Export of RMG products expanding to more overseas destinations

Exports of Bangladesh’s readymade garment (RMG) products are gradually expanding to China, Japan and Latin American countries in recent days. So far, the US and the EU were the main buyers of local apparel items. RMG manufacturers tried hard to explore more export destinations with diversification of their products and were able to find some prospective markets in Asia and Latin America.

China, the world’s largest apparel supplier, has become a major export destination for Bangladesh as Chinese manufacturers are now reluctant to produce basic RMG items. The Chinese manufacturers have recently shifted from basic readymade garment (RMG) items to high-end apparels. A significant number of garment factories that made basic RMG products earlier faced closure in China recently. As such, Bangladesh and other competing countries are now exporting RMG products to China.

According to Export Promotion Bureau (EPB), Bangladesh exported knitwear products to China worth $3.071 million in fiscal 2007-08 against $0.76 million in the previous fiscal year, posting a staggering 400 percent growth. In fiscal 2007-08 the country exported woven garments to China worth $6.691 million against $6.323 million in fiscal 2006-07. The total export to China from Bangladesh amounted to $106.946 million against the import of around $3.0 billion in fiscal 2007-08.

In 2007, Bangladesh exported cotton T-shirts, singlets and other vests worth $0.79 million against $0.57 million in 2006. China imported such kind of apparel items worth $976.890 million in 2007 and $926.330 million in 2006 from the rest of the world. It clearly shows that China itself imports apparel items of a significant amount. Aggressive marketing drive by Bangladesh can grab a chunk of such import of China, experts say.

Currently Bangladesh enjoys duty concession on exports of 757 products to Chinese market under Asia Pacific Trade Agreement. Of the 757 products, 22 knitwear items and almost the same amount of woven items are included in the concession category. As a result, the export of knitwear and woven products is getting a steady rise to China.

Bangladeshi exporters are also looking to the Japanese market as the hottest new export destination. Apparel exports to Japan started to pick up after the Japanese government announced the China+1 strategy in 2008. Japan is eager to reduce its dependence on China, the largest supplier of apparel items globally. The China+1 policy promote shifting production from China to other nations, such as Bangladesh. Being a member of the least developed countries’ group, Bangladesh has duty-free access to Japan for woven product (under the generalised system of preferences, or GSP). Knitwear faces a duty of 17 percent, as Japan clings to its aging knitwear industry.

The Japanese government has recently invited the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) leaders to discuss about duty-free access for knitwear. Earlier, the association leaders had asked Japan to relax rules-of-origin for knitwear items. If Japan allows duty-free knitwear, it will be a great opportunity for Bangladesh. In fact, Dhaka’s decision last year inspired exporters with a cash incentive of 5.0 percent of each apparel shipped to Japan. Manufacturers need separate production lines for the Japanese customers, as they never compromise on quality. On the other hand, Japanese buyers can afford to pay for high quality.

Garment exports to Japan maintained roughly a 175 percent growth rate in between 2008-10, according to the EPB. Even with the duty, Bangladesh registered a 231 percent rise in knitwear exports to $60 million in the first 10 months of the past fiscal year; and earned $90 million from woven garment exports — 121 percent growth over the same period a year earlier.

The Japanese textile and clothing investors are also coming to Bangladesh. Big entrepreneurs like Maruhisa, Yokohama Tape TM Textiles etc. have decided to invest a significant amount of money here. Three related companies — NI Teijin, CHORI and FVG — have opened liaison offices in Dhaka, and two companies opened quality-control inspection centres (PQC and K2) to meet Japanese national standards.

Meanwhile, a Bangladesh Garment Manufacturers and Exporters Association (BGMEA) delegation visited some Latin American countries to assess, explore and prepare for current and future potential of Bangladesh’s garment exports. During the visit, tremendous responses were received from importers and buyers of those countries. Rough reckoning says Bangladesh can fetch US$400 million from apparel exports to three Latin American countries in the next three years. These countries are Brazil, Mexico and Chile.

The main obstacle to raising garment exports to Latin America is the absence of Bangladesh missions in those countries. If government missions are opened in the countries, then it would be convenient for Bangladesh exporters to catch market there,textile experts say.

Brazil’s readymade garment import amounted to $ 767.072 million last year, of which $303.631 million knitwear and $463.441 million woven, while Bangladesh’s export to that country was $50.287 million ($ 33.599 million knitwear and $16.688 million woven).

Mexico’s import totalled to $1,947.85 million last year, ($982.58 million knitwear and $965.27 million woven), of which Bangladesh shared $114.01 million ($61.76 million knitwear and $52.25 million). Out of Chile’s total RMG import to the tune of $ 1,074.83 million last year ($517.39 million knitwear and $557.44 million woven) Bangladesh took a part of $7.47 million ($ 5.26 million knitwear and $2.21 million). The Mexican government has agreed to allow any Bangladesh businessman holding a US visa to visit that country. Besides these countries, Bangladesh is eyeing opening new market for RMG export to Russia, Turkey and Colombia.

RMG buying houses, both local and foreign, are now growing rapidly in Bangladesh, as the country has become a lucrative place for RMG outsourcing on the appreciation of Chinese currency against the greenback. As part of their business expansion, foreign buying houses are eying to set up more liaison offices here. The buying houses including M&S, Adidas and Tesco have already published advertisements in newspapers to recruit experienced merchandisers for such liaison offices to collect RMG products at a competitive price from local garment units.

There is no denying that the country’s export witnessed a significant growth during the last two decades due to growing competitive strength of the local exporters, mainly the RMG exporters, against their rivals from countries like India, China, Vietnam and Pakistan. Among other factors, efforts of the private entrepreneurs and the provision of cash incentive played a significant role in export growth. Cash incentives offered by the government also helped to build up many backward linkage industries and generated employment.

The garment industry has now emerged as a prime industrial sector in the country. More than five million people are directly and indirectly employed in the sector. Also, the local apparel industry is facing stiff competition in the world market. There is a need for developing forward linkage industries for sustaining in the competitive markets. Overall situation in the garment sector is much better now. But still, there should be more improvements in the social sector where workers’ living conditions are conspicuously tagged.

Source: thefinancialexpress-bd.com