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close this bookDeveloping the non-farm Sector in Bangladesh: Lessons from other Asian Countries (WB, 1996, 116 p.)
close this folderRural industry and export-led growth
View the document(introduction...)
View the documentPossibilities for foreign investment
View the documentDomestic hardles
View the documentFinancing of new enterprises
View the documentNiche exporting

Niche exporting

A more profitable but riskier export strategy involves targeting niche markets, in which competition is less fierce and locally available craft skills facilitate entry. Handicrafts and traditional textiles and clothing for ethnic markets in industrialized countries are some of the available options. Finding a lucrative niche market requires market knowledge, the ability to manufacture a well designed product, luck, and an innovative sales drive. Most attempts fail. But a few outstanding successes can have profound demonstration effects. Three examples of niche products suited to mix of skills available in Bangladesh are bamboo fishing rods and fishing flies; bamboo cane, coconut fiber and straw products; and handloom products. Currently, the demand for exclusive and pricey bamboo fishing rods is met by a small number of craftsmen in the United States and Europe, who import their materials from southeastern China. Converting a piece of bamboo into a fishing rod worth hundreds of dollars requires little equipment other than hand tools, but demands labor skills. Some of these skills and the tradition of fashioning fishing poles from bamboo are already present in Bangladesh. Through breeding and experimentation better varieties of bamboo can be produced, and the deliberate acquisition of skills can refine the art of making fishing rods. Good bamboo rods are superior to those made from synthetic materials and the availability of good quality, comparably priced bamboo poles would induce substitution and stimulate demand.

Labor, technique, materials, and attention to detail are needed to produce fishing 37 flies, but there is nothing esoteric about the process. Kenya produces flies using mostly imported material and exports its flies to Europe and the United States. It is a niche product ideally suited for rural industry in Bangladesh.

Crafting wooden boats for recreational sculling is another activity that could thrive in rural Bangladesh. In the West, boatbuilding skills are becoming rare, and the market is being taken over by boats made from fiberglass, carbon fiber, and kevlar. Wooden boats have a mystique, an aesthetic quality, and a durable stiffness that gives them an edge over synthetic craft, but rising costs are a severe constraint. Labor and specific boatbuilding skills are plentiful in Bangladesh (Jensen and others 1989). To sell abroad, the industry would need to adopt the designs and materials that foreign buyers demand. For instance, building a small wooden shell might require more than six different kinds of wood, some of which are unavailable in Bangladesh. Thus a producer would first have to integrate local skills with designs and some imported items, including tools, resins, and wood. Once Bangladeshi boats had gained market acceptance overseas, producers would have to progressively refine their designs incorporating feedback from buyers, and conduct a modest amount of research to generate a regular stream of innovations that sophisticated Western markets routinely expect. Riverboat manufacturing is a long-established cottage industry in Bangladesh and could provide a springboard for exports to the sporting goods market.

Bamboo cane, coconut fiber, and straw products feed a modestly sized local market, but could be exported to niche markets. Furniture, baskets, mats, fabric, and headgear are some of the items that are traded. But the field is competitive, crowded with producers from South and Southeast Asia and Central America. A common thread links their successes: good design, painstaking workmanship, selective and focused marketing, and just the right measure of exclusivity. One good example of a rural-based product, made entirely by hand, that occupies a privileged market segment are straw Panama hats from Ecuador. Each Panama hat requires at least two months labor by a master craftsman, and the finest hats with a silken finish, which retail for thousands of dollars, can take up to eight months to complete. These "Montecristi fines" are the finest straw hats but the market for hats made from different kinds of natural fiber is diversified. There is a mass market for low-priced straw hats sold at very small markups. This is a point of entry. However, establishing a foothold in the market for premium headgear is the only way to ensure profitability and reputation. Traditional weaving and basketmaking skills must be put to new uses, available or imported fibers must be experimented with, reverse engineering of promising designs pursued and a cost effective marketing strategy devised, which raises the chances of success.

The handloom sector also commands a large domestic market and could develop into an important exporter. This industry has stagnated for the past decade as demand has shifted toward machine-made fabrics and handloom weavers have only slowly absorbed technological changes that would enhance quality and raise productivity. Very likely, machine-made cloth will eventually displace the lower grades of cotton fabrics used for dhotis and saris. Only the specialty fabrics, like the superior "madras" check material, the silk-cotton blends, and the weaves used for jamdani or varanasi saris, are likely to have an enduring market. But these products, suitably upgraded and refreshed with new designs, provide unique export opportunities.

Emigration from the subcontinent to the United Kingdom, North America, and East Asia has created a large, rapidly growing, and relatively affluent ethnic market in these regions. Smaller, prosperous Indian communities also live in East Africa. But Bangladesh's fairly restricted range of handloom designs, weaves, and blends appeals only to a small clientele. The cotton fabric might be rustic and uneven in quality; the sari material is often ornate and unsuited for regular use.

The specialty, high quality handloom cloth made of silk or silk cotton blend must be redesigned to have an international appeal. Handloom weavers cannot bring about this transformation on their own, although their readiness to upgrade their technology and produce new designs will be critical. The key players are designers and marketing expertsthey who must create a range of products tailored to the tastes and lifestyles of the target ethnic population. Once the needed integration of style, design, and material has been achieved, and a workable formula identified, handlooms can be improved technologically.

Bangladesh has the rural production base and skills to manufacture fabric in exportable quantities and developing a rural-based garment industry linked to handlooms 38 is certainly feasible. But important forward linkages with service activities must materialize before handlooms can be transformed into an export sector with good growth prospects. Essentially, marriage of urban-based design, marketing, engineering extension, and finance services can reverse the downward spiral of the handloom industry and position a specialized segment to enter export markets.