Key Highlights:
- Eurostat’s data indicates a noteworthy surge in Bangladesh’s apparel exports to the EU by 8.5%, reaching around €1.3 billion in February
- In terms of volume, imports from Bangladesh experienced a 3.67% decrease, equivalent to 11.84 million kilograms
- In 2030, the global apparel market is expected to reach approximately $1135 billion, with Bangladesh aiming to surpass a $100-billion export milestone by then
With a keen eye for fashion, the European Union (EU), comprising diverse economies, has increasingly looked to Bangladesh to fulfill its apparel demands, elevating the South Asian nation to a prominent position in the worldwide apparel market.
Eurostat’s data indicates a noteworthy surge in Bangladesh’s apparel exports to the EU by 8.5%, reaching around €1.3 billion in February, marking the highest figure in 4 months. However, this surge contrasts with a notable 18.6% decline compared to the same period last year.
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Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), highlighted a recent increase in inquiries from Western buyers. Nevertheless, many manufacturers struggle to fulfill these orders due to buyers offering lower prices.
Hatem also stressed a shift in buyer preferences towards shorter lead times, which Bangladesh struggles to meet due to a gas crisis, resulting in an increase in shipment times to 89-90 days from the previous 50-60 days. Consequently, some Western buyers are diverting their orders to Vietnam and China.
The beginning of 2024 witnessed a significant downturn in Bangladesh’s apparel exports to the EU, with a notable decrease of 26.74%. Eurostat reported a total export value of €2.48 billion during January-February 2024, down from €3.39 billion during the same period in 2023.
In particular, Bangladesh experienced a decline in knitwear exports to the EU during January-February 2024, amounting to €1.42 billion compared to €2 billion in the corresponding period the previous year. Similarly, woven garment exports to the EU from Bangladesh decreased to €1.06 billion during the first two months of 2024, down from €1.38 billion in the same period in 2023.
Furthermore, in terms of kilogram-based import statistics, Bangladesh emerged as the primary sourcing country for the EU in 2023. This marks Bangladesh’s continuation as the top supplier of apparel to the EU in quantity since 2022.
Bangladesh’s Apparel Exports Take a Hit as EU Imports Plummet
In terms of volume, imports from Bangladesh experienced a 3.67% decrease, equivalent to 11.84 million kilograms. This decline in quantity can be attributed to a rise in unit prices, which increased by 7.86% in the January-March period of 2023, driven by increased costs of raw materials, transportation, and other production expenses.
According to Eurostat, global apparel imports during this period decreased by 4.94% compared to the same period in 2022, resulting in a decline of about $1.22 billion. In volume, the European Union’s clothing imports suffered a significant downturn of 12.64%, representing a decrease of 136.88 million kilograms compared to January-March 2022.
Among the top ten apparel-sourcing nations, Bangladesh, India, and Vietnam exhibited positive growth, while the EU’s apparel imports from other countries, including Turkey, Pakistan, Sri Lanka, and Morocco, experienced declines.
EU Demand Fires Up Bangladesh’s Cotton Apparel Exports Ascent
The US Department of Agriculture (USDA) forecasts that Bangladesh is on the verge of surpassing China as the world’s largest cotton apparel exporter, driven by increasing demand. Cotton consumption in Bangladesh for 2023-24 is expected to rise by 800,000 bales to reach 8.0 million, primarily due to growing apparel exports.
Retailers are planning to shift sourcing away from China to Bangladesh, India, and Vietnam over the next two years. Bangladesh stands out as the most competitive apparel supplier in terms of cost structure, according to a recent study.
This presents Bangladesh with an opportunity to boost exports to the EU. The Export Promotion Bureau of Bangladesh aims to exceed $50.0 billion in apparel exports in FY2024, indicating anticipated higher demand. Spinning mills are expected to ramp up operations in 2023-24 as the textile supply chain replenishes stocks of yarn, fabric, and apparel.
In the previous marketing year, textile manufacturers destocked and maintained low inventories across the supply chain.
What Else Can Bangladesh Do to Increase its Exports?
In 2030, the global apparel market is expected to reach approximately $1135 billion, with Bangladesh aiming to surpass a $100-billion export milestone by then. While the backward linkage for MMF (man-made fiber) apparel is still burgeoning, Bangladesh meets its growing demand for MMF raw materials through imports of fibers, yarns, and fabrics, largely from China, which supplies 62% of man-made staple fibers.
With a focus on MMF apparel, Bangladesh is keen on capturing a larger market share, anticipating substantial export growth. The establishment of an MMF factory by June 2024 promises tax exemptions for up to a decade, encouraging investments and fortifying the backward linkage.
Diversifying the product range according to consumer preferences is paramount, potentially entailing the introduction of new designs, fabrics, or clothing varieties to align with evolving EU market demands. Upholding high quality and adhering to international standards, encompassing labor laws, environmental norms, and safety regulations, can enhance competitiveness in the EU market.
Benefitting from the EU’s Generalized Scheme of Preferences (GSP) and the Everything But Arms (EBA) initiative, Bangladesh enjoys duty-free and quota-free access to the EU market for various products, including textiles and garments. Leveraging these agreements to the fullest extent can bolster export figures.
Bangladesh’s apparel industry has undoubtedly carved a niche for itself in the global market, particularly in the European Union. With its competitive cost structure, burgeoning cotton apparel exports, and the EU’s increasing demand, the South Asian nation is poised to cement its position as a formidable player. However, to sustain this momentum, Bangladesh must diversify its product range, maintain high-quality standards, and capitalize on preferential trade agreements like the GSP and EBA.
By addressing challenges such as shorter lead times and establishing a robust MMF (man-made fiber) supply chain, Bangladesh can unlock new avenues for growth and solidify its status as a world-class apparel exporter, ready to conquer the ever-evolving fashion landscape.
