestock and
livestock products
 Development of breed (Cattle,
goat, sheep, poultry etc.)
 Development of feed and forge
 Development of dairy and meat.
Dr. Kazi Emdadul
Haque
Director General
Bangladesh Livestock
Research Institute
Savar, Dhaka-1341
Tel: 7708326
Contact: Abdul
Subahan
Miah

27
3.4.4 Government Bodies
Table 13: List of Government Bodies Working in the Leather Sector (Source: GTZ)
Name of the
Organization
Export Promotion
Bureau (EPB)
 Formulating and adopting policy and
Programs for active promotion of
exports from the country and carrying
out promotional activities in product and
market development & expansion of
supply side capacity.
 Coordinating exports development
efforts at different sectors and
production levels.
 Exploring markets of exportable goods
in abroad, collecting and disseminating
trade information to the stakeholders
and organizing Bangladesh private
sector participation in international trade
fairs abroad.
 Imparting training for Human Resource
Development and conducting studies,
surveys, research etc. for expansion
and diversification of exports.
 Assisting the Ministry of Commerce in
formulating Export Policy of the country.
Mr. Mir Shahabuddin
Mohammad Vice-
Chairman Export
Promotion Bureau
1, Kawranbazar,
Dhaka
Tel: 8159140
Leather Sector
Business
Promotion
Council (LSBPC),
Ministry of
Commerce
 Promoting the export of leather, leather
goods, leather footwear and
accessories.
 Promoting and facilitate export of
leather and leather products and import
of raw materials, know how, resources,
equipment and machinery.
 Encouraging and assisting in a
balanced development of leather sector
in Bangladesh and setting up a
common facility center/institute for
testing, training, standardization and
design centers for upgrading the
technology in the leather sector.
 Editing, printing and publishing journals,
brochure and sales materials for
business promotion.
Ms. Ishrat Jahan
Program Manager
Leather Sector
Business Promotion
Council (LSBPC)
DCCI Building (9th
Floor), Room 1001,
65-
66 Motijheel C/A
Dhaka, Bangladesh
Tel: 9550104,
9550074
Fax: 9567149
E-mail:
lsbpc@intechworld.net

28
 Undertaking training or educational
program constantly to develop, promote
advance and increase the value added
products in the leather sector
Bangladesh
Small
& Cottage
Industries
Corporation
(BSCIC)
 Provide pre-investment and post
investment, counseling and advisory
services.
 Develop industrial plots for investors.
 Supply technical information, design
and prototypes, industrial profiles and
market information.
 Assist financing of SCI through DFIs &
NCBs, selection of right type of
machinery, adopting and adapting
appropriate technology, studying
investment feasibility and establishing
sub- contracting linkages.
 Organize technical and management
Skill development training, Fairs and
exhibitions and buyer-seller meet.
Mr. S. R. Osmani
The Chairman
Bangladesh Small &
Cottage Industries
Corporation
105-106 Motijheel C/A
Dhaka-1000
Tel: 9559373,
9553481
Bangladesh
Standard and
Testing Institute
(BSTI)
 To set up Bangladesh Standards of
quality and dimensions and prepare and
promote the general adoptions of
standards on national and international
basis in relation to materials,
commodities, structures, practices and
operations.
 To promote Standardization, quality
control, metrology and simplification of
benchmarking in industry and
commerce.
 To implement Bangladesh Standards
through the administration of a national
certification mark scheme or inspection
of goods or both.
 To certify the quality of commodities,
materials, products, and other things
including food materials, whether for
local consumption, export or import.
 To coordinate the efforts of producers
and users for the improvement of
materials, products, code of practice,
appliances, processes and methods.
Mr. A. B. M. Abdul
Huq Chowdhury
Director General
Bangladesh Standard
and Testing Institute
116-A, Tejgaon
Industrial Area,
Dhaka-
1208, Bangladesh
Tel: 8821462
Fax: 9131581

