Bangladeshi denim products are dominating the global markets by beating its competitors in the European markets as well as in the United States by occupying a lion’s share of the proverbial denim pie.
As of now, Bangladesh is the largest exporter of denim products to Europe with a 27% market share topping China, the largest exporters of clothing products to both Europe and the US.
With a 14.20% market share, Bangladesh now is also the third largest exporter of denim products in the US after Mexico and China.
According to Eurostat, statistics directorate of the European Commission, Bangladesh in 2017 exported denim products worth of €1.30 billion – a 0.54% hike from 2016’s €1.29 billion. However, Bangladesh's closest competitor Turkey has posted a 4.36% growth to $1.12 billion in the same period.
Bangladesh earned $507.92 million – a 9.55% growth – exporting denim products to the US markets in 2017, which was $463.61 million in 2016, according to data from the Office of Textiles and Apparel (Otexa) in the US.
China earned $921.90 million with 1.41% negative growth, while second largest exporter Mexico registered 7.9% negative growth by earning $793.42 million.
Meanwhile, Pakistan and Vietnam, the two closest competitors of Bangladesh, posted positive growths by over 13% earning $213.78 million and nearly 20% earning $207.28 million, respectively.
Bangladesh currently exports Blue Denim Trousers WG, Blue Denim Trousers MB, Blue Denim Skirts, Blue Denim Jackets, Blue Denim Suit Type Coats MB, Playsuits, and Sunsuits, among other products, to the international markets.
The major global retailers to which Bangladeshi entrepreneurs also supply denim products include H&M, Uniqlo, Tesco, Walmart, Levi's, Diesel, Wrangler, G-Star, s.Oliver, Hugo Boss, and Gap.
The reasons behind the lead
New investments both in fabrics and garments manufacturing and increased capacity are playing major roles in establishing Bangladesh’s dominance in the US and EU markets. But manufacturers are also investing in research and development of high end products, helping them get a better price.
Meanwhile, improvement of the safety standard in the apparel industry has also drawn the attention of more global buyers.
“Investment in denim fabrics and denim manufacturing has increased sharply. As a result, production capacity has increased too, pushing the export earnings up and taking the lead in the global markets,” Sayeed Ahmad Chowdhury, general manager of Square Denim, told the Dhaka Tribune.
He said manufacturers now are also taking less time to produce the products as they are sourcing the fabrics from local mills instead of importing. “As a result, buyers are placing more orders here.”
In the last two years, Square Denim has increased its production capacity from 1.5 million meters to three million. Considering the increasing demand, Sayeed said, they will be launching another unit soon.
Envoy Textiles Managing Director Abdus Salam Murshedy told the Dhaka Tribune: “Buyers always want quality fabrics when it comes to denim products. To manufacture quality fabrics, latest technology is must for any company. And we have already established that.”
Producing five million meter of denim fabric every month, Envoy Textiles is currently the Number 1 LEED Platinum certified Green Factory in the world.
Two years back, Bangladesh was highly dependent on imported denim fabrics. “Now, we can meet about 50% of the demand locally and are also exporting to some of the globally renowned buyers,” Murshedy said.
According to Bangladesh Textile Mill Association (BTMA), Bangladesh currently has 31 denim fabrics manufacturing mills, which produce over 400.40 million meter fabrics every year.
According to market research and advisory firm Technavio, the global denim and jeans market is worth about $60 billion. However, the denim industry is expected to grow at a compound annual growth rate (CAGR) of over 6.5% by 2020.
Asia Pacific Countries (APAC) is expected to be the fastest growing market for denim jeans, said Technavio data, and China is the fastest growing country in the region.
Since Bangladesh is now the largest exporter to the EU and holds a large share in US markets, there is an enormous opportunity to grow - especially in premium denim jeans market, which is expected to grow at a CAGR of 12.23% by 2020 in the region.
"There is hardly any adult in the world whose wardrobe does not contain at least one pair of jeans. Moreover, jeans are now worn and loved by women and children across the world. So the prospect of Bangladesh's denim export growing in the coming years is undoubtedly bright,” Denim Expert Limited Managing Director Mostafiz Uddin told the Dhaka Tribune.
“If Bangladesh can make its footing stronger in developing design and innovation, then the sky is the limit for our denim industry,” he said.
According to a study by Cotton Inc, 71% of people in Europe and Latin America enjoy wearing denim, followed by 70% in the US, 58% in China, and 57% in Japan.
Since customers are more cautious about environmental and health hazards issues, the denim products manufactured by a sustainable process are becoming more popular.
In a recent development, Bangladesh is also turning the apparel manufacturing process into an eco-friendly one by establishing green factories – a major advantage – which consume less water and other natural resources, said Abdus Salam Murshedy.
Besides, more apparel businesses are apparently shifting from China to Bangladesh as the workers’ wages in China have increased, and the country is also moving towards producing high value products instead of basic and mid-range ones.
Challenges and ways forward
Despite being a global market leader in denim products, there are also some challenges ahead for the Bangladeshi manufacturers.
According to people from the growing industry, price of fabrics and getting utility services – including gas and electricity – hindering new investment are some of them. Moving towards value added products is another issue that needs more attention.
“Production cost has gone up, but the manufacturers are forced to offer lower prices due to price cuts in the finished products by global retailers,” said Sayeed Ahmad Chowdhury.
Since most of the denim products are limited in basic items, the key to success in the global market is innovation in designs and washing, he said.
Mostafiz Uddin, also the founder and CEO of Bangladesh Denim Expo, added that the challenge for Bangladesh is too also adding further value to denim products through design development and innovation.
What the sector currently needs, all of them agreed, is more investment in research and innovation to meet the increasing global demand in latest and trending denim products.
To tap the growth opportunity and help with product diversification and value addition, Bangladesh government should prioritize denim products and provide all out support to the entrepreneurs, added former BGMEA president Murshedy.