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Woven exports losing luster despite potential

Arifur Rahaman Tuhin
18 Apr 2024 21:31:41 | Update: 18 Apr 2024 23:05:49
Woven exports losing luster despite potential

Woven products used to contribute the lion’s share of Bangladesh’s ready-made garment (RMG) export earnings until FY20, and such items are still dominating the global apparel market.

But woven items started to lose their shine from FY21.

In the first three quarters (July-March) of FY24, woven products posted only 0.47 per cent year-on-year growth to $16.19 billion, while knitwear items secured 9.79 per cent growth to $21.01 billion, show Export Promotion Bureau (EPB) data.

In the first nine months of this FY, such items posted year-on-year negative growth for three single months, and were able to secured double digit year-on-year growth just for a single month – July.

Industry insider said the woven sector is most potential for them as western brands shifting sourcing destination from China, and Bangladesh is their first priority and the goods is dominating 72 per cent of global apparel trading.

But due to the back to back global economic crises, lack of backward linkage, lack of technological development, lack of skilled manpower and lack of research and development, the country failed to grave the opportunity.

The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) recently conducted a research on manmade fibre, and findings show that the country could earn an additional $42 billion through non-cotton goods export in 2032 if the country invests $18 billion in this sector.

Another BGMEA’s research shows RMG products made from man-made fibres (MMF) will occupy 60 per cent of the global garment exports by 2030. Meanwhile, the global export of garments will grow to $1,121 billion by 2030, compared to $953 billion recorded in 2022.

BGMEA Vice President Abdullah Hil Rakib said, “There are three factors behind the sloth export growth of woven products, and those run in parallel. Firstly, the global economy is not stable and that is why the order inflow is very favourable.

“Secondly, the sector’s raw material is import dependent, and thirdly, China is again focusing on the apparel industry.”

He added, “Buyers want goods within a short timeframe with low costs. But we cannot achieve this as we have to import yarn and fabric from China and other countries, which increases our lead time and product costs.

“On the other hand, China could offer a less price than us due to their strong backward linkage facility.”

Rakib pointed out, “Our backward linkage investment is actually focused on knit, and investment here is multiple times higher compared to manmade or non-cotton fibre. But our potential is with manmade fibre, and government support is most important matter here.”

Woven clothes manufacturers said when the Covid-19 pandemic began, global economy collapsed, which severely impacted to the low and middle income segments of the population. The economic headwinds reduced consumers purchase capacity.

When they tried to recover from the economic shock, they faced another hit due to the ongoing Russia-Ukraine war and middle-east crisis. As a result, consumers forced to use less-value clothes.

TRZ Garments Industry Managing Director Haroon Ar Rashid said, “Woven clothes are costlier than knitwear items. A consumer can purchase a t-shirt for $10, but a woven shirt costs $40. Consumers don’t have enough money to purchase costly products such as knit items.”

“If we had a strong non-cotton backward linkage, we may supply woven clothes with low prices, similar to our competitors,” Haroon, also a BGMEA director, added.

Meanwhile, many woven manufacturers said they are doing good business amid the ongoing global economic crisis. They are basically manufacturing costly items and diversifying their product line.

The business said most of Bangladesh’s exporters are still manufacturing basic items, and most of the factories were set up without assessment. But no one is thinking about investing in woven sector backward linkage.

This is why raw material import dependency is increasing lead time and costs.

But now-a-days, brands are seeking diversified products in a short time with cheap rate, and Bangladesh failed to ensure this. Result, the sector failed to perform as expect despite a huge potentiality.

Industry insiders point out that the order flow of woven items has recently increased, but the prices are still tight, which is not enough to make profits. Some prices even fall below manufacturing costs.

Sparrow Group Managing Director Shovon Islam is one of the high-value woven clothes manufacturers in Bangladesh who mostly makes apparel for US customers.

Despite the sloth order and export growth trend, he is receiving a decent amount of orders, even though the inflation is still high in the USA.

Shovon believes that due to the ongoing economic slowdown, middle income and lower middle income consumers are suffering severely. For this reason, their purchasing capacity has decreased, which in turn caused regular orders to fall.

“But those who are manufacturing goods for upper class consumers, like me, the order inflow are good enough. I think the ongoing high inflation did not hit the lifestyle of upper class consumers.”

Shovon, also a BGMEA director, added, “The order inflow is now good, and the export growth for woven products is expected to jump in the last quarter of FY24.”

Nipa Group Managing Director Md Khosru Chowdhury said, “Due to global economic headwinds, buyers failed to clear their inventories. That is why they placed fewer orders.

He, however, added, “In the recent time, order flow has increased, but the unit price is still tight. But we have to take the orders to keep our factory running.”