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One of the most prestigious business sectors in Bangladesh's RMG sector is buying house (BH). It is well known that Bangladesh is the second-largest supplier of RMGs in the world since the country's industry produces high-quality goods at competitive prices compared to its rival nations. Bangladesh has had a substantial impact on the global apparel market, and garment buying companies are essential to this achievement. It can be estimated that clothing makers and buying houses shared at least 1.4 billion dollars in the previous fiscal year (FY) 15–16 when taking into account the required 5 percent commission on buying services.
A buying house essentially acts as a trading partner between the manufacturer and the buyer/retailer. In the business world, there are two different sorts of BH: trading/purchasing offices and buying agencies or liaison offices. Both phrases have different connotations.
1. A buying agency, also known as a liaison office, is a regional buyer's independent office where all essential approvals have been granted. According to local law, it cannot demonstrate any income without any expenditures. For instance, H& M (Sweden), TEMA (Turkey), and Decathlon (France).
2. The buying office, on the other hand, is the entity that collaborates with numerous buyers and brands simultaneously. In this instance, the buyer is providing all necessary clearances. They are just permitted to carry out orders; they cannot make important decisions. Specifically, ARP, Apptex Sourcing, Target Australia, and T& M Sourcing Ltd.
3. A few office initiatives as a liaison officer and a buying house, which refers to these kinds of office initiatives at a period when an independent buyer's office has the most approving authority without fabrication and Lab deep selection. Additionally, performances without approval from authorities for various buyers and companies.
4. A lot of clothing manufacturers use their own marketing office as a buying house and charge a commission of between 5 and 10% for the service.
The export-focused RMG sector in Bangladesh began as a small, unconventional export sector in the latter half of the 1970s. The RMG industry began to grow rapidly after freedom, notably in the 1990s as the nation attained political and social stability. RMG has developed into the nation's greatest revenue-generating sector in just three decades, accounting for 82% (USD 28.094 billion FY 15-16) of all exports. There was no BH in Bangladesh in the 1970s or 1980s. To meet industrial demand, some entrepreneurs introduced the buying house concept in the early 1990s.
According to estimates from BKMEA and BGMEA, there are currently more than 1000 enlisted buying houses, 1500 textile enterprises focused on export, and more than 6000 RMG companies operating in the nation (4000 under BGMEA and 2000 under BKMEA as of 2015–16 FY). It should be noted that since some businesses belong to both the BGMEA and the BKMEA, the actual number would be slightly lower. This number has increased significantly over the last two decades. According to insiders in the industry, buying house is a hub for sellers made up of top exporters, suppliers, and manufacturers that showcase their newest and trendiest collections of clothing to a large audience all year long.
In reality, a buying house is always essential to the RMG industry. It is the culmination of all marketing initiatives, including finding overseas buyers for clothing, gathering orders, utilizing media on behalf of manufacturers, as well as placing orders with the most appropriate factories for producing clothing and offering both buyers and manufacturers a variety of technical and communication support.
In Bangladesh's garment manufacturing industry, BH is significant. The RMG business in Bangladesh is entirely dependent on international consumers, and consumers abroad depend on garment buying houses. Because they frequently lack sufficient knowledge of the nation of production, the manner of communication, the culture, the environment, and so forth, buying houses often give them with significant support by supplying clothing products that meet their needs. Some of the more well-known buyers created their own office in Bangladesh, which was quite expensive, to lessen their reliance on purchasing homes. For some overseas buyers, that is not an option. such that the number of new buying homes is growing daily. Here are some foundational ideas for understanding the significance of BH in detail.
Saving money
Reducing production costs is one of a retailer's top priorities. A buyer will be more likely to capture the mass consumer market if they purchase a product with a competitive pricing and top quality. Bangladesh is a manufacturing nation that is solely focused on exports. Although hundreds of importers and retailers get their goods from Bangladesh, the majority of them lack local contacts or operational offices. Therefore, there is no other option for ensuring the proper implementation of an order except to establish a working office of one's own. Owning a business requires a significant financial and time investment. Famous Brand country manager Carin Kjellgren once claimed, "We are investing half a million dollars only to maintain 30 employees annually." In contrast, a buyer can easily obtain all services from a buying house in exchange for a small percentage of FOB or a service fee, or perhaps even both.
Intense treatment
Without proper care, a new product will result in thousands of dollars in losses for both parties, much like a newborn infant. Both money and reputation are significant losses for a buyer. The merchandiser, who is in charge of the products, is constantly busy making sure they meet the quality standards set by the customer. He is the go-to doctor for any kind of serious scenario from the planning stages to shipping. And for purchasers who are located far away, that is not doable. This kind of service is provided by buying houses with complete customer and supplier satisfaction.
Meant to support
The provider typically met the lead time of 90 days for completing a single order. It has decreased dramatically over the past year, but it is still only 60 days, meaning that anything is possible within this time. In this intricate supply chain process, ongoing third eye help is required; this is especially true on the supplier's side during production. In order to ensure smooth production, the merchandiser must make some crucial decisions during production. In order to do this, he must first observe the actual situation and then, following extensive observation, decide how to preserve both quality and production within the allotted time. Additionally, a foreign buyer cannot purchase a home without assistance.
Quality assurance
Because the clothing business maintains a complex supply chain where vendors get various materials from various locations, sew clothing using various trained workers, and then sell goods to retailers, actual quality assurance is one of a buying house's primary responsibilities. A highly expensive quality expert is always recruited when purchasing a home to assure product quality. A clothing with obvious flaws and low quality won't be purchased by the general public. Customers and retailers so purposefully avoid buying products that do not adhere to the global quality standard.
In order to avoid acquiring defective items, quality-conscious consumers have a robust quality checking system in place. Therefore, it is rather tough to produce the correct quality goods from factories without the cooperation of a buying team.
A new tagline for Bangladesh's RMG industry is "$50 billion by 2021." It is not a utopian vision for the nation. The nation has the resources necessary to accomplish this. By 2021, when the Republic of Bangladesh celebrates its 50th anniversary, we want to export $50 billion worth of goods. By securing several orders from the top buyers of clothing throughout the world, buying house will play a key role in reaching this milestone.
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