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Rising apparel exports to China a sign of new opportunities

Release Date: July 26, 2017

 

 

Riding on a duty-free trade privilege, Bangladesh's garment export to China increased 14.77 percent year-on-year to $391.59 million in fiscal 2016-17, something exporters are seeing as a sign that new opportunities are awaiting.

China, the global leader in apparel business, has turned into a major export destination for Bangladesh because of its huge population with a growing section of middle-income households.

Moreover, China is shifting production from basic to high-end garment products and has a shortage of skilled labour.

Garment manufacturers are also giving more preference to Chinese markets for a shorter lead-time and better prices from retailers and brands.

Exporters are upbeat about Chinese markets as this potential can be a very good substitute for continued apparel export growth at a time when shipments to other traditional destinations like the US, EU and Canada is falling.

During the 2008-2009 global recession, global trade experienced a significant slump but Bangladesh's export got a boost for increased shipments to China.

“Garment export from my group has been maintaining 10 percent growth every year to China. China is a new destination for us,” said Asif Zahir, director of Ananta Group, a leading garment exporter.

Zahir exported garment products, mainly of denim and trousers, worth US $15 million last year. Retailers like H&M, GAP and Zara are his main buyers from Chinese markets.

Moreover, China has its own retailers and brands which buy a lot of garment items from Bangladesh, he said. Export of trousers, denim, non-denim and t-shirts, is high from Bangladesh to China, he said.

“We need a strong marketing for the Chinese markets. We have a very strong potential in the Chinese market,” Zahir said.

China itself is very strong in jackets and lingerie, for which export of such products from Bangladesh is not yet high. The growing Chinese middle class are the main customers of Bangladeshi apparel, exporters said.

Chinese manufacturers produce high-end garment products which middle class consumers can hardly afford. As a result, demand for Bangladeshi garment items is high.

Since Chinese manufacturers have already shifted their focus to high-end products, the Chinese government started exploring an alternative market for middle class consumers.

As a measure, the Chinese government in April 2011 allowed duty-free access to 4,721 products, of which a majority are garment items. Since then, garment export to China from Bangladesh is on the rise.

Recently, a study by Switzerland-based International Textile Manufacturers Federation (ITMF) said by the end of 2020, China would produce US $750 billion worth garments from the current US $300 billion, half for export and the remaining for domestic use. Currently, about 80 percent of China's garment products are produced for local consumption. So Bangladesh should focus on this Asian economic giant for its future export growth.

The remaining export-focused 20 percent make up about 40 percent of global apparel trade, worth nearly US $200 billion. China has 1.35 billion people, for which many Chinese manufacturers do not bother with exports, the study said.

Anwar-ul-Alam Chowdhury Parvez, a former president of Bangladesh Garment Manufacturers and Exporters Association, said the Chinese market would grow automatically as they have already shifted from producing basic items. “We should maintain a warm relationship with China for higher export,” Parvez said.

Local garment exporters enjoy a three percent cash incentive on export to China under a new market stimulus package introduced in 2009 to minimise fallouts of global financial recession.

China's state-owned companies and private sector entrepreneurs are also very much interested in Bangladesh for a new initiative of the Chinese government's flagship Belt and Road Initiative, which includes Bangladesh.

In the fiscal 2016-17, overall export also increased by 17.49 percent to US $949.41 million from US $808.14 million in the 2015-16 fiscal, according to data from Bangladesh Export Promotion Bureau. Very soon China would become the second Asian market after Japan for Bangladeshi exports to cross the US $1 billion mark.

 

Source From: The Daily News

 

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