Year 2019 was no less than a shaky one for Bangladesh’s RMG export industry. Some inherent challenges, along with some brought on Bangladesh by the changing times and retail landscapes, have troubled the export sector. It started with massive agitation of workers over wages and, soon after when the Government decided to increase wages by a whopping 51 per cent, most of the factories failed to cope with the situation throughout the year. Another phenomenon that Bangladesh could not utilise in 2019 is US-China Trade War. If apparel export data of Bangladesh released by Export Promotion Bureau (EPB) is anything to go by, the country failed to grab the shift coming from China which, otherwise, could have been a great opportunity for Bangladesh.
According to EPB, Bangladesh grew by just 0.42 per cent to export US $ 33.07 worth of garments in 2019 as against US $ 32.93 billion worth of garments in 2018. Knitted garments earned US $ 16.44 billion revenues, marking 1.24 per cent growth on Y-o-Y basis, while contribution of woven garments stood at US $ 16.63 billion which fell 0.30 per cent on the yearly note.
Knitted garment products clocked US $ 16.44 billion through exports, marking 1.21 per cent growth; while woven products fell short of what it achieved in 2018. Bangladesh fell by 0.30 per cent in its woven garment export and hit US $ 16.63 billion mark in 2019.
The export growth is the slowest in past decade for Bangladesh as the last time it recorded such miniscule growth was 2009 when exports saw negligible growth of 0.09 per cent over 2008’s export value.
As far as region-wise export is concerned, European Union remained the top export destination for Bangladesh with US $ 20.44 billion worth of shipment. However, RMG shipment plunged by 0.79 per cent in the EU in 2019 over 2018. EU constituted around 70.69 per cent of overall knitted garment exports by Bangladesh; while the share in case of woven stood at 52.91 per cent.
According to the data analysed by BGMEA, the share in EU is continuously dipping over the years. Out of overall apparels exported from Bangladesh, EU contributed 61.75 per cent in 2019 which is lesser than its share in 2018 (62.5 per cent) and 2017 (64 per cent).
Further, the USA remained the single largest export destination for Bangladesh with US $ 6.02 billion (up 3 per cent) worth of shipment. The share of the US was 18.20 per cent in total apparel export value, while it was just 17.75 per cent in 2018. The overall global apparel import of the USA stood at US $ 83.82 billion in 2019, according to OTEXA, and Bangladesh contributed 7.18 per cent to this value which is well below to what China (29.68 per cent) and Vietnam (16.18 per cent) do.
Sharing views on the US apparel market, Aminul Islam Khan, Executive Director, Fashion Watch Ltd., told Apparel Resources that the reason behind growth in the USA is the big volume orders. “We majorly work with Walmart and Target USA, and they place orders of not less than 200,000 pcs which is huge. Not just us, many factories in Bangladesh which work for the big US buyers get this much quantity per order. This way, we are able to focus on targeted buyers and that helps a lot,” informed Aminul. It’s worth mentioning here that Fashion Watch Ltd. is one of 19 sister concerns of one of the biggest apparel manufacturing groups in Bangladesh which manufactures Asian Apparels women’s top and bottom of both knit and woven fabrics.
When it comes to countries and regions other than EU and the USA, Bangladesh saw RMG export worth more than US $ 1 billion in two countries: Canada and Japan. In 2019, Canada imported apparels from Bangladesh worth US $ 1.12 billion growing at 5.41 per cent on the yearly note, while exports to Japan valued at US $ 1.07 billion with a decent growth of 4.15 per cent.
Apparel Import of Top 5 EU destinations from Bangladesh…
1. Germany – The second largest single apparel export destination for Bangladesh after the USA, Germany’s apparel imports dwindled 5.71 per cent from the Asian country in 2019. In 2018, export to Germany grew by 10.1 per cent and Bangladesh could not repeat the performance in 2019. Clocking US $ 5,535.58 million revenues from shipment to Germany, Bangladesh fell both in knitted and woven segment by 5.68 per cent and 5.88 per cent respectively.
2. UK – Though BREXIT has taken place in 2020, it was a part of EU till 2019, thus must be talked about in this list. Bangladesh RMG exports to the UK saw 2.36 per cent growth to ship US $ 3,836.76 million worth of apparels. Share of knitted category was US $ 2,030.41 million (up 3.57 per cent), while woven segment contributed US $ 1,806.35 million (up 1.68 per cent).
3. Spain – Bangladesh marked 0.41 per cent surge in its apparel exports to Spain and shipped US $ 23,860.34 million worth of apparels in 2019 as compared to US $ 2,376.55 million worth of apparels in 2018. The share of knitted category was 54.39 per cent and the export valued at US $ 1,298.12 million which fell by 1.44 per cent from what Bangladesh exported to Spain in 2018. Woven category export stood at US $ 1,088.23 million and marked 2.74 per cent growth on Y-o-Y basis.
4. France – Another EU country importing apparels from Bangladesh but seeing marginal growth! Bangladesh’s apparel shipment to France valued at US $ 1,987.83 million in 2019 which was just 1.21 per cent greater than the value it earned in 2018. Knitted apparel export value stood at US $ 1,187.19 million, while woven garments saw shipment worth US $ 800.64 million.
5. Italy – Export of Bangladeshi apparel products fell significantly by 4.34 per cent on Y-o-Y basis during 2019 in the Italian market and that’s setback. Bangladesh could ship apparels worth US $ 1,432.55 million to Italy in 2019 as compared to US $ 1,497.55 million in 2018. Both knitted and woven garment categories fell by 4.07 per cent and 4.84 per cent respectively.
