In the recently held GLOCAL Textile Summit which was attended by the Brands and Sourcing Leaders of India, the emphasis was on Bangladesh.
Great analogies were given about garment manufacturing in India and Bangladesh.
The rhetoric was to any extent that the topics in the sessions were reduced to praises being sung about the industry in Bangladesh.
To my mind, I think Bangladesh is losing steam and other neighbors like Vietnam are marching ahead.
As we all know the ready-made garment (RMG) industry is a mainstay of this economic success story: Bangladesh is today one of the world’s largest garment exporters, with the RMG sector accounting for 84 percent of Bangladesh’s exports. This comes on the back of the sector’s rapid growth and modernization over the past decade—as well as the strides it has made in improving conditions for the country’s approximately four million garment workers.
Over the past decade, Bangladesh’s RMG sector has made impressive progress in tackling the challenges of growth—particularly in diversifying customers and products, improving supplier and workforce performance, and strengthening compliance and sustainability.
A key strategy for the sector’s growth over the past decade has been to diversify customer countries and move to more complex products and value-added services. Bangladesh’s RMG sector has made progress in broadening its customer portfolio to manage risk and adapt to changing demand patterns in the global fashion market.
Things are changing and the anti-globalization trend is now a major concern in the international market where the USA is the key player to stir world trade. Even the recent trade dispute between the USA and China engendered a new threat and seriously destabilized the geo-economic balance of the world.
When US President Donald Trump announced “Buy American, Hire American” in the same line Narendra Modi campaigned to “Make in India” is a strong conception of anti-globalization.
The historic trade wars namely the opium war, chicken war, the pasta war, the Banana war, and Smoot-Hawley Tariff Act in 1930 that occurred among the different countries were based on anti-globalization theory and not surprisingly, the USA was involved in four of five of these historic trade wars.
So, Bangladesh's textile and apparel industry should give utmost attention to the trend and must adapt to the changes – in the quickest possible time – to secure future business.
The concept of anti-globalization is now again not only because of trade and economic factors, but many other social and political factors are also encouraging localized manufacturing. And in fact, almost dead textile and clothing manufacturing bases in the west seem to experience some sort of re-birth”.
Reshoring initiative in the US, the bleeding of manufacturing jobs to other countries has stopped, with the U.S. seeing a total of 249,000 manufacturing jobs returning home from offshore between 2010 and 2015.
Manufacturers are now able to generate the same or better workflow without being labor-intensive due to the rise in automation.
On the theme line of anti-globalization, customization is going to be more effective in the marketplace. Volume in big quantities or common fashion trends is no more popular in the market. People want customized products and more variety in quality and design that are sometimes difficult to manage for the brands.
As the world is facing the consequences of supply chain disruptions post-Covid-19 and rising commodity prices including food and fuel, especially due to the Ukraine war, small economies like Bangladesh are facing challenges to sustain requisite growth in their lead sector.
The weakening currencies of some of the competitors like Pakistan also bear negatively on the competitiveness of Bangladesh garment products.
The energy crisis in Bangladesh has increased the cost of doing business in the country. The cost of electricity from generators is three times more than power from the regional grid.
The growth of the garment industry in Bangladesh came in with massive over-concentration in a few products and few markets.
Five basic items (T-shirts, trousers, jackets, sweaters, and shirts) account for 73% of Bangladesh's RMG exports.
These products also belong to the low unit value market segment, in which the global import share is 54% compared with Bangladesh’s export share of 76%.
On the other hand, RMG production has also decreased due to the intensifying electricity crisis. In this situation, export orders from different countries especially the US and European Union markets have decreased drastically due to the global economic recession and the ongoing Russia-Ukraine War.
According to sources, after the Covid-19 pandemic, the impact of the Russia-Ukraine war has halted global economic progress. The recovery of the economy from the negative impact of Covid-19 is uncertain. Almost all major economic countries of the world are suffering.
As a result, the economic recession has also occurred in low- and middle-income countries. The big economic countries of Europe including the United States and the United Kingdom are suffering from the shock of high inflation. Along with Bangladesh, India, and Pakistan also suffered a big shock of inflation.
European consumers are forced to buy fuel and food at higher prices than before. For this reason, they have reduced the budget for clothing.
The country’s garment industry is facing an acute shortage of power affecting production on one hand while its major markets are postponing shipments due to surging inflation.
The export regime of Bangladesh is heavily dependent on LDC-specific preferential market access. Bangladesh has benefitted from unilateral trade preferences provided by many developed and developing countries under their respective Generalized System of Preference (GSP) schemes for products originating in LDCs. These preferences usually combine duty-free market access with less stringent rules of origin (RoO) requirements for preferential access. Bangladesh also enjoys LDC-specific market access concessions through the regional trade agreements of SAFTA and APTA.
We can safely conclude, the textile industry of Bangladesh is under stress and facing major challenges due to the global recession and inflation, unfavorable trade policies, internal security concerns, the higher cost of imported inputs apart from post-Covid-19 supply chain disruptions, and a decline in global demand.
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