6 months ago

How did Bangladesh surpass China in EU knitwear exports?

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Bangladesh has experienced a remarkable threefold increase in its presence within the worldwide apparel industry, rising from a moderate 2.5% market share in 2005 to an astounding 7.9% by 2022. 

By utilising one of its strongest suits—its comparative advantage in the production of RMG items—Bangladesh has achieved rapid economic growth and established its name as a significant player in the textile industry, known for its large-scale production of ready-made garments (RMG).

Today, Bangladesh marks the first instance where it has surpassed China in exporting ready-made garments (RMG) items to the European Union (UN) in terms of volume and export value. 

Overtaking China, Bangladesh emerged as the leading knitwear exporter to the European Union (EU) between January and September 2023. In comparison to China, which exported 442 million kg of knitwear valued at 8.96 billion USD, Bangladesh sold a significant 571 million kg worth of knitwear items valued at 9 billion USD to the EU members during this time, as per a report by Eurostat, the statistical office of the European Union. This notable shift established Bangladesh as the principal knitwear provider to the EU, excelling in quantity and value.

The rise of Bangladesh to the top of the global RMG exporter rankings in the EU is especially noteworthy, given China's fierce competition. This accomplishment proves the strategic expansion and resilience of the RMG industry in Bangladesh. 

This accomplishment is attributable to several reasons. Firstly, Bangladesh has concentrated on creating a flexible supply chain that is sensitive to market needs within the textile sector via vertical integration. This strategy led to reduced expenses, quicker lead times, and more productive manufacturing.

Secondly, Bangladesh's public and commercial sectors have allocated significant financial resources to safety, sustainability, and compliance initiatives guided by international inspection agencies like the Accord and Alliance. These steps have protected the welfare of millions of workers and improved workplace safety, enhancing Bangladesh's appeal as an RMG manufacturing destination.

Thirdly, Bangladeshi goods now enjoy a competitive advantage in the EU market due to well-negotiated trade agreements and privileged market access. Bangladesh has improved the overall calibre and effectiveness of its RMG industry by using these agreements to draw in international investment and gain access to technology transfer.

Additionally, it is crucial to mention that the surge in the global garment market is the ramification of China's global garment market's wane due to the scarcity of adept labour, diminished foreign investment, and hikes in manufacturing costs. This decline is because of their industrial transition from manufacturing to the production of advanced technological devices such as mobiles and home appliances. As a result, work orders have moved to other countries, including Bangladesh. 

The ongoing trade war between China and the United States prompts international retailers to seek sustainable sourcing alternatives.

However, it is necessary to note that while both volume and export value have increased, the unit price of RMG products in Bangladesh is significantly lower than that in China. It calls into question the viability of the growth model and the strain it puts on workers and manufacturers alike. Maintaining decent salaries and working conditions while maintaining competitive pricing requires a careful balance.

Bangladesh needs to be vigilant against becoming complacent as it celebrates this accomplishment. The expectations of consumers are continuously changing, alternative sources of export are rising, and the global market is experiencing dynamic shifts. Bangladesh must continually generate new ideas, promote better designs, boost quality, and lean towards higher-value products to retain this spot, continue to provide quality and affordable items and expand access.

Additionally, we must reduce our dependence on China for raw materials by strengthening backward linkage institutions. This can be achieved with proper policy support and resources provided to entrepreneurs in the backward link.

Furthermore, there must be more investment in honing the skills of its abundant labour force and focusing on higher-value textile market sectors. In the grand scheme, these steps can increase the nation's production of RMG goods and lead to growth in business with RMG product importers.

To put it simply, this development calls for continual advancement in all facets of the economy—not limited to textiles—ensuring that growth is strong, more sustainable, and inclusive.

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