Despite the ongoing global economic crisis, the ready-made garment sector witnessed an exponential export growth of 10.27 per cent year-on-year in the last fiscal year, but one of its key segments, sweaters, experienced an increase of only 5.35 per cent during the same period.
According to the Export Promotion Bureau (EPB), in the last fiscal year, Bangladesh earned $5.94 billion through sweater export which was $5.64 billion in FY22. On the other hand, the country earned $46.99 billion in FY23, and the figure was $42.61 billion in FY22.
In FY22, the sweater sector posted a 39.21 per cent year-on-year growth, and it was 12.62 per cent in FY21 when its exports fetched $4.05 billion.
Industry insiders say the export target grappled with significant financial challenges and a notable inflation crisis during the previous fiscal year. Consequently, buyers reduced their orders, resulting in a tangible impact on the overall export figures.
But in this season, buyers are receiving a good number of orders from all traditional (the European Union, UK, Canada, and US are considered as traditional markets) and non-traditional buyers and expecting a significant export jump in FY24.
Brands, having incurred substantial losses in the previous fiscal year due to sluggish sales, are now adjusting their pricing strategies in response. Despite a rise in manufacturing costs, they are opting for lower prices.
In a bid to mitigate losses and maintain buyers’ interests, a significant number of sweater exporters are accepting orders at reduced costs, occasionally even below the breakeven point, they said.
Talking to The Business Post, Rupa Group Managing Director Md Shahidul Islam said, “We went through a difficult time last year. But the current situation is quite good, though the season is also the peak time for sweater manufacturing.”
He added: “The assessment of the sweater sector's performance as favorable largely depends on securing a substantial volume of orders from December to April. This specific period is traditionally regarded as the off-peak season for the sweater industry.”
Southeast Sweaters Managing Director Mahbubur Rahman Lucky said, “In previous years, we faced an order crisis in the winter season as our market was highly dependent on the western bloc. But the situation has improved thanks to the boost in marketing in the non-traditional market.”
Lucky, also Chief Executive Officer of the factory, said that currently they are receiving a good number of orders in the lean and peak season, but the price is tight.
Nowadays, obtaining orders from buyers has become more challenging. In the past, it was a common scenario for brands to create samples and initiate orders with factories, industry insiders said.
As the country is presently engaged in the production of high-value items, manufacturers are now responsible for creating samples and approaching potential buyers. Those with this capability are securing a greater number of orders.
The Chinese exporters continue to hold a significant share in the sweater market, producing high-value goods. However, driven by the ongoing US-China trade tensions and elevated manufacturing expenses, buyers are increasingly considering a shift away from China.
If the country can ensure quality and punctual delivery, brands will opt for Bangladesh. Already a significant portion of buyers already relocated to Bangladesh, industry insiders believed.
Sayem Fashions Director Abrar Hossain Sayem said our existing clientele is submitting fewer orders than our forecasts, yet we are filling our production capacity by partnering with new brands.
Sayem, also President of Bangladesh Apparel Youth Leaders Association (BAYLA) further said, “Many well-known Western buyers, particularly those from the US, are conducting significant business transactions in China. This presents us with ample opportunities to attract their attention.”
He added, “However, it's essential to enhance product quality and introduce innovative items to capture their interest. We've already initiated collaborations with certain new brands. If we manage to bolster our research and development efforts and provide the same facilities that Chinese manufacturers offer – like product innovation and development studios – we can expect buyers to also turn their attention towards Bangladesh.”