Home Apparel Market diversification efforts go haywire

Market diversification efforts go haywire

Exports of apparel items to potential non-traditional markets declined significantly in the just-concluded financial year, undermining the country’s efforts to diversify destinations, insiders have said.They said although there are good potentials of exports to non-traditional markets, those remained untapped mainly because of the absence of effective measures from both exporters and the government.Australia, Japan, China, Chile, Brazil, Russia, South Africa, New Zealand, Malaysia, Korea, India and Turkey are being considered non-traditional emerging markets for apparels, while the United States, European Union and Canadian markets are known as traditional.Garment exports to such destinations except Chile, China and Russia declined drastically in the fiscal year 2016-17, according to official data.Shipments to Brazil, Korea, Mexico, South Africa and Turkey slid by 26.97 per cent, 16.97 per cent, 16.86 per cent and 14.87 per cent respectively in July-June period of the fiscal 2016-17 fiscal compared to the same period a year ago.Exports to India, Japan and Australia dropped by 4.84 per cent, 3.87 per cent and 8.52 per cent respectively in the last fiscal year.Some 15 per cent of the country’s total readymade garment exports come from the non-traditional markets including the three destinations, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data.Total exports of garment products to the non-traditional markets witnessed a 1.59 per cent negative growth with earnings worth $ 4.28 billion in the last fiscal year.Local garment exporters attributed sluggish global demand followed by low unit price of apparel items and high duty in many non-traditional markets to the dismal growth.They also blamed internal issues such as rising cost of doing business and the closure of a good number of factories due to compliance requirements prescribed by the western retailers platforms-Accord and Alliance-to such a situation.They also held the stronger local currency against the US dollar responsible, which was making the country costlier.Moreover, the currencies were weaker in the importing countries, especially in Brazil, India, and Turkey, which contributed to sapping demand.Exporters and experts blamed the high duty–33 per cent in Brazil, 30 per cent in both Turkey and Mexico and 40 to 50 per cent in South Africa for the poor volume of exports to those countries.While cost is going up in China, it is still grabbing the larger share in the non-traditional markets backed by its own raw materials, which helped the East Asian country produce products in line with the market demand, they added.According to the International Trade Centre (ITC) data, South Korea imported apparels of $8.17 billion in 2016 including $3.28 billion from China and $2.41 billion from Vietnam.But Bangladesh with only $199 million exports is in the sixth position in the market.In South African market, dominated by China, the country’s position is the seventh with $65.08 million exports out of its total import worth $1.61 billion in 2016, according to ITC data.India’s export to South Africa was higher than Bangladesh, it showed.In the Japanese market, China’s exports stood at $16.96 billion, Vietnam’s $3.07 billion out of its total $26.24 billion import in 2016. Bangladesh fetched $902.96 million from the market in 2016.Brazil imported apparels worth $1.24 billion in 2016-$672.21 million from China and $107 million from Bangladesh.  The global demand for apparel is declining in the last couple of years leaving a negative impact on local exports, Faruque Hassan, a vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), told the FE.The price of apparels also fell while cost of doing business has significantly gone up, he added.Currency devaluation in importing countries is another factor, said Md Hatem, a former vice president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).But local currency still remained stronger than US dollar, he added.Many factories have been shut due to compliance issues, which also had an adverse impact on the production level, he said.Khondaker Golam Moazzem, research director of the Centre for Policy Dialogue (CPD), recommended measures from the government level for reducing the rate of duty.He also suggested incentive package to help sustain the competitiveness.


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