While Bangladesh's top readymade garments (RMG) export destination is the West, with inflation and overstocked retail stores has resulted in fewer orders for Bangladesh.
While the industry has slowly been seeking out new markets, the hard work has paid off with Japan emerging as the single largest non-traditional market in the last fiscal year.
Exports to Japan reached $1.6 billion in FY23, with a YoY growth of 45.62% from $1.09 billion in FY22.
Despite multiple local and economic crises, Bangladesh's overall RMG export rose by more than 10% in the last fiscal year.
The non-traditional market has contributed significantly to this rise, despite the domestic energy crisis and decreased demand, economic turbulence and global inflation.
Exports to the United States, the single largest export destination, and Germany, the second largest market, both experienced negative growth, while exports to the European Union (EU) experienced narrow growth.
According to the Export Promotion Bureau (EPB) data, the RMG export to the non-traditional markets in FY23 reached $8.37 billion with a 31.38% YoY growth from $6.37 billion in the last FY22.
Moreover, the export earnings from the nontraditional markets covered 17.82% of the total RMG export earnings.
In FY23, the total earnings from the apparel sector were $46.99 billion, 10.27% higher than $42.61 billion in FY22.
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.
Manufacturers said that Bangladesh's apparel sector is performing well in non-traditional markets following the Covid recovery.
This is attributed to the relatively stronger economic performances of these markets compared to their Western counterparts, which are facing challenges due to the ongoing Russia-Ukraine war, they added.
Moreover, for the first time, three non-traditional market countries have joined the “billion-dollar club” of RMG exports.
Export earnings from the nontraditional markets
Among the major destinations of the non-traditional markets, exports to Japan reached $1.6 billion, with a YoY growth of 45.62% from $1.09 billion in the last fiscal year.
Apparel export to Australia and India reached a milestone of $1 billion for the first time.
Bangladesh exported apparel items worth $1.15 billion to Australia in FY23, fetching a growth of 42.48%, higher from $812.24 million in FY22, EPB data stated.
Earnings from India stood at $1.01 billion in FY23, 41.58% higher from $715.61 million in FY22.
According to EPB data, exports to South Korea, Mexico, and UAE climbed by 22.45% to $538.46 million, 26.50% to $348 million and 3.53% to $292.37 million respectively.
However, despite being a potential destination, export to Russia declined by 26.96% to $426.39 million due to the ongoing war.
What industry insiders say
Industry insiders said that there is an opportunity to grab a big slice of the pie of the non-traditional market.
Apparel manufacturers 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.
Talking to Dhaka Tribune, Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said that they want to reduce over-dependence on traditional markets.
“Now we should focus on nontraditional markets as buyers and brands are also interested in increasing business with Bangladesh. We have taken several initiatives for the target countries like Japan, Australia, Korea, India, the Middle East and the African continent. We are conducting research on their clothing trends and demands. Moreover, to boost exports, we are planning to organize multiple roadshows in these markets,” he added.
They also maintain regular contacts with businessmen and diplomats and he is hopeful that the export of non-traditional markets will increase in the future.
“New markets have been contributing to increase nontraditional markets' share. We plan on turning these destinations to that of the EU. We are working on sufficient R&D, designs and other requirements. In this regard, policy support from the government and all other stakeholders is also needed,” he added.
Earlier, Executive President Mohammad Hatem of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) noted 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 for 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 ease of doing business.
BGMEA Director Mohiuddin Rubel said that in the US, their market demand has fallen, the bank has raised interest rates to tame inflation, and other economic pressures which influenced exports.
“Our position in new markets is very good as growth has been good in almost all destinations. Exports to some countries have exceeded billion-dollar. Since there are issues in the US and the West, we should focus on new markets,” he added.
He also said that most of the new market countries are emerging economies with great potential for exporters.
In the recently concluded FY23, Bangladesh earned $55.55 billion from exports.
