More apparel orders shifting to Bangladesh, report shows

US buyers like Walmart, VF (Contour), Gap, JCPenney, Calvin Klein, and Tommy Hilfiger have transferred their orders to Bangladesh from China, Cambodia, Vietnam, and other competitors

The long-standing claim by apparel exporters that foreign buyers have shifted their purchase orders from China and other East Asian countries to Bangladesh is now being backed up by a recent report by Bangladesh Bank.

According to the report published by the External Economics Branch of the central bank, there has been a trend of purchase orders being shifted from competitor countries to Bangladesh. 

Exporters had also claimed that the rate of order relocation to Bangladesh has increased significantly recently. Along with China, the importers also shifted their orders from Vietnam and Cambodia and other countries to Bangladesh, they say. 

According to the manufacturers, the buyers shifted orders from China due to the trade war with the US, from Myanmar due to military rule, and from India and Vietnam due to the production disruptions amid Covid-19.

The central bank report agreed with these claims, noting that the rate of increase of export relocation was slow in June 2021, but began to pick up in September.

Apparel exports in December 2021 were even more encouraging amid the ongoing pandemic. 

After the global lockdown eased, the stores of the exporting countries opened up and the buyers gradually began shifting their orders to Bangladesh. 

However, the central bank also recommended taking issues like price of raw materials such as cotton and yarn, abnormal transportation cost, and cancellation of purchase orders into consideration immediately in order to maintain the growth.

Talking to Dhaka Tribune, Shahidullah Azim, vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said it is true that China's orders are declining in the context of international politics, but that Chinese production has also become more diversified.

“Moreover, China is increasing its production of high-end products on a large scale by gradually reducing the production of traditional apparel items. That is why other countries are getting orders for these traditional products,” he added.

According to industry insiders, the largest apparel buyers of the US like Walmart, VF (Contour), Gap, JCPenney, Calvin Klein, and Tommy Hilfiger have transferred their orders to Bangladesh from China, Cambodia, Vietnam, and other competitors.

Representatives of the buyers’ companies said that the purchase orders from China, Vietnam and Cambodia are now shifting to Pakistan, Sri Lanka, India and Bangladesh. 

In this context, the manufacturers of Bangladesh are getting a large number of purchase orders from the US. 

Meanwhile, according to Otexa, Bangladesh's apparel exports to the US market have increased by more than 40% in January this year and the country outperformed China, Vietnam, and Indonesia in apparel exports to the US.

The European buyers also followed similar trends for both woven and knitwear products, though it has not yet hit a significant level.

According to industry insiders apparel purchase orders have already surpassed the pre-pandemic level — in some cases, they are 5-10% more.

They also said trust and reliance played a key role in this rise of purchase orders. 

Bangladesh achieved this reliance through the government's approach to tackling and managing the pandemic, and the overall order management capacity of the apparel manufacturers, the work environment, sincerity, and health protocols which increased the confidence of buyers, say manufacturers.

In the meantime, Bangladesh has also received orders for many high-end sportswear which the country had never received before.

A factory in Chittagong is making official T-shirts for FIFA World Cup - Qatar 2022, while the Fatullah Apparels of Narayanganj is making official fan variant jerseys for the Basketball Team of the Spanish giant Real Madrid.  

Shahidullah Azim said that Bangladesh is now getting orders for many high-end products from big sportswear companies.

“To grab high-end orders, we need to increase investment in man-made fibre. The demand for readymade garments produced from man-made fibre is now 75% in the world market,” he added.

According to EPB data, in the 2020-21 financial year, Bangladesh made export earnings worth $31.45 billion from the apparel sector, and in the first eight months (July to February) of the current fiscal year (FY22), the sector earned $27.50 billion from exports.