Bangladesh slipped to seventh from its fifth position as US-based fashion companies’ apparel-sourcing destination in 2017 as they consider the country risky for trade compliance, according to a study. The much-valued compliance issues in the West outweigh the country’s best advantage in terms of price, the survey shows. The study, titled ‘2017 Fashion Industry Benchmarking Study’, found Bangladesh as the most competitive in terms of price but also the riskiest in terms of trade compliance. Jointly conducted by the United States Fashion Industry Association (USFIA) and the University of Delaware, the results of study were released last Thursday. It surveyed 34 executives from the US-based fashion companies between April and May 2017. This year, Bangladesh stands down as the seventh sourcing destination, with 61 per cent of respondents sourcing there, slipping from fifth (70 per cent) in 2016, the study report revealed. “‘Made in Bangladesh’ enjoys a prominent price advantage over many other Asian suppliers,” it said, adding that respondents say Bangladesh, Cambodia and India are relatively high-risk destinations in terms of compliance. Overall, respondents are cautious about expanding sourcing from Bangladesh over the next two years, with only 32 per cent expecting to somewhat increase sourcing there, and none expecting to substantially increase the trade. Respondents were much more optimistic about Bangladesh in 2015 and 2014 when as many as 42 per cent and 50 per cent of respondents, respectively, planned to expand sourcing from there, it added. Respondents said sourcing in Bangladesh is high-risk since compliance is so important to companies, it said. This risk level could be holding them back from increasing the sourcing of fashion garments. “Labor cost remains the top factor driving up sourcing cost in 2017, with 73 per cent of respondents expecting an increase,” it said, adding that wage levels continue to rise quickly in many Asian countries where US fashion companies primarily source, including China, Vietnam, Cambodia, Sri Lanka and Bangladesh. Raw materials and shipping fees are the drivers of sourcing cost this year, with 61 per cent and 58 per cent of respondents, respectively, expecting their costs to increase slightly. Around one-third of respondents expect the cost associated with factory compliance, meeting social and environmental standards, and trade barriers to increase in 2017, it showed, reminding the fact that more must be done to eliminate trade barriers and cut “red tape” on borders to help companies manage and reduce cost. Quoting US official data, it showed that Bangladesh and India were top suppliers for only two categories of apparel while Vietnam was the top supplier for five categories. Though US fashion companies intend to source more from Vietnam and Bangladesh in the next two years, imports from the two countries might grow at a relatively slow pace, it forecast. Bangladesh’s overall apparel exports to the US market fell by 5.47 per cent to $2.14 billion during January to May 2017 which was $2.26 billion during the corresponding period of 2016, data from Office of Textiles and Apparel (OTEXA) affiliated with the US Department of Commerce have shown. Vietnam’s apparel export grew by 6.95 per cent to $4.47 billion during the first five months of the current calendar year, it showed. The study also revealed that respondents unanimously opposed the US border-adjustment tax (BAT) proposal, and called for further removal of trade barriers, including restrictive rules of origin and high tariffs.