29
Ministry of
Industries
 Accept private initiatives for economic
development and uphold the
government’s facilitating role in creating
a favorable atmosphere to augment
private investments in the country’s
industrialization, given the background
of a free market economy and
globalization.
 Cater to the needs for local and foreign
market and also for consumer
satisfaction of the local products;
measures undertaken include, among
others, efforts to: (a) produce world
class quality products, (b) diversification
of goods, (c) introduce cost-effective
management in the production system,
(d) more value addition in the industrial
sector, and (e) provide support for
enhancing productivity by using
continuous, appropriate and advanced
technology.
 Provide assistance to augment the
industrial sector’s contributions to the
GDP of the national economy, meet the
general demands of local consumers
and earn more foreign exchange so that
local industrial entrepreneurs can attain
further capacity to establish industries,
and industrial goods can have access to
the overseas market on a competitive
basis.
 Provide inspiration for the speedy
expansion of cottage industries and
SMEs and for further investment in
these sectors so that new employment
opportunities are generated,
unemployment is reduced and poverty
alleviation program made successful in
the country.
 Increase productivity at the enterprise
level; produce high-value added
products step by step through
development and application of
appropriate technology and increase of
Dr. Mohammad Ayub
Miah
Additional Secretary
Ministry of Industries
Shilpa Bahaban,
Dhaka-
1000
Tel: 9563556

30
export through export diversification.
Ministry of
Fisheries &
Livestock
 Improvement of cattle wealth.
 Dairies- Management of cattle farm.
 Animal nutrition.
 Livestock census and cattle insurance.
 Research and training in fishery and
livestock
Mr. Iqbal Mahmood
Joint Secretary
(Admin/Livestock)
Ministry of Fisheries &
Livestock
Bangladesh
Secretariat, Dhaka
Tel: 7166263
3.4.5 Private Organizations
Name of the
Organization
Design &
Technology
Centre (DTC)
Providing:
 Training for factory managers,
technicians, product designers and
advisory services for quality and
wastage control.
 Consultancy in improving existing
and new product line and
arrangement of production flow for
the factory.
 Assistance for designing corporate
profile, product catalogue and
assistance in arranging/participating
fairs locally and internationally.
 Marketing assistance for local and
export market.
 Information services regarding fairs,
designs, technology, machinery and
tools, materials, business
opportunities, market statistics etc.
Mr. Atif Rashid
Executive Director Centre for
Design & Technology Ltd.
House#53, Road#10, Block-
E, Banani-1213
Tel: 9860077
Fax: 9881225
3.5 Leather Products in Bangladesh
There is wide variety of leather goods produced in the Bangladesh. The main groups are below:
I. Small leather goods/Fancy leather goods
II. Medium leather goods
III. Heavy leather goods
The leather products of Bangladesh (non-footwear) include the following:

31
3.5.1. Small Leather products
Small cowhide merchandise or local leather
products which are normally conveyed in pocket
and purses, incorporates totes, wallets, key case,
international ID case, note case, card case,
cigarette case what's more stogie case, match
box case along these lines others. A large portion
of those items are made without any inside
solidifying of fortification. These cowhide products
oblige leather having thickness of around 0.5 mm
to 1.0014
mm . distinctive sorts of conceals and
skins which are typically utilized as a part of
making small cowhide products are, bovine softy,
goat coat, sheep napa, calf skin and so forth.
3.5.2. Medium Leather Goods
It incorporates purses, shopping packs, shoulder sacks, report cases, join cases et cetera.
These packs are produced using calf, goat, sheep and colorful skins and stows away completed
with scope of colors which produces a decent appearance and look complexity and innovation.
Leather, which has a thickness of 0.8 mm to 1.2 mm, is utilized as a part of making of medium
cowhide merchandise. Bovine softy, dry processed, cow napa, sheep napa, goat and buff softy
cowhide are broadly utilized as a part of making of medium leather merchandise.
3.5.3 Heavy Leather Goods
These are made by and large from cow and bison shrouds, which are solid and strong. The
shrouds always have different surface grain examples and size reaches from 20 to 30 sq. ft. is
full stow away. Cow and buff covers up of thickness 1 to 1.5 mm are utilized for making
substantial cowhide products. The sort to cowhide products for making substantial cowhide
products are, box sides, Katti Leather, Split Leather, Cow Upper, Upholstery, Buff Softy, and so
forth.
14
International Leather Standards

32
3.6 Marketing Leather goods
3.6.1 Research
The first step would be to know the market by answering the following questions:
Know the Target Market
 Who are the potential clients?
 What number of will be there in the market?
 What amount/ how frequently/ do they purchase?
 Is there any changing patterns?
 Is the request expanding?
Market Environment
 How is the economy influencing the market?
 Who are the potential contenders?
 What will be the piece of the pie of the contenders?
 What is the level of rivalry?
 What is the premise of rivalry
 Is it value/ brand and so forth?
 What government regulations influence this market?
Item Plan
 What brand name/ image do you need?
 The items advertise destinations?
 How you plan to position the item?
 The item promoting system to attain achievement?
Deals
 What will be the deals targets for the next 12 months?
 What can’t avoid being the - income?
 What will the terrible benefit gauges?
 What geological territories do you wish to spread?
Dissemination
 How would like to disseminate the items?
 Is it through the current dealer network?
 Is it through extra merchants?
 When will they be selected?
 What can’t avoid being the exchange rebates?

