Traditional RMG markets shrinking

Exporters looking for alternatives

Mahfuja Mukul: About 84 percent of the country’s total export earnings come from the garment industry. And the big market for these domestically made clothes is the United States and European countries. Among these, the United States is the single largest market for garments made in Bangladesh. 85 percent of the total revenue from garment exports comes from these conventional markets. However, Bangladesh’s garment exports to major markets have declined in recent times.
The same picture is also seen in Canada, another major market for Bangladesh’s garment exports. The reduction of exports to the major markets of clothing products has caused concern among the entrepreneurs. If the market conditions do not change, the export income from this sector may begin to decrease quickly.
However, in the meantime, entrepreneurs of the clothing industry have started to look for alternative markets. They are less dependent on Europe-America and tend to new or non-traditional markets. Various initiatives have been taken to expand non-traditional markets to avoid over-dependence on large markets. Cash assistance at the rate of 4 percent is also being given to exports by the government. All in all, the non-traditional or alternative market of clothing is becoming popular day by day in this market of export of domestic clothing products.
Industry officials say that the decline in exports to major markets is making them reconsider. There is also the threat of sanctions on the issue of protecting labor rights. Bangladesh is also having a kind of tension with the United States on the issue of the twelfth national election. All in all, entrepreneurs are worried about the export market. But the alternative market is showing them hope. However, the export of readymade garments to new or non-traditional markets is comparatively less so far.
The data of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and Export Promotion Bureau (EPB) says that Bangladesh has exported apparel products to European member countries in the first five months (July-November) of the current fiscal year (2023-24) as compared to the same period of the previous fiscal year. 0.15 percent less than (first five months).
In the fiscal year 2022-23, exports of ready-made garments to EU countries increased by nearly 10 percent over the previous fiscal year. Earlier in 2021-22 fiscal year it increased by 34 percent over the previous fiscal year and in 2020-21 fiscal year it increased by 14 percent over the previous fiscal year.
Managing Director of Bangladesh Apparel Exchange Mohiuddin Rubel feels that globally 2023 was not as good as 2022 for the apparel sector. According to World Trade Organization (WTO) data he told, according to the organization’s data, in 2022, the total global apparel exports were worth $576 billion. It is likely to decrease slightly in 2023. In the meantime, the markets of Europe and America have reduced the purchase orders or imports of garments.
Analysis of the WTO report shows that Bangladesh holds the second position after China in garment exports. Of the $576 billion in ready-made garments sold in the world market during the year, China exported $182 billion of ready-made garments, which was 31.67 percent of the total market. In the same year (in 2022), Bangladesh occupied 7.87 percent of the garment market, which was 6.37 percent in the previous year in 2021.
In financial terms, the total garment export from Bangladesh in 2022 is $45.35 billion, where the growth is 32.60 percent. According to the report, the top eight apparel exporting countries in 2022 are China, Bangladesh, Vietnam, Turkey, India, Indonesia, Cambodia and the United States respectively.
Mohiuddin Rubel said, in the new year (in 2024) overall we will be under a little pressure. At the same time, we are also getting indications of increase in the demand of our garments in the international market. If we can maintain the internal supply chain and increase investment in new products and markets, we can sustain the desired growth.
According to the data, in the five months of the current fiscal year, exports of clothing products to European countries were worth $905 million, which was $907 million in the same period of the fiscal year 2022-23 (first five months). That is, during this time, the total export revenue of clothing in the EU countries fell from 49.48 percent to 47 percent.
Exports to Germany, one of the largest markets, fell by 15 percent in the last five months (July-November). Bangladesh’s garment exports to the country during the period under discussion were $2.31 billion, which was $2.72 billion in the same period of last financial year. According to this, exports decreased by $41 million. In the last five months, apparel exports to the United States have decreased by 5.76 percent. In the first five months of the last financial year (July-November), clothing sales in the country were worth $3.48 billion, but in the same period of the current financial year, it fell to $3.28 billion. According to this, the export to the United States has decreased by $20 million.
BGMEA president Farooq Hasan told that the majority of garment exports come from traditional big markets. Decline in exports to these markets is a concern. As a result of declining exports to conventional markets, overall apparel exports may turn negative at the end of the fiscal year. On the other hand, the gradual increase in exports to new and non-traditional markets is also a positive sign for the country’s garment industry.
The entrepreneurs of this sector say that the pace of export to non-traditional markets is quite consistent. Despite the adverse global conditions, exports to new markets are increasing. In the first quarter (July-September) of the current financial year, exports to non-traditional markets increased as compared to other markets. As exporters’ confidence in those markets is increasing, importers are also showing interest in Bangladeshi-made garments. Above all, entrepreneurial initiatives and government cash support for exports are encouraging the expansion of non-traditional markets.
Among the non-traditional markets, Bangladesh sells relatively more garments to 18 countries. One of the major markets is Japan. In the first quarter (July-September) of the current fiscal year, apparel exports to Japan increased by more than 39 percent. At this time, the amount of clothing export in the country is about $450 million. The second major market for non-traditional is Australia. Where exports increased at a higher rate than Japan. Exports to Australia increased by 54 percent. There is export continuity in this unconventional market as well. In the first three months of the fiscal year, the country has exported a total of $344.7 million worth of garments.
BGMEA President Farooq Hasan said, “In BGMEA, we have talked about taking initiatives to create new and alternative markets for the export of garment products even before taking responsibility. That’s how we did it. I have done branding of Bangladesh clothes in different countries with diplomatic cooperation.
He said, the decrease in exports in the conventional market has made us worried. If this situation continues, it may cause danger for the export sector. Exporters are worried whether strained relations with the US and fears of sanctions over labor rights issues will affect garment exports in the coming days. In addition, the US central bank, the Federal Reserve, is trying to control imports by increasing policy interest rates to curb inflation.