Knitwear continues dominance in export
The knitwear segment has retained its position as the country's biggest export earner in the readymade garment industry and among all the sectors of Bangladesh.
But the journey has not been smooth.
In its early years, it had to navigate through a quota system and securing raw materials was not easy as imports were the only option. Now it is facing mounting challenges brought on by the coronavirus pandemic and the Russian war in Ukraine.
The knitwear segment overtook the woven sub-sector for the first time in the financial year of 2007-08 and held the pole position until 2010-11.
The woven outran the knitwear segment in 2011-12 and the dominance continued till 2019-20.
In 2020-21, knitwear outran woven and recaptured the glory. And it continued in the last fiscal year as well as it brought home $23.21 billion, versus the woven's $19.40 billion.
Local garment suppliers, primarily, attributed the change in fashion and style globally, to the continued success of the knitwear sector
Even in July to September, the first quarter of the current financial year when the overall export earnings showed a falling trend, the knitwear segment grew 9.40 per cent year-on-year to $5.64 billion because of a strong demand amid the raging war and unprecedented inflation in the eurozone and the US.
Local garment suppliers, primarily, attributed the change in fashion and style globally, to the continued success of the knitwear sector.
Fast fashion and putting on casual dress have increased the use of knitwear items in the last one decade. Nowadays, even executives wear casual dresses at offices instead of formal ones. Knitwear like functional sportswear is used as dresses for formal events worldwide.
Fashion connoisseurs prefer knitwear items since it is comfortable and easy to wash. Moreover, product diversification has taken place within the segment.
When Covid-19 brought the entire world to a screeching halt and damaged the global supply chain severely and businesses hit rock bottom, the country's knitwear sector put on a good show, surprisingly, as Bangladesh kept supplying garment items to the world amid the raging flu.
The segment also felt some damage.
The slowdown in the knitwear shipment was first noticed in March 2020 when earnings stood at a paltry $1.05 billion. It fell further in April, to $180.2 million.
But it rebounded in the following month as exporters fetched $608.38 million since people were forced to spend more time indoors to avoid catching the deadly virus. The receipts sprinted to $1.16 billion in June.
"It was surprising that the demand for knitwear items started climbing even during Covid-19 when the global supply chain came to a standstill. In fact, knitwear export has continued to surge," said Md Fazlul Hoque, managing director of Plummy Fashions, a Narayanganj-based knitwear exporter.
"The use of knitwear items has risen as consumers spent more time at home. During their long stay indoors, western consumers mostly use T-shirts."
Historically, the knitwear sector was groomed in Bangladesh because of the quota system which started in the late 1970s and was in place until 2004.
In the early days, knitwear manufacturers, particularly those based in Narayanganj, used to ship knitwear items as the European Union granted the facility of a quota system that was not rigorous and was less cumbersome. So, a strong market was created for local knitwear items.
In fact, Bangladesh made the most of the quota system, sowing the seed for today's gigantic knitwear industry.
The EU and other developing and developed countries later eased the Rules of Origin for knitwear items, allowing the least-developed countries such as Bangladesh to qualify for the generalised system of preferences in the trade bloc even if imported cotton and yarn are used to ship export-oriented goods.
This prompted knitwear producers to invest a lot of money in the sector and broaden their manufacturing prowess.
Subsequently, entrepreneurs also pumped money to produce yarn and other raw materials for the knitwear sector.
Currently, nearly 90 per cent of raw materials are procured from the local market, cutting reliance on China, a major feat for the industry as it more than halved the lead time.
Even five years ago, the US was not a major market for knitwear manufacturers.
"Today, the US has turned into a major export destination for us," said Hoque.
Three years ago, the export of knitwear items from his factory to the US was almost zero whereas the world's biggest economy is his main buyer now.
Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association, said demand for knitwear items has not fallen despite higher inflation in the eurozone and the US.
Competitive prices are a major factor in Bangladesh's success in the knitwear sector.
"The export of knitwear items has kept rising and the momentum will continue in the future as well," Hatem said.
Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association, expects the dominance of knitwear in exports to continue for the next few years as raw materials are easy to procure and the demand for casual wear has lifted the demand for knitwear products.
Currently, more than 1,200 knitwear factories are in operation in Bangladesh, employing over 14.50 lakh workers.