Despite many ups and downs along the path, the garment industry of Bangladesh has been able to maintain its strong footing in the global clothing market. The industry is a great example of resilience as it came out strongly after one of the biggest industrial disasters in Bangladesh that jeopardised the whole sector. Since the incident, the RMG industry has made great progress in ensuring workers’ safety and a few companies have taken a step further to establish eco-friendly green factories in Bangladesh. Although, the industry has probably avoided one of the greatest threats in recent history, there is little room for complacency due to competitive dynamics and evolving trends in the global clothing market.First of all, let us have a closer look at our competitors in the South East Asian region. China, still the number one clothing exporter, is slowly losing its market share. This is a great news for us, but we are not alone in trying to grab their share of the market. In fact, our South East Asian neighbours are better poised to grab that share. A World Bank study in 2016 estimated that if the Chinese export prices rose by 10 per cent, Bangladesh would experience a 13.58 per cent increase in apparel exports to the U.S. market. However, the same rise in Chinese export prices would increase Vietnam’s exports by 37.70 per cent and Cambodia’s exports by 51.25 per cent. This data indicates that clothes manufactured in Vietnam and Cambodia are closer substitute to Chinese products than what is produced in Bangladesh. Bangladesh focuses heavily on cotton based products, whereas a much larger share of the apparel export basket of China and our South East Asian competitors comes from man-made fiber (MMF) based products. From 2005 to 2012, MMF based apparel saw the strongest growth in global demand for apparel, indicating the missing opportunity for the RMG sector of Bangladesh.Just as important as product diversification is the diversification of market. Some countries are successfully using free trade agreements to gain market access. For instance, Vietnam has signed 17 free trade deals in total, and these agreements have been reported as a major driver of strong export growth in its textile and garment industry. The signing of the Europe-Vietnam Free Trade Agreement (EVFTA) is at the final stages. When signed, this agreement will remove over 99 per cent of customs duties on goods traded between Vietnam and the European Union. While Bangladesh currently has GSP facilities in European market, it may look for greater market access in other regions using free trade agreements if the cost benefit analysis shows net positive result. Recent data shows great promise as combined garment exports to India, China and Japan rose by around 19.8 per cent in FY 2017-18 from FY2016-17. However, we are still heavily dependent on U.S. and European markets. These two markets only constitute 49 per cent of Chinese apparel exports. South East Asian countries too are not as dependent as Bangladesh is on these two markets.Bangladesh also needs to be aware about the trends in the global apparel market. China with its massive middle class population will be a major force for consumption and global growth. McKinsey & Company, a consulting firm, reported that 76 per cent of Chinese urban population would be middle class by 2022. Bangladesh needs to make strategic moves to tap into the consumer market in China and in other Asian countries. Another key trend emerging in the global apparel market is ethical fashion. The market for Eco-Apparel in U.S. is $5 billion, and it is rising rapidly. In a global survey by Euromonitor International, majority of the participants responded that they tried to make a positive impact on environment through their daily activities. The growing consciousness about environment, society, and the people involved in the apparel value chain offers both opportunities and threats for the RMG industry of Bangladesh. On the one hand, the RMG industry of Bangladesh must ensure workers’ rights and minimize negative impact of apparel manufacturing on the environment. On the other hand, by being socially and environmentally more responsible, it can become a major player in the emerging ethical fashion market.
