Bangladesh maintained its growth momentum in exporting apparel items to the United States, the biggest single destination of readymade garment (RMG) manufacturers, in the first half (January-June) of 2022, securing the position of the third largest exporter to the destination.
According to latest data from the Commerce Department’s Office of Textiles and Apparel (Otexa), Bangladeshi exporters shipped apparel items worth $5.01 billion, fetching a growth of 60.3%, in the first six months of the current calendar year.
Bangladesh had previously exported RMG goods worth $3.13 billion to the US in the same period of 2021.
The market share of Bangladesh in the US also rose to 9.43% while China and Vietnam were ahead of Bangladesh with market shares of 23.54% and 17.49% respectively, Otexa data further showed.
In the same period, the overall US apparel imports reached $49.58 billion, noting a 40.14% year-on-year surge.
The data also showed that the single-month apparel export earnings from the US in June grew to $906.06 million, fetching a growth of 66.20% from $545.21 million in the same period last year.
Apparel exports also experienced a growth in terms of volume by 44.17% to 1,760 million square metres in the first six months of 2022, from 1,221 million square metres in the same period of 2021.
In June 2022 alone, apparel exports experienced a growth of 46.5% to 282.494 million square metres from 192.77 million square metres in the same month of 2021.
Why the surge
Manufacturers said that Bangladeshi clothing always had a good position in the US market and they were working hard to sustain this trend of export growth amid record-high inflation in the US.
According to the Otexa data, China and Vietnam occupied the first and the second highest positions respectively in the US market as of June 2022.
US apparel imports from China in the first half of 2022 experienced a growth of 40.15% to $10.25 billion from $7.31 billion in the same period of 2021, proclaiming the first position with a market share of 23.54%.
Vietnam exported apparel items worth $9.19 in January-June of 2022, fetching a growth of 35.03% from $6.81 billion in the same period of the past year, claiming a market share of 17.49% which left them at the second position.
India secured the fourth position by exporting apparel items worth $3.2 billion, registering a growth of 57.27% from $2.03 in the January-June period of 2022 with a market share of 5.6%.
RMG imports of the US from Indonesia in the first half of 2022 increased by 60.27% to $3 billion while the imports from Cambodia grew by 52.52% to $2.16 billion in the same period, which made them the fifth and sixth, with a market share of 5.5% and 4.32% respectively.
However, the entrepreneurs of the country fear that due to the ongoing Russia-Ukraine war, inflation in the country has risen sharply and that is why the sales of clothes in the outlets of the brands have declined noticeably.
Moreover, the sudden hike in the price of all types of fuel has also ushered in new worries as this hike may bring a harsh blow for them by increasing production costs further by 20%-40%, which is likely to narrow the profit margin.
Talking to Dhaka Tribune, Mohiuddin Rubel, director of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that export to the US market increased by more than 60%.
“But these orders were placed in May when the global situation was not as volatile as it is now. This growth may just be a short-term phenomenon as per the impression from the global brands and buyers,” he added.
Revenge shopping, which popped up among US customers, has already been declining, Rubel also said, adding that in the aftermath of the Covid-19 pandemic and geopolitical crisis, global trade and economy were going through dire conditions.
High fuel price and shortage of supply are portraying a negative impact on the global scenario and our industry has also been affected by this with a hike of 62% in yarn price, 500% in freight cost, and 60% in chemical cost, he also said.
Moreover, minimum wages increased by 7.5% at the beginning of the last year, he added, noting that average production cost has increased by 40%-45%.
“Moreover, productivity and efficiency are a major concern for us as average productivity in Bangladesh is around 45%. But in Vietnam and Turkey, it is 55% and 70% respectively,” the BGMEA official also said.
He also said that in this crisis situation, entrepreneurs are getting backup support from the governments which helps to stay afloat.
“We also want some kind of policy support from the government and we are also trying to overcome the vulnerabilities like product and market overconcentration, absence in the niche market, improvement of backward linkage industries,” he added.