Home ›› 14 Nov 2021 ›› Front
Bangladesh’s apparel export volume jumped since the last two months as western countries began recovering from the Covid-19 shock, but low prices offered by buyers – especially in the US market – are choking the readymade garment industry’s profits.
Under the circumstances, some RMG exporters are now refusing to take work orders from US buyers as the prices offered are not enough to turn a profit, industry insiders told The Business Post.
Data from the Export Promotion Bureau shows that Bangladesh’s export earnings from clothing products reached $3.41 billion and $3.56 billion in September and October respectively this year.
October’s figure was the highest ever recorded for this sector in the country, and around 81 per cent of these earnings came from the US and European Union market.
The Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data further reveals that the country’s apparel exports grew 34.93 per cent to $2.66 billion in the US market from July to October this year, which was $1.97 billion during the same period in 2020.
Bangladesh also exported apparel goods worth $7.61 billion between July and October 2021, showing a 16.84 per cent year-on-year growth. The figure was $6.51 billion from July to October last year.
Exporters say they are able to turn a profit from the EU market because Bangladesh is currently enjoying the Generalized System of Preferences facility there. However, when compared to China and Vietnam, EU buyers too are offering Bangladesh lower prices.
On the issue, BGMEA’s President Faruque Hassan said, “It is a positive sign that our export performance index is doing well, but the buyers are definitely not practicing fair prices. We have made big investments in our factories to improve their environment.
“We have set up 500 green factories, and 150 of them received US Green Building certification. Despite our efforts, the buyers are not giving anything in return. I have already held several meetings seeking fair prices from buyers during my US and EU visits.”
Industry insiders said due to the Covid-19 crisis in Vietnam, political unrest in Myanmar and power shortage in China, buyers – especially those based in the USA – are looking for alternative sourcing hubs, and Bangladesh is their first priority.
After the Covid-19 shock eased, buyers began placing more and more apparel orders here because they did not have enough stock to meet consumer demand. The local exporters were in crisis at that time, so they began taking up orders with marginal profit margins.
The apparel makers also wanted to boost their exports in the US market, sources said, adding that however, the low prices make this market unsustainable for suppliers.
Addressing the matter, BGMEA’s Vice President Shahidullah Azim said, “It is true that our export growth is now much better when compared year-on-year, but we are not sure how long this boost will last.
“Many buyers came here due to the ongoing crises in the South-East Asian region. However, most of them are not interested in paying us fair prices. We are trying to convince buyers who practice at least a minimum level of fair pricing to keep doing business with us.”
Azim added that the current prices in the US market are not enough to make exports sustainable there. “They are offering us a huge volume of orders, and it is enough to continue production. But I have refused many of them due to low prices,” he added.
Md Khosru Chowdhury, managing director of Nipa Group and a BGMEA director, says he has already rejected work orders worth around $2 million from US buyers in the last three months.
“They are exercising fair prices in Vietnam and China, and even Myanmar, but not in Bangladesh. This is completely unethical, and this is why I refused to accept orders from them [US buyers],” he added.
Md Imranur Rahman, managing director of Laila Styles Ltd, said buyers from the EU are offering better prices for apparel goods compared to the US ones, but not as much when compared to Vietnam and China. “I have refused several orders from the US buyers because of the low prices – it was not enough to make a profit,” he added.
Kazi Iftekhar Hossain, president of Bangladesh Garment Buying House Association, said, “Buyers have a preconceived notion that Bangladesh is producing apparel goods for a low price, and we are responsible for this trend.
“Some of the apparel makers are exporting their goods without any profit, which is creating an unstable market. The time has come to encourage buyers into practicing fair pricing, and diversify our products. Only then will we be able to secure good prices.”
