Almost half the fashion brands and buyers of the US in a survey said they are keen to increase sourcing from Bangladesh over the next two years due to low prices
The readymade garment (RMG) sector of Bangladesh is in the good books of American buyers as it has historically offered to brands prices that are lower than the global average, according to a recent study.
Nearly half of the fashion brands and buyers of the US surveyed for the eighth edition of the annual study titled “2021 Fashion Industry Benchmarking Study” said they are keen to increase sourcing from Bangladesh over the next two years.
The study, conducted by the United States Fashion Industry Association (USFIA) and published on July 19, showed that the unit price of apparel products in Bangladesh was $2.5 in July-May of this fiscal year while the global average price was $2.6 during the period.
Executives in charge of purchasing clothing from 31 US-based brands, retailers, importers and wholesalers participated in the study which was conducted from April to June of this year.
Of the respondents, 37% said they would increase their purchase of clothing from Bangladesh, while 11% expressed that they would definitely increase sourcing from the country.
India came out on the top as 52% respondents said they would increase their sourcing from India while 7% said that they would definitely increase it.
Vietnam, Indonesia, Cambodia, Sri Lanka, Turkey and China were also contenders for apparel sourcing in the survey.
The import price per square metre of Indian garment is $3.5, $3 in Vietnam, $2.5 in Cambodia, and $1.6 in China.
Although the price of Chinese garments is low, US buyers are leaving the country for other problems — 90% of the respondents said that the maintenance cost of stores had risen because of increased tariff to the US-China trade war where 74% said the trade war had weakened their brands’ financial condition.
The brands paid an average of 23.4% duty on garment imports from China last year, which was about 8% in 2017, said the study.
China, Vietnam, India and Bangladesh are the top four Asian countries who exported RMG to the United States this year.
Of the respondents, 70% said they want to reduce sourcing from China by 70% over the next two years and they are also worried about the rising cost of Vietnamese clothing.
The respondents said that apparel with the “Made in Bangladesh” tag enjoyed a prominent price advantage over many other Asian suppliers.
But as a competitive disadvantage, US apparel imports from Bangladesh concentrated too much on basic fashion items, limiting export growth, especially when consumer demand shifted during the pandemic.
The study said that diversifying the export product structure and improving production flexibility and agility will be critical for Bangladesh to play a more significant role as an apparel sourcing base for US fashion companies in the post-Covid-19 world.
It also revealed that 70% of the respondents plan to source more from Bangladesh over the next two years but they plan to “source from the same number of countries and work with fewer vendors.”
This emerging trend implies that the competition among the thousands of Bangladeshi apparel suppliers will intensify and the smaller and less competitive ones could become more vulnerable, the study noted.
Besides, the respondents still believe that sourcing from Bangladesh represents a relatively higher compliance risk than many of its rivals.
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However, after the Rana Plaza collapse, a lot of work has been done on the working environment of the factory. Bangladesh now has the highest number of eco-friendly garment factories in the world, the report said.
Shahiddullah Azim, vice president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that Bangladeshi clothing has good potential in the US market.
“The US has shifted orders from China due to the trade war, from Myanmar due to military rule, and from India due to a shaky Covid-19 situation. Bangladesh is receiving these orders,” he added,
According to the BGMEA, the US is the top destination for Bangladeshi RMG exports.
Bangladesh exported $5.22 billion worth of garments to the US last year.
In the first five months of this year (January-May), Bangladesh exported garments worth $2.58 billion to the US, which is 15.38% more than the same period of last year, according to the Office of Textiles and Apparel (OTEXA) — an affiliate of the US Department of Commerce.