Saturday, November 15, 2008

Garment trade grow stronger in Bangladesh despite recession

Bangladesh’s largest contributor to its GDP is getting stronger despite the recession in the developed world. Japanese clothing giant Fast Retailing Co, mostly known by its brand name Uniqlo, has recently started outsourcing low-end products from Bangladesh to boost its sales worldwide. It has opened its local office in Dhaka in September this year.

The company plans to treble its overseas sales within the next two years through selling cheap garments amid global financial recession.

The company's new business plan to brace for low-cost management, and the shortest and cheapest manufacturing and marketing strategy has led it to Bangladesh, a high official of Fast Retailing said.

According to the Daily Star, the company will also start outsourcing home furnishings and fashion accessories from Bangladesh soon, said Koji Yamamoto, an official of Fast Retailing Co in Dhaka.

Besides Uniqlo, such global retail giants as GAP, Zara, Wal-Mart, Tesco, JCPenney, H&M and Next are already operating in the country.

A high official of Fast Retailing said Bangladesh would be the Uniqlo's outsourcing partner to supply clothes both to its Japanese retail shops and other overseas outlets in India and Russia.
The IMF said Bangladesh has lost some grounds in garment trade to Vietnam and Cambodia in its key markets in North America and Europe in 2007 and early 2008, but in the short term it sees no major change in its export outlook.

"Although competition is becoming more intense, Bangladesh's strong market position does not look likely to diminish in the short term," the IMF said in a research paper on Bangladesh's export diversification and external competitiveness.

"Despite the recent mixed performance, Bangladesh retained second position after China in global garment trade," the paper co-authored by IMF's Bangladesh chief Jonathan Dunn said.

Bangladesh exports grew more than 16% to US$14.11 billion in the 2007-8 fiscal year on the back of impressive performance by the ready-made garments, particularly knitwear.

The shipment, however, was negative in the first quarter, but it came back strongly in the remaining three quarters when garment exports grew more than 20 percent to finish the year with a record $10.7 billion income.

The IMF says cheap labour remains the key driver of Bangladesh's garment trade, as a worker in Bangladesh earns only $56 dollar, which is nearly half of what his colleague earns in Vietnam and Cambodia and a third than China.

It also said Bangladesh has diversified its export base in the recent years but still it needed a lot of catch-up work to compete with Vietnam or Cambodia.

The country expanded its number of export products well by South Asian standards, but less than East Asian competitors, it said, adding since 1990 the country increased its number of products from 366 to 673.

"This was a faster rate of increase than Pakistan and Sri Lanka, but slower than Nepal and considerably slower than Cambodia, which quadrupled its number of products."
Another encouraging factor in the garment industries in Bangladesh is the start of backward integration of the garment industries. Local textile companies and accessory factories have started operating further driving down the cost of producing the end products.

20 comments:

Bangladesh Corporate Blog said...

Certainly there is an opportunity for us to seek and exploit the situtation amidst these turns and turmoil of the global financial crisis. However, during these trying times, its imperative that we set a vision deep enough and not be complacent that our industries are not affected even though the world is going through a recession. As the crisis proved, it does not take time to turn the board, and if we are at the receiving end, we are usually always hit hard.

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