Surviving the Chinese onslaught: What Raja Metal Industries can teach its peers
The competition is not only from the imported Chinese products but also from large local conglomerates who have joined the industry lately. Still, this rather small manufacturing company - specialised in making and selling kitchen and bathroom faucets from the 1970s - does not quite feel threatened
The products we used in the 1970s or 80s have evolved a lot in the decades leading to today. The market itself evolved no less. As India, and especially China, advanced in terms of industrialisation, many of our locally manufactured products disappeared from the market.
Yet, there are some who survived the onslaught in style, innovating new ways to do business in an open market flooded with cheap, often substandard but good-looking products from leveraged industries of the region. Some of them were even able to stick to their principle of maintaining the quality of the product, which can be an inspiration to other local manufacturers.
One such local manufacturing company is Raja Metal Industries, which has specialised in making and selling kitchen and bathroom faucets for local consumers and has been in the market since the 1970s.
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When the local market is flooded with Tk300-Tk1,000 faucets (even as cheap as Tk40 in case of plastic ones) that can meet the necessity of average buyers just fine, Raja Metal still manages to market high-end products priced at up to Tk14,250. Of course, the company also manufactures products with a lower price tag.
Although the factory, currently located in the capital's Jatrabari area, spans over 50,000 sq feet of land, it had a modest beginning.
"My late father Tajijul Haque Master started a small factory in Old Dhaka back in 1973 when he was young. He didn't even have the capital to start it. His aunt mortgaged her gold ornaments to lend him Tk2,000," said Md Nazrul Islam, the managing director of Raja Metal Industries.
"The factory had a bamboo fence. My father used to sleep in the factory so the machine would not get stolen. He would manufacture metal products, such as soap holders, towel rails etc with his own hands, with the help of an assistant. He would even carry the products himself to sell them. That's how it all started," he added.
The factory was initially called Rani Electroplating (named after Haque's first child) but was later renamed Raja Metal Industries in 1978 when his first son was born, and that's when it started manufacturing faucets.
In the early 1980s, Dhakaiya traders started doing business on credit, creating a setback for the company, Nazrul said. But at the same time, Sylheti businesses started showing particular interest in Raja Metal's products. Raja still continues to sell better in that part of the country, he added.
Different government agencies such as the Public Works Department (PWD), the armed forces, Bangladesh Police, BGB are also regular customers of Raja, its MD said. In 1990, Raja won the National Industry Fair award. In 2004, Tajijul Haque died and his eldest son, the current MD, took charge.
Looking down on local products
According to sellers, more than 40% of faucets sold in the market are imported. Hazi Mohammad Jainal Abedin, the president of Bangladesh Bathroom Fitting Manufacturer Association, said the figure is fast approaching 50%.
For Raja, which is among the first few faucet makers in the country, surviving in an industry flooded with imported products is a huge challenge.
"Bangladeshi consumers have a preference for foreign products. When they come across a local product, they ask for discounts, warranty/guarantee and what not, because they think local products are not good. But they do not look for a warranty in case of similar foreign products. They don't even bargain too much in that case," Nazrul said with disappointment.
Even though local brands are now taking off, there are some who sell foreign products after rebranding them. They do this because it is cheaper. Instead of brass, they often use zinc, which decays faster.
"World renowned brands such as Grohe, Roca, Toto, Kohler - none of them manufacture plastic or zinc faucets. But our love for cheap products has almost driven out quality from the market," said Nazrul. "Here at Raja, we have imported spectrometers from Germany, and using this, we ensure the quality of our products."
Raja Metal has been able to retain its customer base by maintaining product quality, and taking an uncompromising stance on the use of the right proportions of metals. Also, a proper electroplating prevents decay of the outermost layer even in the saline environment of the south, according to the company's MD. This is how it strategizes in its fight against the aggression of substandard and cheap products in the market. Despite the dominance of such products, the company has not shied away from manufacturing high priced products.
But how would a customer be able to identify a good product? How would s/he know what metal the product is made of? After brass faucets are made, they get a chrome layer through the electroplating process. Therefore, the surface of every faucet looks the same.
On the inside, zinc would look whitish, but brass yellow, Nazrul answered. Also, brass is heavier.
Asked if any government agency is responsible for ensuring the quality of such products, Nazrul said BSTI (Bangladesh Standards and Testing Institution) is in charge of this. But they only check if there is any leakage in the faucet, but not the grade of the brass used in it.
An ever-growing market
Like many other sectors, the Coronavirus pandemic affected the sanitary ware industry as well. Raja Metal also felt the heat badly.
"Although there was no sale, we paid our workers in full, we did not let them take the hit. Suffering was all mine," said the Raja MD. "We received support from the government at a 4% interest, for which I thank the government," he added.
This year, the business is turning back, but the competition feels more intense this time, Nazrul said. With 150 workers, the company has a capacity of manufacturing 5,000 pieces every day, but the actual production sticks to around 2,000, he said.
However, the demand for faucets is also skyrocketing with the rising building construction all across the country.
Yet, the manufacturer thinks the industry needs some kind of protection against imports - by imposing higher tariffs for example.
Although metal faucet importers currently pay a TTI (total tax incidence) of 69%, the TTI for ceramic sinks and other sanitary fixtures made of porcelain is 150.76%.
Nazrul also feels that the Bangladesh Bathroom Fitting Manufacturer Association is not active enough to push the agenda forward.
The competition for Raja, however, is not only from the imported Chinese products but also from large local conglomerates who have joined the industry lately. Among them are RFL, Akij Group, Abul Khair Group and A1 Polymer Ltd (Anwar Group). These companies are taking up market shares both in the low- and high-end product market.
Still, this rather small company from the 1970s does not quite feel threatened. "The demand is so high that no single company can capture the whole market," Nazrul said.
"But our customers need to change their mentality and liking for foreign products for no reason," said Nazrul, asking, "Or else, how would our local industries flourish?"
Nazrul Islam thinks the government can build an industrial park for this industry so they can avoid various barriers (which he would not elaborate fearing reprisal), and concentrate on manufacturing product which is completely home-grown, with locally generated raw materials that come through recycling.
Such support from the government can even help the industry grow towards becoming an exporting one, said the MD of Raja Metal Industries.