33
Advancements
The advancements which relies upon the:
 market size
 market spread
 business sector fragment
 item situating
3.6.2 Strategies for Selling Products
Businesses can follow either the pull or the push strategy, or a combination of both to market
their product to the masses.
3.6.2.1 Push Selling
Steps needed for the push selling entails:
 New merchant arrangement [ time/ schedule]
 Yearly deals gauges for the new merchants
 Month to month stockholding for the new merchants in their dealership.
 Yearly deals gauges for the current merchants
 Month to month stockholding for the current merchants in their dealership.
 Consistent exchange rebate
 Exceptional discount reward for lifting more stock -say 20% over keep going year.
 Train the deals delegates.
 Standard deals commission.
 In addition to uncommon reward if they attain the targets [ 20% over the keep
going year]
 Arrange the best deals
 Ensure the existence of agent rivalry.
 Arrange the exceptional merchant rivalry by areas in the nation.
 Arrange the best merchant rivalry broadly.
Helpful tactics for push selling:
 Provide presentation stands to the merchants
 Provide Shop signs
 Leaflets
 Giveaways

34
3.6.2.2 Pull Selling
Pull Selling involves the following:
 Immediate promoting advancements to the use of catalogs.
 SEASONAL promoting advancements to the purchasers with extraordinary value
built in light of volume.
 Deals drive by the deals reps. on major retailers.
 Create a steadfastness program for 12 months for small independent stores.
 Promote in the neighborhood papers/ magazines with a markdown voucher offer
with which people can purchase the items from the neighborhood merchants,
utilizing the voucher.
 Load the site with a rebate voucher offer with which people can purchase the
items from the neighborhood merchants, by downloading/ utilizing the voucher.
3.6.3 Parameters
Parameters will to understand if the marketing strategy is actually working.
 Sales Targets
 Recovery/ Sales Collection
 Business on net money
 Invoicing Record
3.6.4 Marketing Tools
Leather goods are considered luxury goods and therefore ordinary marketing strategies do not
work for them. They are to be handled very delicately and treated as limited user goods and
therefore, the marketing strategies should also be very much be targeted towards the target
market.
3.6.4.1 TVC
The people who use leather products do not normally have a lot of time to sit back and watch
TV commercials. So it may not be a very viable approach.

35
3.6.4.2 Print Ad
Print ad might be a bit more effective if it is specifically
targeted to the rich and up class. Therefore, the
placement of the print ad must be done accordingly.
Magazines work best in this case. Historically, print ad
of leather goods have always known to show richness
and class in them so that must be kept in mind. Here is
a sample of some of the print ads.
3.6.4.3 Others
Free sampling might be an expensive but effective promotional tool when it comes to leather
goods. For example, little free samples or leather presents to corporate clients is sure to bring
up more revenue.
3.7 Distribution Channel
3.7.1 Raw Hide and Skin Collectors and Suppliers
The value chain methodology of this segment is launched by raw hide and skins gatherers and
suppliers including various individuals by regional standards termed as "Faria", "Bapari" and
"Arotdar". The Farias' (neighborhood small brokers) gather the hides and skins from the butcher
or slaughterer and send them to "Baparies" (small capital businessperson) in diverse business
for the starting treatment.
In the wake of taking important consideration, Baparies send those to "Arotdars" (locale level
conceal wholesalers). The Arotdars add salt to the conveyed skins and shrouds if necessary
while sorting these in their sheds. Later these items are sent to Posta zone of Dhaka city from
everywhere throughout the nation and from Posta it is supplied to diverse tanneries according to
request.
The distribution channel for raw hide and skin collectors and suppliers is:
♦ Raw Hide and Skin Collectors and Suppliers → Tanneries
3.7.2 Importers of Chemicals
One of the primary deterrents for the advancement of leather industry in Bangladesh is the
nonattendance of compound plants for creating substance reagents required for cowhide

