Amidst the slowdown in garment shipment to the European Union and the United States owing to persistently higher inflation, the Asian markets are emerging as the saviour for the apparel exporters from Bangladesh.
Consumers in the two largest garment export destinations of Bangladesh have remained concerned about the lasting economic uncertainty caused by the raging Russia-Ukraine war.
As a result, the earnings from the garment export to the US, Bangladesh’s single largest market, registered a paltry growth of 1.11 per cent year-on-year in the first six months of the current financial year. Similarly, the receipts from the EU market clocked a 16.61 per cent growth.
On the other hand, the export of apparel items to the major Asian markets posted substantial growth during the period and the momentum is expected to continue in the coming years as the continent gets richer.
For instance, the shipment to Japan, a very promising market for Bangladesh, rose 42.54 per cent year-on-year to $754.72 million between July and December. It was $529.46 million in the identical period a year earlier, data from the Export Promotion Bureau (EPB) showed.
The export to India surged around 50 per cent to $548.87 million and it climbed 35.66 per cent to $255.49 million in South Korea and 97.52 per cent to $164.85 million in Malaysia.
Garment sales to Turkey appear to be rebounding: the export to the country had been on the decline after Ankara maintained a 17 per cent duty on the import of garment items from Bangladesh since 2017.
Still, the apparel shipment to Turkey rose 83.70 per cent to $117.43 million in July-December.
The export to Saudi Arabia was up 41.62 per cent to $104.31 million and to the United Arab Emirates by 22.28 per cent to $155.35 million.
The shipment advanced 15.27 per cent to $127.24 million in China, which itself is the largest apparel supplier in the world.
“We are studying the Asian markets very seriously as part of our roadmap,” said Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
He said this was not a normal time for the garment business as consumers in Bangladesh’s traditional export markets such as the US, Canada, the UK and the European Union are going through a tough time owing to higher consumer prices driven by the global energy shortage and supply disruptions.
“So, we are trying to ship more goods to Asia and other emerging markets like those in Latin America, Africa and Australia.”
The BGMEA has set a target to generate $100 billion from apparel shipments by 2030. Apparel manufacturers raked in $42.61 billion in the last fiscal year, which ended in June.
“Our target is that we will maintain our EU and US markets as usual. At the same time, we will continue our drives to increase shipments to the Asian markets,” said Hassan.
The BGMEA expects to release the roadmap in the next two months and its experts have also suggested expanding Bangladesh’s apparel sales in Asia as the base of the middle-income consumer group is expanding in the countries in the continent.
More than 1 billion Asians are set to join the global middle class by 2030, according to Vienna-based World Data Lab.
Asian nations make up more than half of the world’s middle class, but they account for only 41 per cent of that group’s consumer spending. The share is set to exceed 50 per cent within a decade.
The Asia-Pacific region is set to account for more than 40 per cent of the global menswear and womenswear sales by 2024, thanks to its high population density, increasing internet penetration, economic growth and the increased spending ability of consumers, said London-based data and analytics company GlobalData in a forecast last year.
Some Asian markets such as India, China, Japan and South Korea are also major suppliers of raw materials to Bangladesh’s $52-billion ready-made garment sector.
The garment shipment to Russia, however, declined in July- December because of the ongoing war.
Exporters fetched $180.64 million in the first half of FY23, which was $341.21 million during the same period a year ago, a decline of 47.06 per cent.
Owing to the war, Bangladesh has been missing out on the promising market where shipments nearly touched $1 billion just before the conflict erupted in February.
In early March last year, global payments messaging network SWIFT asked banks in Bangladesh to suspend transactions with half a dozen Russian lenders since they are facing sanctions from the US and the EU over Moscow’s invasion of Ukraine, local exporters have been forced to send goods to Russia through alternative routes and receive payments in alternative currencies.
Despite enjoying a duty-free market access, Bangladesh’s exports to China are not picking up, said M A Razzaque, research director of the Policy Research Institute of Bangladesh in a study report on “Making: The Most of Market Access in China” last year.
The imported apparel market in China is about $10 billion compared to $180 billion in the EU and almost $90 billion in the US.
Due to the smaller market for imported apparel items, it is difficult for Bangladesh to succeed in the Chinese market relying only on clothing items, Razzaque said in the report.
