RMG exports non-traditional markets experienced significant growth, reaching $4.06 billion in revenue in the first half of the financial year.
In the context of Bangladesh's key export destinations, the United States, Canada, the United Kingdom and the European Union (EU) countries are generally known as the traditional markets whereas the rest of the markets are considered non-traditional markets.
Japan, Australia, Russia, India, China, South Korea, UAE, Malaysia, Brazil, Mexico and many other countries are major destinations from the non-traditional side.
According to the Export Promotion Bureau data, the apparel export to the non-traditional markets reached $4.06 billion (17.58% of total RMG export earnings) with 32.19% year-on-year (YoY) growth in H1 of FY23, higher from $3.05 billion in the same period of the last FY22.
In the last FY22, Bangladesh earned $6.37 billion from non-traditional markets, which was 14.96% of total RMG export earnings.
Industry insiders said that the major markets like the US and the EU are already saturated and the market share is not likely to increase much.
Moreover, the impact of the ongoing economic turmoil and geopolitical crisis is higher in these destinations but comparatively lower in the non-traditional markets.
But there is an opportunity to grab a big slice of the pie of the non-traditional market by increasing its share and Bangladesh is still on the right track in this regard.
In the H1 of FY23, the growth of apparel shipment to the US and the European Union showed a very narrow growth due to the remaining concern about the persisting economic uncertainty of the raging Russia-Ukraine war.
Moreover, the apparel manufacturers of the country are preparing a roadmap to export $100 billion worth of garment items by 2030 and capture 10% of the global market by 2025, riding on exploring new markets or nontraditional markets.
Talking to Dhaka Tribune, Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that there are many studies on what kind of products they want and what kind of diversification is needed to grab new markets.
“Government officials and various factory persons are associated with it. We are focusing on new markets as the exports to Europe and the US may slow down due to looming recession and inflation,” he added.
Export to the non-traditional market in H1 of FY23
Exports to Japan reached $754.72 million with a YoY growth of 42.54% from $529.46 million in the last fiscal year.
In the last FY22, Bangladesh earned $1.09 billion by exporting apparel items to Japan.
Moreover, major Japanese RMG manufacturers are shifting most of their overseas production from China as rising labour costs and zero-Covid policy is eating away its dominance and Bangladeshi exporters are trying to take the opportunity.
Japan imported apparel items worth $23.83 billion in 2021 from global sources and the share of Bangladesh was 4.58% in this market.
Regarding Japan, BGMEA Director Mohiuddin Rubel said that Japan has long been one of the major destinations for Bangladesh.
“They also have a high purchasing capability and this market is important to us both in terms of emerging markets and value,” he added.
Riding on the zero-duty trade benefit and competitive prices, the shipment of apparel items to India is growing fast.
Bangladesh earned $548.87 million from India between July and December of FY22-23, a 49.99% increase from $365.95 million during the same period of the previous fiscal year.
Regarding India, Mohiuddin Rubel said that with the socio-economic conditions in India improving, their production cost is also increasing. It will eventually lead them to be import-oriented.
Moreover, exports to Australia, South Korea and Mexico climbed by 29.52% to $516.63 million, 35.66% to $255.49 million and 51.12% to $186 million respectively.
Australia imported apparel items worth $7.8 billion in 2021 from global suppliers.
Central bank suggests finding new markets
In its study titled "Quarterly Review on RMG: July-September, FY22," Bangladesh Bank also recommended the manufacturers change their export target countries to more promising Asian economies including Japan, India, China, South Korea and the Middle East because the current economic unrest was more severe in the American and European countries.
Infrastructure and policy support
Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) President Mohammad Hatem said that they have been working with the government for a long time on various policies to increase exports to new markets.
“China was the main source of these countries and the order is now shifting from China to Bangladesh. We are working to increase B2B communication in these markets and are reaping some benefits,” he added.
He also said that they need policy support and increased ease of doing business.
Mohiuddin Rubel said, if they target these markets, they have to observe product trends and produce accordingly.
“Infrastructural development capable of producing products compatible with their demand is required along with stronger R&D,” he added, saying that they have to come out of the traditional way to grab non-traditional markets.
Moreover, the exporters also said that diversification, manmade fiber, resolving NBR-related issues and signing FTA and PTA will also help them to grab non-traditional markets.
However, manufacturers are confident of getting orders as the country has the safest RMG sector with the highest number of green factories in the world.