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Corporate - July 26, 2022

China taking half of BD leather at lower price

Mahfuja Mukul: The biggest brands of leather products in the world are European-American. Buyers of those brands give utmost importance to quality, environment and management of tanneries while buying leather. Must have Leather Working Group (LWG) certificate. The only institution in the country has that full certificate. That is why Bangladesh is lagging behind in the world market despite the good quality of leather.
Using this opportunity, Chinese companies are buying leather at a low price. China does not attach much importance to this document. Although unable to provide specific information, Bangladesh Tanners Association (BTA) says that about 70 percent of leather and leather products are exported from the country. Half of the exports go to China alone. The remaining 30 percent is used in the local industry of the country.
According to the data of BTA, among the exportable leather, Japan, South Korea, Vietnam and three European countries, England, Italy and Portugal, export the most. Besides, some skins are sold in some countries of America. The amount of leather exported by these countries is equal to or slightly more leather is exported only to China. Where leather prices are less than half of those countries.
In this regard, the general secretary of BTA Sakhawat Ullah told that we are forced to stay in China’s syndicate market only because the compliance issue is not right. I can’t use it even though it has unlimited source worldwide. Not certified by the Leather Working Group (LWG), the global certification body for the leather industry. As a result, I am failing to capture the big market. Again, it is not possible to ensure the fair price of leather in the local market.
Traders say they are forced to export leather to China at low prices. At present, sales of leather products have increased in various countries of Europe and America after overcoming the effects of Corona. As a result, prices in the world market also increased. China is taking half of the leather from the country at a very low price.
Ashiqur Rahman, managing director of Tajin Leather Corporation said that most exporters cannot take advantage of the increase in the price of leather in the international market. Because there is no export due to lack of LWG certificate. Brands from those countries that used to export to those countries have now made LWG certification mandatory. As a result, the order is being cancelled.
Comparing the markets of China and Europe, he said, while in Europe, leather is two dollars 80 cents per square foot (1 dollar at 100 cents), it has to be sold in China from 90 cents to 1 dollar 20 cents.
He said, we are giving half the leather to China. Then the extent of our losses can be easily estimated.
However, despite various setbacks, exports of leather and leather products have increased significantly in the last financial year. According to the Export Promotion Bureau (EPB), Bangladesh exported leather and leather products worth $124.52 million in the last financial year (2021-22). There has been a growth of 32.23 percent in exports from the previous financial year.
According to the data, the export of leather and leather products has reached hundreds of crores after several years. Due to environmental pollution, the exports of this sector started to decrease after the financial year 2016-17. The sector turned around again in the outgoing financial year after two consecutive years of exports being below 100 billion dollars.
In addition to raw leather, leather footwear, belts, wallets, various types of ladies’ bags, various types of boxes, jackets, handgloves, car accessories are being exported from Bangladesh. They are being prepared in finished leather (processed) by a handful of organizations in the country. In many cases, wet blue leather exported from Bangladesh is returning to Bangladesh as finished leather. Domestic companies are buying them at double the price and making products with them.
In this regard, BTA president Shaheen Ahmed told that until 2015, major brands of Europe and America bought leather and leather products from Bangladesh. Then due to LWG these buyers are not taking the products. However, the demand for leather products is increasing every year. Wetblue leather exported from Bangladesh is returning to Bangladesh as finished leather in terms of product manufacturing. We have to buy at double price. It is simply due to lack of compliance.
Businessmen and experts in this sector say that if it is possible to export leather and products to the world’s biggest brands, export income of 10 billion dollars is possible from this sector by 2030. That is why the compliance of this sector must be ensured. Central Effluent Treatment Plant or CETP in Savar Leather Industrial City must pass international standards. Besides, solid waste management is also required properly. That is why the government should give them policy support.
If the environmental and management problems of the tanneries are resolved, this sector will become extremely promising.

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