36
transforming. More than 90%15
of the synthetic substances utilized are foreign made in diverse
nations.
Tanneries gather these chemicals from the neighborhood vendors of chemicals or the nearby
specialists for the remote concoction organizations. On account of the protracted import
strategy, a large portion of the neighborhood vendors and nearby specialists can't supply
chemicals in time to the tanneries. Lacking supply of chemicals prompts high cost of chemicals
in the neighborhood markets and accordingly builds the creation cost. Generally, Bangladesh is
not having the capacity to gain the normal foothold in the global business sector.
The distribution channel for importers of chemicals is:
♦ Importers of chemicals → Local Merchant/Local Agent of chemicals
3.7.3 Leather Processing Units or Tanneries
Tannery changes raw hides and skins into leather for made articles like shoe-upper, sack, bag,
sash, wallet and coat. In tanneries raw hides is prepared however performing Soaking,
Fleshing, Liming, De-liming, Bating, Pickling, Chrome Tanning, Samming, Splitting, Skiving,
Scudding, Drying, Staking and giving completing touch where the leather is given the last
surface treatment and look.
Right now there are 207 tanneries in Bangladesh1, 90% of them are in Hazaribagh of Dhaka,
and the rest is everywhere throughout the nation. Some presumed tanneries of Bangladesh are
Dhaka Leather, Apex Tannery, Lexco, Karim Leather, Samata Tannery and Bay Tannery.
Tanneries of Bangladesh can be characterized into three classes regarding ability to process
raw hide and skins
They are:
 Large Scale Units (Census Sector)
 Medium and Small Scale Units (Simple Sector)
 Cottage Unit (Household Sector)
These tanneries by and large produce wet blue, outside layer and completed cowhide.
Most of them deliver covering leather, just a couple of them are delivering completed cowhide.
Around 80% of the created cowhide (outside layer and completed) is sent out to universal
business sector and the rest is expended by regional standards for the generation of footwear,
leather merchandise and articles of clothing.
The huge scale units are capital concentrated (small number of laborers included) and creating
amazing completed cowhide. These have higher request in the universal business. Medium-
scale units are delivering similarly low quality and trading a lower amount of items. Bungalow
units are altogether given to coddling the nearby market just. Because of the colossal reliance
15
Bangladesh Export Promotion Bureau, 2013.

37
on foreign chemicals, these tanneries are confronting issues in gathering due dates of global
contracts.
The distribution channels used by these tanneries are:
♦ Tanneries → Export Agent
♦ Tanneries → Manufacturer of leather goods and footwear
3.7.4 Wholesaler of Leather and Accessories
Leather wholesalers in Bangshal are also a fraction of the value chain of leather sector. They
buy poorer quality leathers from tanneries and vend them to local manufacturer of leather and
footwear products. They also import all sort of chemicals and garnishes for leather and footwear
goods. Factors like: (i) the traffic jam of old Dhaka (causing depletion of working hours), and (ii)
insufficient space for leather dispensation in the Bangshal market region, are hampering the
growth of business in the locality.
The distribution channel for wholesalers is:
♦ Wholesaler of Leather & Accessories → Manufacturer of footwear & leather goods for
domestic and international market
3.7.5 Handmade Footwear Manufacturers
Handmade footwear is manufactured a lover the country in speckled locations. From Bangshal
wholesale market these manufacturers gather leather, accessories, and chemicals and
manufacture reasonable quality (low quality justified by low price) sandals, shoes, slippers etc
for local market only.
The majority of these manufacturers do not have right of entry to modern technology and market
information. They only use sewing machine for sewing and the rest is done physically. Nearly all
of them sell their products to wholesalers, retailers or local showrooms. After that these
products are delivered to the end users.
Therefore, the distribution channels for handmade footwear manufacturers are:
♦ Handmade Footwear Manufacturer → Retailer/ Local Showroom → End User
(Domestic Market)
♦ Handmade Footwear Manufacturer → Wholesaler → Retailer → End User (Domestic
Market)

