From hands to minds: Universities reimagining the apparel business landscape

Picture a ladder with three rungs. At the bottom is OEM (Original Equipment Manufacturer), making products to someone else’s design and shipping them under a foreign label. In the middle sits ODM (Original Design Manufacturer), designing and building products that others rebrand.

At the top is OBM (Original Brand Manufacturer), doing it all—design, manufacture, and selling under its own name. Climbing from OEM to ODM to OBM means bigger margins and stronger brands. But for many manufacturers in developing countries, that ladder is missing a few rungs.

We stitch the world’s clothes. But who stitches our future? That question haunts Bangladesh’s USD 47 billion apparel industry. Nearly 90 per cent of its garments ship under foreign brands, leaving local factories stuck with razor-thin margins of just 3–5 per cent, while overseas buyers pocket 4 to 5 times that in branding and retail markups. When COVID-19 hit and buyers walked away, USD 3 billion in orders vanished almost overnight—laying bare the fragility of a model built on dependence.

Why is the OEM trap a big problem? Three reasons stand out-A) Value capture: Without own designs or brands, local firms forfeit the richest parts of the value chain—branding, distribution and margins. B) Vulnerability: Contract manufacturers are exposed to sudden order cancellations, shifting sourcing strategies, and price competition from lower-cost countries. C) Stunted capability-building: When firms focus on speed and cost, they under-invest in R&D, design teams, marketing and IP—skills that take years to develop.

Not every country stays stuck. Taiwan’s semiconductor story proves it. Decades ago, the island was mostly assembling chips for others—a role not unlike OEM manufacturing. But Taiwan made a bold bet: government-backed R&D and deep collaboration between universities and industry. Institutions like ITRI worked hand in hand with academia to train talent, develop technology, and push beyond simple assembly. The result?

Companies like TSMC emerged, not just making chips but designing them, owning the intellectual property, and leading the global market. Taiwan didn’t settle for chasing orders—it built an ecosystem of innovation. The leap from low-margin manufacturing to tech powerhouse didn’t happen overnight, but it happened because the country chose design, skills, and IP over dependence.

So how can Bangladesh begin to break the trap? The answer rests largely on a pragmatic, scaled-up model of academia–industry partnerships—but not as one-off trainings or charity projects. It needs to be a systemic pipeline that turns classrooms and research labs into launchpads for commercial design and brand-building. Here’s how that plays out in practice-

[a] Build skill pipelines, not just seminars. Universities need to move beyond theory and co-create curriculums with manufacturers—producing designers, technologists, and product managers who understand today’s supply chains. Quick workshops like chip design or fabric innovation bootcamps help, but they’re no substitute for semester-long project courses and mandatory internships that put students inside real factories and brand teams.

[b] Turn labs into launchpads. Select university labs should become shared prototyping hubs—think fashion-tech labs, textile material centers, sustainable-dyeing facilities—where manufacturers co-fund pilot projects. These hubs must run on clear IP-sharing rules so the designs born there can actually hit the market, not gather dust in journals.

[c] Lock up the ideas, not the progress. Small RMG manufacturers hesitate to invest in design because buyers control the IP—and the profits. The fix? Neutral IP escrow systems or shared-data trusts. These act like safes, holding design files under agreed rules and spelling out how revenue gets split when a product sells. It protects the innovators, builds trust, and keeps the ideas flowing instead of being swallowed by big buyers.

[d] Recruit anchor buyers to run “co-branding” pilots: they provide market channels while local firms retain co-ownership of new designs—gradually shifting trust and revenue sharing. Universities can play a key role by facilitating design collaboration, structuring fair IP agreements, and embedding students in these projects for hands-on branding experience—critical steps toward building the capabilities needed for OBM leadership.

[e] Build sectoral clusters (textile/garment design parks) where universities, incubators and small factories co-locate, supported by targeted tax credits for joint R&D and patient, concessional finance for design-to-market cycles.

Here’s an idea worth testing: a National Design Accelerator. Picture a fast-track program pairing ten factories with university teams and a retail partner. It funds prototype development, provides legal and IP guidance, and guarantees a buyer trial if designs meet agreed benchmarks.

Success is measured by prototypes hitting the market, IP registered, upgraded skills, and higher margins on pilot lines. These are the building blocks of OBM leadership—design capability, brand confidence, and control over IP. Even a few wins could spark a demonstration effect strong enough to draw private investors.

But the road isn’t easy. Small garment factories often don’t have the money to share project costs. Universities focus on research papers, not real products. Big buyers hold on tightly to their designs. And weak laws make contracts hard to enforce. Fixing this will take clear action: tax breaks for companies that work with universities, faster IP registration, low-cost legal help at tech parks, and simple targets like how quickly new designs get made, how much money local firms keep, and how many jobs are created.

The OEM trap is ultimately a political-economic challenge as much as a business one. It demands patience, sustained public support, credible anchor partners, and a steady commitment from universities to make applied research matter. The payoff is clear: more jobs that pay better, less vulnerability to fickle buyers, and the chance to grow household-brand firms that keep more of the value created in Bangladesh.

Stitched right, the next generation of Bangladeshi products needn’t carry someone else’s name. Stitched right, the next generation of Bangladeshi products needn’t just bear someone else’s logo—they could proudly carry names born and built in Bangladesh.

* Ariful Islam (Faculty, Sunway Business School-AACSB, Malaysia)

* Tasnia Fatin (PhD Scholar, Putra Business School-AACSB, Malaysia

* Sazali Abd Wahab (Professor, Putra Business School-AACSB, Malaysia).