Opportunities are widening as globally renowned apparel brands look to source more garments from Bangladesh amid the widening recovery from financial crisis.
Some buyers have already shifted to Bangladesh from competing countries, while others are increasing order quantities.
Prices of garments in China, Turkey, Sri Lanka, Cambodia and Vietnam have gone up due to higher production costs. Bangladesh has also diversified its product range and marketing over the last few years.
Apparel exports grew by more than 30 percent in the first quarter (July-September) of the current fiscal year, riding on high demand for competitively priced items.
Export Promotion Bureau data shows knit products worth $2.18 billion and woven worth $1.79 billion were exported during the time — 32 percent and 30 percent more than a year earlier.
Top German brands Hugo Boss and Adidas are in talks with local apparel-maker Viyellatex Group to buy direct for the first time, in 2011.
Michael Otto, chairman of Otto Gmbh and Co KG, said in an interview that the German retail chain is investing 20 million euros (Tk 197 crore) in Dhaka to run a social business that produces garments.
German lifestyle brand s.Oliver moved to a new, bigger Dhaka office last month to strengthen sourcing.
Retail giants including Wal-Mart, JC Penny, Zara, Tesco, IKEA, Marks and Spencer, H and M, G-Star Raw, Uniqlo and Li & Fung have also increased quantities purchased from Bangladesh.
Spanish retail chain Inditex Group, which manages eight brands (Zara, Pull and Bear, Massimo Dutti, Bershka, Stradivarius, Oysho, Zara Home and Uterqüe), also plans to expand sourcing.
Apparel exports to Japan, a newer market, started picking up after 2008, when Tokyo announced the China+1 strategyto shift sourcing focussed on China to other nations, such as Bangladesh.
Fast Retailing Company Ltd, which owns Japan’s casual-clothing chain Uniqlo, signed a $100,000 deal with Grameen Bank Group on July 13 to produce garments at the group’s factories. Uniqlo opened a liaison office in Dhaka in 2008.
Other Japanese companies, including Maruhisa, Yokohama Tape, TM Textiles, NI Teijin, CHORI, FVG and Onward Holdings Co, also began doing business in Bangladesh.
Apparel exports have grown to South Africa, New Zealand, Canada, Brazil, Mexico and Australia.
“It’ll not be difficult to double export earnings from apparels as international buyers are coming at such a higher rate,” said Abdus Salam Murshedy, president of Bangladesh Garment Manufacturers and Exporters Association.
But success hinges on a smooth supply of gas and power to the factories and relieving congestion at the Chittagong Port, he said.
Mohammad Hatem, vice-president of Bangladesh Knitwear Manufacturers and Exporters Association, said apparel-makers have the capacity to cater to additional orders, but the power crisis, and high cotton prices hold them back.
Economist Wahiduddin Mahmud said the sector has shown resilience in the face of global recession.
“While some effect of the recession was felt belatedly in early 2010, the industry seems to have emerged from it even stronger and more competitive in the global market,” he said.
“In fact, the main reason why Bangladesh’s garment export has been able to withstand the recession is its ability to capture higher shares of the US and European Union markets at a time when the total volume of garment trade has contracted.”
“The future looks even more promising, as China may increasingly lose its competitive edge in garment export due to its rising wage costs and a possible revaluation of its currency,” said Mahmud, a former caretaker government adviser.
“Among our garment entrepreneurs, those who are smart enough may now be able to exercise some bargaining power in price negotiations as well,” he added. “True, Bangladesh is known as a low-cost supplier of garments. But the low average unit price of exported garment is mainly due to the kind of basic apparel items that we export. For similar kinds of items, our exports fetch similar or sometimes even higher prices compared to those from, say, Vietnam or Pakistan.
“Yet our garment industry faces formidable challenges. Its competitiveness is mainly derived from low wages, which also remains a potential source of labour unrest, even with newly announced minimum wage rates. There are large variations across the garment factories in productivity and managerial efficiency. Improved productivity needs to be translated into better labour conditions. To stay competitive while maintaining sound labour relations will require a restructuring of the industry. That process will not be painless,” the economist said.
If the country wants to move up the value chain in global trade, a skilled labour force and better management are required. “That will also make it possible to raise wage rates as labour productivity increases,” he said.
The more immediate challenges are improving the efficiency of Chittagong Port and ensuring energy supplies, he added.
source: thedailystar.net