38
3.7.6 Industrial Footwear Manufacturers
Other than completed leather, some other underdone materials as lining leather, artificial sole,
insole-leather and adhesive are also used by the footwear manufacturing firms in producing
footwear. Footwear manufacturing units imports substantial volume of raw materials from
exterior sources. They Export their products to Hong Kong, Italy, Germany, Thailand and
European countries. About 15 to 20 footwear firms are working at present in Bangladesh. These
footwear firms manufacture modified high quality sandals, shoes, slippers etc. as per wants and
needs of international buyers. A major difficulty for these firms is the locally unavailability of the
Last Machines.
The dependency on imported final delays their manufacturing process ensuing in inability to
meet deadlines. In calculation, due to shortage of skilled designers, inadequate supply of
excellence leather, inadequate product line and product mix, etc. international market of
Bangladeshi footwear is not increasing to its full potential.
Industrial footwear manufacturers are using three distribution channels and that is:
♦ Industrial Footwear Manufacturer → International Market
♦ Industrial Footwear Manufacturer → Export Agent → International Market
♦ Industrial Footwear Manufacturer → Retailer → Domestic Market
3.7.7 Semi-industrial Footwear Manufacturers
Semi-modern footwear units make quality footwear for neighborhood showcase and also for
fare advertise in a constrained scale. Generation limit of these commercial ventures is smaller in
examination to mechanical footwear producers. These units are confronting comparative issues
- as those of the mechanical cowhide products units - thwarting development of their business.
Semi-industrial footwear units use two distribution channels, they are:
♦ Semi-industrial Footwear Manufacturer → Retailer → End User (Domestic Market)
♦ Semi-industrial Footwear Manufacturer → Export Agent → International Market
3.7.8 Handmade Leather Goods/Crafts Manufacturers
There is a small number of hand tailored cowhide merchandise producers in Bangladesh. They
have an adaptable item range, for example, moneybags, travel permit case, card holder, waist
cinch, portfolio office sacks, women bags, travel bags, coats, overcoat, skirt, trousers and so on
to fulfill the interest of nearby market. They gather leathers, chemicals, and fancy
embellishments from Bangshal wholesale market and offer their completed items to nearby
retail shops, end clients and once in a while to global purchasers casually. Insufficient
information on cutting edge cowhide innovations and advertising, untalented specialists and

39
constrained offices for item expansion are some real issues that these producers are
confronting.
They use two distribution channels, and they are
♦ Handmade Leather Goods/Crafts Manufacturer → Retailer → End User (Domestic Market)
♦ Handmade Leather Goods/Crafts Manufacturer → International Market
3.7.9 Industrial Leather Goods Manufacturers
At present just two mechanical cowhide products makers – Picard Bangladesh Ltd. also Crown
Leather Goods are working in Bangladesh. Picard Bangladesh is assembling basically women's
bags, and in a restricted scale, different things. Then again, Crown Leather Goods is
assembling an extensive variety of items including moneybags, women bags, office sacks,
distinctive sorts of handbag and so on.
Due to lacking supply of fantastic completed leather these two organizations generally import
premium quality completed cowhide from Italy, Germany and other European nations. They
once in a while import adornments, elaborate materials, and chemicals, and at different times,
gather those inputs from the neighborhood markets. Picard Bangladesh fares its items to
Germany just. They specified absence of talented faculty, failure to concoct global standard
items, nonappearance of current innovation and so forth as the real deterrent for business
sector extension
Their distribution channels are:
♦ Industrial Leather Goods Manufacturer → International Market
♦ Industrial Leather Goods Manufacturer → Retailer → Domestic Market
3.7.10 Semi-industrial Leather Goods Manufacturers
Semi-modern Leather Goods producers make 'small (fit as a fiddle and size) cowhide products'
that incorporates moneybag, card holder, handbag and so on., 'medium leather merchandise's
similar to office bags, women sacks, reports' case, cam case, and so on., and 'overwhelming
cowhide products' as travel sacks, attaché, cowhide articles of clothing, for example, coats,
coat, skirt, trousers, waist layer, overskirt and so on.
They utilize completed leather, lining cowhide and glue as their crude materials. Most of the
crude materials utilized by the leather merchandise assembling firms are gathered from nearby
sources. Reliance on purchasers supplied plans just, untrained faculty, and insufficient
mechanical backing and so on are their fundamental issues for extending business
The distribution channels for semi-industrial leather goods manufacturers are:

