Global RMG market share: Bangladesh’s position, causes and way forward

by Apparel Resources

09-August-2019  |  5 mins read

Bangladesh Garment Industry
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The World Trade Organisation recently released its World Trade Statistical Review 2019.  According to it, of the global apparel export market of US $ 421 billion, Bangladesh’s share was US $ 32 billion in 2018, which was US $ 29 billion in 2017.

Though Bangladesh’s apparel export earnings showed an upward trend, nevertheless the worrying part is that Bangladesh’s market share eroded by 0.1 percentage point to 6.4 per cent in 2018, which was 6.5 per cent in 2017. On the contrary, its closest competitor Vietnam not only narrowed the gap with the former, its share in 2018 also increased by 0.3 percentage points to touch 6.2 per cent from what was 5.9 per cent in 2017.

What’s worrying the industry about this development is that Bangladesh suffered this loss, even though meagre, despite enormous scope to gain from the shifting business from China, thanks to its continuing trade war with the USA.

“I do not see it as a big deal but rising share of Vietnam is leading us to think about the future directions as it has signed a free trade deal with the European Union. The deal will create a great opportunity for apparel makers of Vietnam,” underlined Bangladesh Garment Manufacturers and Exporters Association (BGMEA) President Rubana Huq speaking to the media, adding, “Rise of Vietnam’s market share is a great threat for Bangladesh as it has more advantages than we, and reaping more benefits from the trade war.”

It may be mentioned here that on 30 June 2019, the much-awaited trade agreement between the European Union (EU) and Vietnam, the EU-Vietnam Free Trade Agreement (EVFTA) took shape after European Commissioner for Trade Cecilia Malmström and Vietnam’s Minister of Industry and Trade Tran Tuan Anh, finally signed on the dotted lines.

With EVFTA coming into effect, Vietnam’s total export turnover to the EU market is expected to increase by around US $ 16 billion.

The EU is Vietnam’s largest export market (together with the US). Exports to the EU have multiplied by three times over the last 5 years, representing US $ 30.9 billion in 2015 whereas imports accounted for US $ 10.3 billion.

As per pundits, The EVFTA is a very good, balanced and comprehensive agreement which includes the elimination of almost all tariffs for goods originating from Vietnam. Naturally, the country’s garment and textile sector is euphoric with industry insiders outlining the next course of action to ensure Vietnam is able to exploit EVFTA to the fullest.

This, however, is a worrying development for Bangladesh, more so in the light of the recent WTO data.

“About 30 products are relocating from China, of which 16 overlap with us but the manufacturers are not grabbing the businesses shifting from China…Though it is not possible to shift products base overnight, manufacturers have to align products accordingly to grab more market share,” further adds Huq, adding, “As the platform of the sector, BGMEA is taking measures to learn about the products and sought information of product details with export destinations from the National Board of Revenue (NBR) to scan the situation. We wouldn’t let it go as Bangladesh has huge capacity. The drive is going to start with Brazil, where we are set to visit to explore potentials, while the next focus will be Eurasian countries and Russia.”

Product and market diversification, it seems, hold the key for Bangladesh to a great extent going forward.

“To this end, more attention should be given to non-traditional markets, identifying products which are on demand globally,” explains Research Director of Centre for Policy Dialogue (CPD), Khondaker Golam Moazzem, adding, “As the second largest exporter of apparel products, China relocation opened up opportunity to reduce gap with the number one exporters. But Bangladesh is failing to grab the market share which China is losing. As a result, Bangladesh’s gap with its close competitors is coming down gradually.”

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