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China a preferred destination for Bangladesh RMG makers

"Bangladesh's garment export to China increased 14.77 per cent year-on-year to $391.59 million in fiscal 2016-17 riding on duty-free trade privileges. Exporters are taking it as a sign of new opportunities waiting to be tapped. China has transformed into a major export destination for Bangladesh because of its huge population with a growing section of middle-income households."

 

 

China a preferred destination for Bangladesh RMG makers

 

Bangladesh's garment export to China increased 14.77 per cent year-on-year to $391.59 million in fiscal 2016-17 riding on duty-free trade privileges. Exporters are taking it as a sign of new opportunities waiting to be tapped. China has transformed into a major export destination for Bangladesh because of its huge population with a growing section of middle-income households. China also has advantage of a shorter lead-time and better prices from retailers and brands, which makes it a preferred manufacturing paradise.

Exporters’ delight

Bangladesh RMG makers

 

China itself is strong in jackets and lingerie, and Bangladesh’s export of such products is not too high. Growing Chinese middle class are the main customers of Bangladeshi apparels. For Asif Zahir, Director, Ananta Group, a leading exporter, garment exports has been maintaining 10 per cent growth every year to China. China is a new destination for them. Zahir exported garments, mainly denim and trousers, worth $15 million last year. Retailers like H&M, GAP and Zara are his main buyers from Chinese markets. Additionally, China has its own retailers and brands which buy a lot of garments from Bangladesh. Export of trousers, denim, non-denim and T-shirts, is high from Bangladesh to China.

A recently study by Switzerland-based International Textile Manufacturers Federation (ITMF) said by the end of 2020, China would produce $750 billion worth of garments up from the current $300 billion, half for export and the remaining for domestic use. Currently, about 80 per cent of China's garment products are produced for local consumption. So Bangladesh should focus on this Asian economic giant for its future export growth. The remaining export-focused 20 per cent make up about 40 per cent of global apparel trade, worth nearly $200 billion. China has 1.35 billion people, for which many Chinese manufacturers do not bother with exports, the study said.

Chinese manufacturers produce high-end garment products which middle class consumers can hardly afford. As a result, demand for Bangladeshi garment items is high. Since Chinese manufacturers have already shifted their focus to high-end products, Chinese government started exploring an alternative market for middle class consumers. As a measure, the Chinese government in April 2011 allowed duty-free access to 4,721 products, of which majority are garments. Since then, garment export to China from Bangladesh is on the rise.

Bangladesh advantage

Anwar-ul-Alam Chowdhury Parvez, former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), points out the Chinese market would grow automatically as they have already shifted from producing basic items. Local garment exporters enjoy a three per cent cash incentive on export to China under a new market stimulus package introduced in 2009 to minimise fallouts of global financial recession.

China's state-owned companies and private sector entrepreneurs have also shown keen interest in Bangladesh for Chinese government's flagship Belt and Road Initiative, which includes Bangladesh. In 2016-17, overall export increased 17.49 per cent to $949.41 million from $808.14 million in the 2015-16, revals Bangladesh Export Promotion Bureau figures. Soon China would become the second Asian market after Japan for Bangladeshi exports to cross the $1 billion mark.

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