40
♦ Semi-industrial Leather Goods Manufacturer → Retailer / Showroom → End User (Domestic
Market)
♦ Semi-industrial Leather Goods Manufacturer → International Market
3.7.11 Wholesaler of Footwear
A large portion of the wholesale footwear markets are arranged at the Bangabazar of Dhaka city
and adjoining ranges. Wholesalers gather footwear items from modern, semi-mechanical,
carefully assembled producers and offer them to retailers keeping a sensible net revenue. Now
and again they import modest shoes/ shoes and shoes from china and other Asian nations.
The distribution channel for wholesaler of footwear is:
♦ Wholesaler of Footwear → Retailer of Footwear
3.7.12 Retailers of Footwear, Leather Goods, and Leather Garments
Retail shops of footwear are found all over the place in the nation yet retailers of leather
products are essentially urban zone based. Just a couple of retail shops of cowhide
merchandise are seen in the divisional level. In Dhaka, the vast majority of the retail shops of
footwear are arranged in the elephant street, New Market, Gausia, Polwel (Kakrail), Gulistan,
Gulshan, and Banani range. Retail shops of leather merchandise and articles of clothing are
arranged in Gulshan, Banani, Elephant street, Eastern Plaza and adjacent regions of
Hazaribagh.
The distribution channel used by these retailers is:
♦ Retailer of Footwear → End User (Domestic Market)
3.7.13 Export Agent
Export specialists are helping nearby makers get worldwide contracts and they go about as
contact between the two gatherings. Be that as it may, they don't bear any obligation regarding
fare, shipment, or nature of items. Trade specialists are included in hull and cowhide send out
just. Tanneries send out their cowhide to remote purchasers through these fare operators.
They use one distribution channel and that is:
♦ Tanneries → Export Agent → International Client

43
Table 14: Distribution of Value Addition across Different Stages of the Value Chain
Sl Stages
Purchase
Price / Unit
Additiona
l Bought
in
Material/
Unit
Total
Bought
in
Material
/ Unit
Sellin
g
Price/
Unit
Value
Addition
Distribution
of Value
Addition %
Tannery
1. Raw hide to
wet blue stage
60 10 70 75 5 24
2. Wet blue to
crust leather
stage
75 9 84 91 7 33
3. Crust leather
to finished
leather stage
91 10 101 110 9 43
Total 21 100
Leather Goods Handmade (Local Market)
1. Input
supplier
to
leather
goods
producti
on
980 300 1280 2500 1220 71
2. Leather
goods
production
to retailing
2500 0 2500 3000 500 29
Total 1720 100
Leather Goods Semi-industrial (Export Market)
1. Tannery
to leather
goods
productio
n
1485 58 1543 2450 907 100
Total 907 100

44
3.8.1 Financial Analysis of Value Addition
Value Addition by Raw Hide (Cow) Suppliers16
Assumption:
 Raw hide : 7 bundles 140 pcs ( Each bundle contains 20 pieces))
 Purchase Price : Tk. 1,400.00/ Each raw hide
 Selling Price : Tk. 1,500.00/Each raw hide
Calculation:
Rawhide Sales: 7 Bundles/140 pcs @ tk. 1,500 Tk. 210,000.00
Less: Cost and Expenses:
 Purchase of Raw hides (140 pcs @ Tk. 1,450) : Tk. 1,96,000.00
 Transportation (7 bundles @ Tk. 150) : Tk. 2,380.00
 Labour, hat and Izara charge : Tk. 3,500.00
 Travelling, Conveyance Foods and Hotel rent : Tk. 2,000.00
……………………………………
Tk 2,03,880.00
……………..……………….........
Profit calculation for value addition : Tk. 6,120.00
Value Addition : (210,000-196,000)
= Tk. 14,000
Value Addition Percentage : 6.66%
16
Calculations done using estimated value (GTZ)

45
Value Addition by Handmade Leather Goods Producer17
Assumption:
 Production : Laptop Computer Leather Bag
 Leather Required : 14 sft
 Purchase Price : Tk. 160/sft
 Selling Price : Tk. 4200
Calculation:
Sales : Tk. 4,200.00
 Leather(14 sft @ Tk. 160) : Tk. 2240.00
 Material ( accessories) : Tk. 380.00
 Making charge : Tk. 500.00
 Overhead( Factory, administrative, marketing,
Overhead and financial expenses) : Tk. 190.00
……………………………..
Tk. 3,310.00
……………………………..
Profit calculation for value addition : Tk. 890.00
Value Addition : (4,200-2,620)
= Tk. 1,580
Value Addition Percentage : 37.6%
17

46
Value Addition by Retailer of Handmade Leather Goods18
Assumption:
 Purchase Price : Tk. 4200
 Selling Price : Tk. 5800
Calculation:
Sales : Tk. 5,800.00
 Purchase Price : Tk. 4,200.00
 Salesman Salary : Tk. 150.00
 Rent : Tk. 160.00
 Electricity : Tk. 35.00
 Telephone bill : Tk. 30.00
 Entertainment : Tk. 30.00
 Depreciation : Tk. 35.00
 Others : Tk. 40.00
…………………
Tk. 4,680.00
……………………….
Profit calculation for value addition : Tk. 1,120.00
Value Addition : (5,800-4,200)
= Tk. 1600
Value Addition Percentage : 27.5 %
18

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