Europe and the USA have long been the apparel export mainstays for Bangladesh. However, there exist some non-traditional markets that can reap rich dividends as well, more so in light of the recent turn of events that had adversely impacted Bangladesh’s exports. Even though businesses are getting back to work, many apprehend it would be a long haul before things show signs of any marked improvement in the traditional strongholds of the EU and the US.
Moreover, there is also a challenge for Bangladesh to remain competitive in the EU after the nation’s graduation to a middle-income country. However, Bangladesh will have the opportunity to continue to enjoy duty-free access to the EU if it achieves GSP Plus.
Closer home, many believe that India, China and Japan – which together constitute consumer market worth trillions of dollars – could come to Bangladesh’s rescue in salvaging the export loss suffered in the wake of COVID-19 in the long run. If China boasts of a domestic market that is next only to the USA in terms of size, Indian fashion retail sector is expected to touch US $ 115 billion by 2026. Also, that Bangladesh’s exports to these countries have been pretty decent over the last few years, it makes sense for Bangladesh to focus more on them, experts underlined.
A case in point is India, where for the first time in 2019 Bangladesh’s exports touched the billion-dollar mark, with goods worth US $ 1.25 billion sold to the neighbouring country. Of the total amount, apparel sector alone earned US $ 499.09 million in 2018-19 fiscal, which was 79.09 per cent higher compared to what was US $ 278.67 million in the previous year.
“I have always felt that because of the geographical proximity, India could be a big export market for Bangladeshi RMG products. India now has established and reputed local brands which cater to the demands of millions of Indians who are looking for quality apparel products in trendy and attractive designs. India had also given us preferential trade concessions for exporting our readymade garments and we as Bangladeshi manufacturers must look to establish contacts with prominent Indian retail companies and try to develop a long-term business relationship based on mutual trust and benefit,” Asif Ibrahim, Managing Director of Newage Group, explained the prospects in India, in an earlier interview with Apparel Resources.
Thanks to the duty-free market access, increasing footprints of overseas/domestic brands and retailers in the country and rapid rise of the affluent middle-class, all of which added up to make things even more interesting from Bangladesh’s standpoint.“Bangladesh offers apparel goods at reasonable prices, while global retailers are opening more outlets in India, who buy products from here,” underlined Shahidullah Azim, former Vice President, Bangladesh Garment Manufacturers and Exporters Association (BGMEA), who went on to add that after the implementation of the Goods and Services Tax (GST), production cost in India has increased, which has further given a boost to apparel imports from Bangladesh.
Apart from the EU and US markets, Bangladesh should also focus more on the Asian markets to revive the country’s earnings from export amidst the COVID-19 outbreak, opined Mustafizur Rahman, distinguished fellow of the Centre for Policy Dialogue (CPD), adding that Asian markets, especially India and China, are very important from Bangladesh’s export perspective.
“We need to further explore the Indian market to reap the maximum benefit of the duty privilege,” Rahman stressed.
It may be mentioned here that apart from India, China, the world’s largest apparel supplier, has become a major export destination for Bangladeshi RMG makers lately. Increasing manufacturing cost is making China shift its sophisticated and heavy industries production, while apparel exporters from Bangladesh have been making steady inroads into China on the back of its price competency and geographical proximity to the latter. Also, Chinese Government providing Bangladesh with a preferential trade benefit since 2011 helped the cause more.
“Bangladesh is doing great in exporting cotton-based apparel to China due to the country’s rising production cost. The East Asian country is losing its competitiveness in the low-end segment of readymade garment,” maintained Mohammad Hatem, the First Vice President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).
China is not willing to produce and further invest in lower-end products and the Chinese Government is also discouraging the production of hazardous textile and coal-based power plant products, maintained Khondaker Golam Moazzem, Research Director of the Centre for Policy Dialogue (CPD).
If apparel exports to India have been on the rise in the last couple of years, what added a new dimension to export prospects in the US $ 330 billion Chinese domestic market is China’s recent decision to offer duty-and quota-free access to 97 per cent of Bangladesh’s export items.
“This is a big opportunity for our country. We need to grab this opportunity in the Chinese market,” Mustafizur underlined.
Bangladeshi exports to Chinese markets are growing as the demand for Bangladeshi products, especially garment items, is growing among the middle-income people in China, said industry insiders.
China has a big consumer base, but all its consumers can’t afford the high-end garment items it makes, they said, adding that as a result, many Chinese clothing brands are sourcing garment items from Bangladesh at competitive prices for their domestic customers. Even some work orders for garment products are also being diverted to Bangladesh from China because of the high cost of production in the manufacturing sector of China, they said. No wonder, Bangladesh’s export to China has increased to nearly US $ 1 billion in recent years from less than US $ 100 million even 7-8 years ago.
Also, with the new duty-and quota-free access for 97 per cent export items from Bangladesh, Dhaka has expressed hopes that 17 products that it has been asking for zero tariff facility since 2015 will now be covered under duty-free market access, amongst which the principal items are men’s trousers, cotton- and synthetic-based pyjamas, gloves and leather-based footwear.
Woven apparel exporters and leather-based footwear exporters, in particular, are set to benefit a lot from this facility, said industry insiders.
Apart from China and India, another non-traditional export destination that holds enormous prospect for Bangladesh is Japan, as per industry people, which is also evident from the increasing volume of exports, which has already crossed the US $ 1 billion threshold in fiscal 2018-19 on the back of high demand for Bangladeshi goods and zero duty benefit.
Now if Bangladesh is able to capitalise on the opportunities that these markets offer, especially India and China, whether it is able to lessen its dependence on the EU and USA and diversify markets to salvage some export loss suffered in the traditional export hubs on account of COVID-19 is yet to be seen.