RMG exports to non-traditional countries grow
Bangladesh may have fallen in the EU but it noted growth, though marginal, in non-traditional markets. The country shipped apparels to its non-traditional markets worth US $ 5.51 billion, noting 1.37 per cent growth on Y-o-Y basis. The share in these markets grew from 16.52 per cent in 2018 to 16.68 per cent in 2019.
Of all major non-traditional markets, India has become a good destination for Bangladesh, and in 2019, apparel shipment to the neighbouring country valued at US $ 512.38 million (up 16.92 per cent). According to BGMEA, Japan is also a non-traditional destination for Bangladesh’s RMG products where it escalated its exports by 4.15 per cent as stated above.
Australia has shown its potential as an apparel market for Bangladesh as indicated by the figures. Though the surge is not overwhelming, the export value is significant and values highest after Japan as far as non-traditional markets are concerned. Australia imported apparels worth US $ 692.28 million and noted marginal growth of 0.31 per cent.
Another emerging market for Bangladesh is Russia which imported apparels valued at US $ 482.43 million of garments from Bangladesh in 2019 growing over 3.37 per cent on the yearly note.
However, China is a market which did not go positive for Bangladesh in 2019. China’s global apparel import grew by 18.7 per cent in 2019 but Bangladesh failed to tap this opportunity and tumbled by 9.97 per cent to ship apparels worth US $ 443.46 million.
One of the reasons for this stagnant performance of Bangladesh’s RMG export industry is stable currency. According to Inamul Haq Khan (Bablu), Managing Director, Ananta, the currency regulation is one aspect which could help Bangladesh in the current scenario. “When currencies of our competitor countries have depreciated considerably in the last couple of years, the value of Taka has remained stable, which is doing us no good. If the exchange value of Taka is adjusted to around 95 per US $, it would do wonders to our export-oriented readymade garment sector,” opined Inamul.
Also Read: EU again hurts India’s RMG export in 2019
Performance of top product categories
One of the biggest challenges the industry is facing today is faltering profit margins, the ripple effect of which can be seen in each and every aspect of garment manufacturing. Wages are increasing and so is the overhead cost, on the contrary, prices have reduced by almost 15 per cent in the last few years. The stagnation in order volumes and sluggish global market condition is adding pressure for the garment manufacturers. As far as top performing product categories are concerned, Bangladesh continued its dominance in trouser exports to the European Union. According to data released by EUROSTAT, Bangladesh exported trousers worth € 5.20 billion to the EU, marking 6.33 per cent growth on Y-o-Y basis.
EU imported trousers worth € 18.98 billion in 2019 and saw a rise of 4.28 per cent over 2018. Bangladesh’s share to this value is 27.39 per cent which was 26.90 per cent in 2018.
China remained far behind Bangladesh in trouser exports to EU as the shipment from China valued at € 3.28 billion which grew negligible by 0.61 per cent in 2019. China’s share of trouser export to EU dropped from 17.91 per cent in 2018 to 17.28 per cent in 2019.
T-shirt and sweater are the 2nd and 3rd top products being exported from Bangladesh to EU. In 2019, Bangladesh earned revenues of € 3.49 billion (up 9.58 per cent) from T-shirt export, while sweater helped the country clock € 2.77 billion revenues, marking 7 per cent growth on Y-o-Y basis.
When it comes to the USA, the top product category which was exported from Bangladesh in 2019 was trouser. According to OTEXA, the USA imported trousers worth US $ 2.68 billion and noted growth of 6.42 per cent over 2018. T-shirt and men’s shirt are the 2nd and 3rd top product categories which registered export revenues of US $ 736.30 million (up 13 per cent) and US $ 655 million (up 3.93 per cent) in the US market during 2019.
As far as denim apparel is concerned, Bangladesh managed to see growth in its export to the USA in 2019 at a time when top two exporters in this category, Mexico and China, are falling significantly. Bangladesh shipped denim apparels worth US $ 585.91 million to the USA, marking 3.50 per cent growth, while Mexico and China plunged in their exports by 1.84 per cent and 25.68 per cent respectively.
Jacket and Blazer is an emerging product category for Bangladesh particularly in the US market, as it got a boost by 36.74 per cent in 2019 and clocked US $ 486.47 million figure in exports.
Since the starting of 2020, the unexpected spread of coronavirus is hurting Chinese RMG industry and putting some impact on Vietnam too, a country that Bangladesh considers as its biggest competitor. According to various reports, the capacities in Vietnam are already utilised at least for next two seasons and other small countries can’t handle the big quantities coming from China. As of now, Bangladesh is also struggling as its dependency on China for fabric and trims is still very large; however, in the long run the Bangladeshi industry is seeing this as an opportunity for themselves.
“Vietnam does not have labour abundance, nor backward integration, but it does have the infrastructure and stronghold in specific product categories. In a strategic understanding of what the future holds, Bangladesh is doing a lot of forward and backward integration and diversifying into high-end fashion categories as well. Our manpower is getting technical know-how gradually and we are investing a lot in skill development of our workforce. So, we are sure we will get more orders from next season in Bangladesh and the shift away from China may be grabbed by us,” stated Mamunur Rashid Johny, COO (Buying Division), Euro Bangla Group in a positive reading of the current situation.
