Russian apparel market amounts to US $ 38 billion in 2022 and is expected to grow annually by 2.75 per cent (CAGR 2022-2026), as per Statista.
Bangladesh, in particular, seems to be making the most of the opportunities on offer there, at least thus so far.
The country’s apparel exports to Russia went up by 45.25 per cent in 2021 to US $ 687.81 million from what was US $ 473.54 million a year before.
Further, in the first eight months of the current financial year (July to February), Bangladesh’s earnings from apparel export to Russia stood at US $ 482.23 million, translating to average monthly earning of US $ 60.15 million.
However, the ongoing war between Russia and Ukraine seems to be eventually slowing things down.
Between March and May, earnings from apparel exports to Russian market declined to US $ 27.05 million per month, totalling to US $ 81.17 million even though earnings from apparel shipment during the July-May period showed a 4.32 per cent year-on-year growth to US $ 562.40 billion.
If industry insiders are to be believed, it was primarily due to the shipments made before the war begun.
Ships carrying apparel consignments getting stuck in various ports in the initial days of the war in face of restrictions and the all-pervasive confusion over payment mechanism after the SWIFT ban against Russian banks came into effect, which is getting sorted out now slowly and steadily, are the two main reasons for this slowdown and hold up in shipments, say industry insiders.
Take the case of Shahidul Islam, the Managing Director of Rupa Group, who exports knit items like sweaters, polo shirts and T-shirts to Russia worth around US $ 2 million a year, but is not very hopeful of reaching the US $ 2 million mark this year, let alone cross it with only five months left in 2022, and the war raging on.
What’s more, Shahidul has had to exercise utmost caution while shipping to Russia, considering the risks involved.
Another name in this regard is Fatullah-based Young 4 Ever Textile, which ships knitwear products like T-shirts and polo shirts worth more than US $ 1 million to Russia yearly.
Even though the Russian buyers, until now, had been interested in placing work orders with Young 4 Ever Textile, the Managing Director of the company Rajiv Chowdhury is very careful taking orders from the Russian buyers in view of the continuing war and its implications on business.
He is, however, happy that contrary to the apprehensions, Bangladesh garment makers are able to do business with Russia, albeit exercising caution even if the export has slowed down lately.
Other exporting countries feel the heat too!
Bangladesh is not alone in this; other major apparel exporters like China, Turkey, India and Sri Lanka also saw their exports to Russia decline post the commencement of Russia-Ukraine war.
China’s apparel exports to Russia fell to US $ 122.16 million in March from what was US $ 151 million in February 2022. Likewise, China’s home textiles exports to Russia also went down to US $ 26.54 million in March from US $ 38.50 million in February 2022.
Similarly, apparel export from Turkey to Russia fell to US $ 17.50 million in March from US $ 30.44 million in February 2022.
India’s apparel exports to Russia too registered a steep decline after February 2022 with apparel shipments going down to US $ 2 million in March from US $ 8.56 million in February.
In case of Sri Lanka, apparel export to Russia also registered a drop in value. The export reduced to US $ 0.11 million in April from US $ 0.72 million of February 2022.
Bangladesh garment makers hopeful of turnaround
Notwithstanding the current scenario, shipments to Russian markets will rebound for sure, feel many in the industry and they have their reasons for it.
Russia is a very promising export destination as Russian buyers are getting habituated to paying through alternative channels such as in Chinese currency, claimed Executive President of BKMEA Mohammad Hatem, who added the old export shipment routes of Russia have also been restored now.
For instance, currently, the local garment exporters can ship goods through ports in Finland, Belarus and Hamburg.
The only route closed until now for shipment of goods to Russia is through Poland.
Meanwhile, BGMEA President Faruque Hassan expressed hope that exports to Russia will rebound soon more so as exports through alternate ways and payments through substitute channels have become a reality now.
Such is the appeal of the Russian market that it led the BGMEA Chair to write to the Russian envoy in Dhaka, Alexander Vikentyevich Mantytskiy, to facilitate duty-free access to ‘Made in Bangladesh’ apparels.
According to Faruque Hassan, while opening new opportunities for the Bangladesh garment makers, it will also deepen trade relationship between the two countries and benefit the Russian consumers.
“From a neutral point of view, Russia can benefit by sourcing from Bangladesh since we produce quality apparels at a competitive price,” Faruque said, adding apparel makers in Bangladesh have made huge investments in technology upgradation, innovation and value addition to make the industry more competitive.
Agreeing with the same is BGMEA President Habib Ullah Dawn, who also heads the Commonwealth of Independent States-Bangladesh Chamber of Industry as its President.
Such a facility with Russia will further create opportunities for Bangladesh to explore markets of the Russian-led Eastern European economic union comprising Belarus, Kazakhstan, Armenia and Kyrgyzstan while also open markets of the Commonwealth of Independent States (at present Azerbaijan, Armenia, Belarus, Kazakhstan, Kyrgyzstan, Moldova, Russia, Tajikistan, Turkmenistan, Uzbekistan and Ukraine are part of CIS) as well.