The textile and clothing industries provide a single source of growth in Bangladesh’s rapidly developing economy. Exports of textiles and garments are the principal source of foreign exchange earnings. By 2002 itself, exports of textiles, clothing, and ready-made garments (RMG) accounted for 77 percent of Bangladesh’s total merchandise exports. In the last seven years, Bangladesh’s garment industry has increased its annual revenue from $19 billion to $34 billion—a 79 percent rise. This year it is expected to cross $40 billion. This makes the country the second-largest exporter of garments in the world, with the sector accounting for 84 percent of Bangladesh’s total export earnings. It must also be noted that the highest garment exporter in the world is China, with an export earning of above $130 billion, accounting for one-third of garments exports in the world. So, the gap is huge, and Bangladesh has a great scope to expand, being second yet only accounting for seven percent of the global garment exports.
As Bangladesh celebrates 50 years of independence, global attention is focused on the remarkable economic and social progress the country has achieved in recent decades. Even with the setbacks of the Covid-19 pandemic, the South Asian nation is on track to becoming a middle-income country within a decade. The ready-made garment (RMG) industry is a mainstay of this economic success story. This comes on the back of the sector’s rapid growth and modernization over the past decade—as well as the strides it has made in improving conditions for the country’s approximately four million garment workers. It is to be noted that eight out of the 10 best garments factories of the world are in Bangladesh. With China focusing more on higher technology, the scope has got further enhanced for Bangladesh now.
Today, Bangladesh’s RMG sector is a frontrunner in transparency regarding factory safety and value-chain responsibility, thanks to initiatives launched in the aftermath of the disasters like those at Rana Plaza—including the Accord on Fire and Building Safety in Bangladesh, the Alliance for Bangladesh Worker Safety, and the RMG Sustainability Council. These measures led to the closure of hundreds of unsafe, bottom-tier factories and the scaling-up of remediation activities in many others.
Challenges
However, the pandemic has stalled the sector’s progress at a crucial moment, just as global shifts in fashion sourcing threaten Bangladesh’s position in industry supply chains. There were already signs of a slowdown, with the second half of 2019 showing negative growth compared to 2018. Then Covid-19 struck: in 2020, global lockdowns triggered order reductions, cancellations, payment delays, and renegotiation of terms. As the pandemic threatened the lives and livelihoods of Bangladeshi workers, many smaller, less well-funded factories closed their doors, and competition for smaller orders increased.
While Bangladesh’s RMG sector remains a strong exporter to Europe’s fashion industry and has grown its market share significantly over the past decade, this trend may not continue: the new preferential trade agreement between the European Union (EU) and Vietnam, launched in August 2020, could well lead to apparel exports from Vietnam outperforming Bangladesh’s.
A key strategy for the sector’s growth over the past decade has been to diversify customer countries and move to more complex products and value-added services. Bangladesh’s RMG sector has made progress in broadening its customer portfolio to manage risks and adapt to changing demand patterns in the global fashion market. However, Europe (62 percent of export value) and the US (18 percent of export value) remain Bangladesh’s RMG industry’s leading customer markets, although dependency on the US has decreased. There is enough room to increase exports to non-traditional markets, particularly as traditional markets are showing lower growth in apparel retail sales. Latin America and Afro-Asian markets for different products and price-range are now open.
The markets for manmade textiles and garments instead of regular cotton garments are opening up a new vista in the global garments market. For instance, there is now greater capacity to produce garments made from synthetic fibers; manufacture more complex products such as outerwear, tailored items, and lingerie; and provide new washes, prints, and laser finishings. There also has been some increase in vertical integration of the supply chain, with the result that more suppliers are now able to offer lead times below the standard 90 days.
The country’s RMG sector is by no means homogenous, however. Bangladesh’s advanced manufacturers are characterized by a high degree of entrepreneurship and strategic management; these firms have made investments in productivity improvement, digitization, automation, and sustainability, and they operate according to international best practices. In contrast, the small operators that make up the majority of the market typically focus on cotton-made textiles; they tend to lack financial security and lag in management capability, and have also been hit hardest by the pandemic.
A second major challenge facing the sector has been worker empowerment and the gender gap. Around two-thirds of all workers in the garments industry in Bangladesh are women, often less paid, and less trained. The progress has been slow, and Covid-19 has highlighted and perhaps exacerbated, the precarious position of many Bangladeshi apparel workers.
The sector’s participation in new initiatives regarding climate change and circularity has advanced the sustainability agenda, for example through the Circular Fashion Partnership, a multi-stakeholder initiative aiming to scale up the recycling of production waste. Furthermore, more than 1,500 Bangladeshi companies are certified by the Global Organic Textile Standard, the second-highest number in any country of the world.
Finally, infrastructure remains one of the biggest issues facing the RMG sector. For its apparel industry to prosper in the future, Bangladesh will need to strengthen its transport, energy, and digitization infrastructure. Several major infrastructure projects that are under development could significantly improve Bangladesh’s position. These include the Padma bridge functioning fully and Bangladesh’s first deep-sea port, the Matabari development, which is expected to be functional by 2025, complete with a new container terminal.
With the nation being now becoming recognized as a developing nation, there are newer challenges. It will need to rise to competing without preferential trade access, meeting decreased demand from traditional customer markets, and making a fundamental shift toward a demand-driven and more sustainable sourcing model, apart from also moving into non-cotton man-made yarns and garments.
In quest of a Bangladeshi Brand
One of the under-rated areas in the garments industry of Bangladesh, is the slow growth of Bangladeshi clothing brands. While Grameen Check, Ecstasy, Rong, NagarPolli, Cats Eye, Dorjibari, Trendz, Yellow, Arong, Sailor, Desi Dash, et al are making impressive inroads in the domestic and some South Asian markets, they are far away from any global positioning yet. While Bangladeshi garments make the mainstay of many global brands like Zara, H&M, Primark, Gap, Austin Reed, Peacock, New Look, etc, and often Made in Bangladesh is also noted alongside the global brand names, there hardly is a Bangladesh originating brand selling in global markets. While Paris, Milan, New York, London, Copenhagen, Tokyo, Mumbai et al make the leading fashion destinations of the world with mega Fashion Weeks, there is no Dhaka Fashion Week in the fashion calendar across the globe.
So, in the next phase of evolution of Bangladeshi Garments, the planned rise of a local brand, or some, beginning with Asia and Africa, then all over, is a much-expected natural course of action. Mass production for global brands must also be complemented well by niche branded production of desi brands going Asian to global. This will also depend upon the investment of education and the garment brand entrepreneurs on local designers and models (the only global name being that of Bibi Russell), and distinctive Bangla styles which can have acceptance as ethnic wear or comfort wear globally. That is the other next phase of the industry.
