Apparel export to EU: Bangladesh poised to overtake China

Bangladesh is poised to overtake China in garment exports to Europe, the world's largest market, anytime in the near future for work orders shifting its way and its price competitiveness. 

In the January-June period of this year, Bangladesh attained shipments worth $11.31 billion, registering the highest year-on-year growth of 44.60 per cent, according to Eurostat.

China secured a 21.78 per cent rise, reaching $12.22 billion, showed the data of the European Union's statistical office.

Currently, China is the world's largest apparel exporter, with a 38 per cent market share.

Bangladesh is the second, with a 6.8 per cent market share. Local exporters expect it to reach 7 per cent at the end of this year.

Coming in third place is Turkey. It posted a 20.38 per cent year-over-year export growth to the European Union (EU) to reach $10.89 billion.

MA Jabbar, managing director of DBL Group, a leading garment exporter to the European markets, said the figures could have been higher had there been adequate energy supplies to the mills and factories.

"There will be even more garment export to Europe if the government can supply gas to the mills at adequate pressure," he said.

Work orders are also coming in big volumes from the US because of trade tensions with China, he said.

In recent months, cotton import by China also declined significantly which also indicates that apparel work orders are shifting to other countries like Bangladesh, said Jabbar.

Bangladesh could perform strongly as it already has the capacity to cater to international retailers and brands, he said.

Local manufacturers last year expanded their capacities by over 10 per cent just to cater to the influx of the work orders, said Jabbar who supplies apparel to major retailers and brands in the European markets.

However, inflation stemming from the Russia-Ukraine war may adversely affect consumers, which may have a slight ripple effect on garment shipments to Europe.

Apparel sales in Europe amounted to $397.20 billion so far this year, according to Hamburg-based market research company Statista.

The figure is expected to grow annually by 6.94 per cent between 2022 and 2026.

The market's largest segment is women's clothing, $215.80 billion of which was sold up until now in 2022.

By the end of 2022, 93 per cent of sales in the apparel market will be attributable to non-luxury goods, said the data.

Md Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said the January-June period receipts includes previous work orders put on hold by the European retailers and brands.

The Russia-Ukraine war has started to impact garment shipments, raising inflation and recession fears in European markets, he said.

One indicator is that garment shipments earned some $3.75 billion in August but declined to nearly $3 billion at the end of September, he added.

"We are trying to make up for the losses increasing shipments of garment to new and emerging Asian markets like Japan, India and Korea as those markets are still performing strong and showing great promises," Azim also said.

In the January-June period, European nations imported apparel worth $47.75 billion, up 25.03 per cent from the corresponding period of last year, said the Eurostat.

Local exporters are hopeful that a recent drastic fall of cotton prices in international markets will give a significant boost to the generation of new work orders, especially because Bangladesh was a net importer of cotton.

Cotton sold for 84.11 cents per pound in international futures markets from $1 and $1.05 per pound last month.

As a result, local garment manufacturers will turn more competitive in international markets even amidst apprehensions over recession and inflation.

MA Razzaque, research director of Policy Research Institute, said Bangladesh has been bagging more work orders from the European retailers and brands because of China's sympathy towards Russia.

A type of reservation has been created among Europeans about China sympathising with Russia after the war's outbreak in February this year, he said.

As a result, signing of a major EU-China Comprehensive Agreement on Investment has also been stalled, he said.

So, China is under pressure because of geo-political tension and the work orders are shifting to other countries like Bangladesh, Razzaque also said.

If the recession and inflation in Europe do not last long, Bangladesh has the potential to gain more from the China-centric geo-political tension.

However, the global recession and inflation are major determining factors for trade also in Bangladesh, Razzaque said.

He also said Bangladesh and China were in the same position with regard to cotton product export to Europe as the local manufacturers' strength is in making cotton-based garment items.

But Bangladesh is lagging behind in selling manmade fibre garment items to the European markets as China is stronger than Bangladesh in this segment, Razzaque also said.