Continued efforts are being made by Bangladesh to broaden its export base into other markets with the aim of capturing a larger portion of South Korea’s garment industry, which is now valued at 10.5 billion South Korean won.
Business insiders believe that Bangladeshi entrepreneurs now have the opportunity to seize the Korean market, which currently obtains 34% of its textile items from Beijing. This is due to the fact that the manufacturing of clothes is progressively shifting out of China as a result of rising costs.
According to the Bangladesh Garment Manufacturers and Exporters Association, the apparel industry anticipates reaching the $1 billion mark in exports to Korea in the current fiscal year with a diverse basket of items including lingerie, denim, shirt, jacket, and pullover. This was stated by the association (BGMEA). Because of the extremely low pricing that can be found in Bangladesh, Korean buyers and companies are exhibiting an interest in boosting the amount of their sourcing that comes from that nation.
According to the Export Promotion Bureau, Bangladesh’s share of the Korean clothing market has increased steadily but slowly since 2017, reaching a little more than 4% with total export revenues of $440 million in FY22. This information comes from the Bangladesh Export Promotion Bureau (EPB).
Despite the slowdown caused by the pandemic, there has been an increase in the quantity of apparel that has been exported to the Korean market for the past five years in a row. The owners of companies in this sector are of the opinion that a significant push is required in order to grow their share of the South Korean market in this year. This push will come from the shifting orders coming from China, Vietnam, and Myanmar.
According to data provided by EPB, the amount of apparel that was shipped to the South Korean market increased by approximately 70% in the first two months of the current fiscal year (July and August), reaching $98.86 million. This compares to the amount that was shipped during the same time period in the previous fiscal year, which was $58.28 million.
Shinsung Tongsan, a Korean retailer that owns three brands – Topten, Pulham, and Ziozia – is going to open a sourcing office in Dhaka by October of this year, according to the head of business development of a buying house in Dhaka who has knowledge of the development. Shinsung Tongsan is a subsidiary of Shinsung Group, which is headquartered in Seoul.
The store, whose Topten brand generates annual sales of $430 million, has only recently begun importing knitwear goods alongside its primary imports, which include underwear, denim, and shirts. Top Ten sales generate $430 million annually. Observation:
Furthermore, Coupang, the largest e-commerce company based in Seoul and often referred to as the Korean Amazon, has begun importing garment items from Bangladesh. Coupang is known as the Korean Amazon.
Beginning on the 22nd of October, a delegation from Bangladesh consisting of officials of RMG owners, the trade ministry, the EPB, the Bangladesh Bank, and the Bangladesh Investment Development Authority will travel to Korea for the purpose of finding new purchasers and attracting investments. The President of the BGMEA, Faruque Hassan, stated the following to The Business Standard: “We will reach out to major retailers and brands in Korea to encourage them to obtain their products from us. Additionally, we will present them with the opportunity to work together with us in the production of goods based on man-made fibers.”
Faruque reported that the BGMEA has identified numerous possible export markets through their own investigation. The most notable of these potential export markets are located in the Middle East, Africa, India, and South and North Korea respectively. He went on to say that they have engaged the services of a company that is well-known all over the world to research and analyze global business opportunities and markets for their products.
In response to a question posed by TBS, BGMEA Vice-President Shahidullah Azim stated, “We hope our next month’s Korean mission will help our apparel exports to the country reach $5 billion by 2030.” This statement was made in reference to a previous trade mission to Latin America that helped increase apparel exports to more than $6 billion from a mere $600 million in the destination over the course of the last 10 years.
He made the observation that they will bring their export earnings from Korea up to that level, mostly as a result of the significant demand for high-value winter clothes and denim in that country. Other possible products that have a healthy demand in the country include non-leather footwear, home textiles, jute and jute goods, and so on. In a recent interview with TBS, the South Korean Ambassador to Bangladesh, Lee Jang-keun, stated that South Korea is planning to make future investments in a variety of different industries in addition to ready-made clothing. “Going beyond the RMG is one possibility for the future that we are considering. We want businesses from a variety of industries to invest in this area, “he stated.
The figures provided by the International Trade Center (ITC) place South Korea’s garment imports in 2021 at a total value of $10.53 billion. After China, Vietnam, Italy, and Indonesia make up the top four export sources, with a combined total of 3.54 billion dollars.
On the other hand, the EPB reports that Bangladesh only shipped $530 million worth of goods to Korea in the fiscal year 2022, of which garment shipments accounted for $440 million of those total exports. The United States ranks Korea as its 20th greatest export partner out of 202 countries and regions.
In 1979, the Bangladeshi company Desh Garments, a pioneer in the export-oriented garment sector, dispatched 133 workers and mid-level managers to the internationally known Daewoo’s garment manufacturing plant in Busan, South Korea, to obtain training in sophisticated machinery. After undergoing training in South Korea for a period of six months, the team returned to their native country. Together with those individuals, Desh Garments established a new facility, and this event marked the beginning of a new journey toward making Bangladesh an economically self-sufficient nation through the export of garments.
The private sector and government agencies have collaborated to launch a single-country-focused initiative to locate new export markets, and a visit to Korea is scheduled to take place in October as part of this initiative. The Export Promotion Agency will help exporters showcase their products at a trade and investment fair that will be held in Riyadh from October 6-8. The fair is being organized to help exporters gain a piece of Saudi Arabia’s over $152 billion import market.
The annual imports of food and beverages, clothes, as well as jute and leather, into the kingdom total $35 billion, and Bangladesh has the ability to export these products. The Bespoke Garment Manufacturers and Exporters Association (BGMEA) has also planned to organize export exhibitions in China and Japan in order to investigate prospective markets other than its regular destinations in Europe and the United States of America. Yesterday, the Minister of Commerce, Tipu Munshi, addressed the media and discussed the government’s goal of increasing product exports to $80 billion by 2024 and $100 billion by 2026.
In addition to ready-made garments, which account for 82% of the country’s total export, the government is investigating Asian markets for approximately ten other products, some of which include information and communications technology (ICT), leather, plastic, light engineering, and jute.
Reference:
Uddin, Jasim. “Korea RMG Market Beckons.” The Business Standard, 17 Sept. 2022, https://www.tbsnews.net/economy/korea-rmg-market-beckons-498294
