Bangladesh’s garment exports grow by leaps and bounds
Asia is quite helpless right now – China’s economic growth is slowing down, dragging down its neighboring countries, and the market demand for products from these countries has weakened, especially technology products, which has directly caused the struggle of Asia’s supply chain. However, Quartz reported that while the entire region is in weakness, Bangladesh is thriving and has just broken the historical record for single-month exports.
The South Asian country’s export trade volume reached US$3.2 billion in December 2015, a record high. At the same time, the World Bank predicts that Bangladesh’s GDP will grow by 6.7% in 2016, one of the fastest growing rates in the world. So, what is the secret of Bangladesh? The answer is the world’s insatiable appetite for cheap clothing. Among Bangladesh’s exports that month, the value of these goods reached US$2.67 billion, accounting for 83% of the total value.
Bangladesh is the world’s second largest apparel exporter, after China. Their clothing is mainly sold to the European Union and the United States, and business has been very good recently. For example, from November 2014 to November 2015, U.S. apparel imports from Bangladesh increased by 16%. H&M is one of Bangladesh’s largest customers, and its business continues to expand. Among Bangladesh’s growing exports, clothing accounts for an increasing share, reaching 81.7% last year. The garment industry has become the engine of Bangladesh’s economic growth.
The Rana Plaza collapse in 2013 dealt a major blow to Bangladesh’s garment manufacturing industry. Although the industry has now regained its vitality, moral concerns still exist. After all, much of what makes the country so attractive is that wages are incredibly low and there are still many factories with safety hazards. If workers dare to complain, they are often verbally abused and mistreated.
Experts also pointed out that Bangladesh needs to work towards diversification of exports. If they want to develop further, they should start to climb up the value chain, such as entering the production of electronic products.
Vietnam will be an important opponent on Bangladesh’s path forward. It is also a top option in the eyes of clothing brands looking for low-cost alternatives to China – wages in China have risen sharply in recent years, gradually losing the favor of these brands. Even if Vietnam’s export growth rate in 2015 was the slowest in recent years, it may be completely different this year. Once the TPP agreement is passed, Vietnam will become more attractive, especially to American companies. Vietnamese officials once estimated that these new opportunities could increase Vietnam’s footwear exports by 20%. Of course, Bangladesh will continue to grow and continue to vigorously develop the ready-made garment industry. The country aims to double its garment exports by 2021.
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