Compared With Vietnam, The Prospect Of Textile And Garment Industry In This Country Should Not Be Underestimated.

In a corner of South Asia, there is such a country known as China's "strange and familiar neighbor" - Bangladesh.

The territory has an area of nearly 150 thousand kilometers and a small South Asian country with a population of up to 161 million. It is the second largest garment exporter after China, linking China, India and ASEAN's three largest economies. It is one of the most dynamic economic developing countries in South Asia and even in the world. In the past ten years, the average growth rate of GDP has remained above 6%. In 2018, 7.86% of the economic growth was achieved, and the garment processing industry was its pillar industry. At the end of the fiscal year 2017/18, foreign exchange reserves in Bangladesh amounted to US $32 billion 943 million, which is second only to India in South Asian countries.

According to the World Trade Organization data, China, the 28 countries of the European Union, Bangladesh and Vietnam are still one of the top four exporters in the world, accounting for 72.3% of the global garment market share in 2018. Bangladesh (growing 11.1%) has enjoyed an absolute growth rate of clothing exports, which rose 0.1 percentage points from 6.4% to 6.5%.

Because of the rising demand for local textiles in domestic and international markets, Bangladesh's textile industry has 500 billion investment opportunities. At present, local textile enterprises provide 85% raw materials to the export knitting industry and provide 35% to 40% raw materials to the weaving industry. In the next five years, local textile producers in Bangladesh can meet 60% of the demand for woven fabrics, which will reduce their dependence on imports, especially on China and India. Bangladesh clothing manufacturers use 12 billion meters of fabric every year, excluding 3 billion meters of fabric, and the rest are imported from China and India. In the past year, Bangladesh entrepreneurs invested 68 billion 960 million Taka, set up 19 home textile mills, 23 textile factories and 2 printing and dyeing factories.

Bangladesh has set up export processing zones to attract foreign investment.

At present, there are more than 4600 garment factories in Bangladesh, most of which are concentrated in the two largest cities in the country, namely, the capital city of Dhaka and the port city of Chittagong (Chattogram).

Among them, Chittagong is the largest seaport in Bangladesh, which handles about 90% of the international trade in the country. Despite the continuous improvement of the port in the past few years, congestion is still caused by the rapid increase in cargo volume. In 2018, the port's throughput reached a record of 2 million 900 thousand standard containers, up from 2 million 700 thousand in 2017, far more than the original designed annual capacity of 1 million 700 thousand. According to a Hongkong manufacturer in Bangladesh, it takes about 15 days to transport a batch of raw materials from mainland China to Chittagong, and another 7 days to clear customs.

The lack of efficiency in border clearance is another major challenge faced by manufacturers and exporters. The lengthy process of checking, granting permits and paying related costs often leads to delays in shipping and border compliance and increased costs.

To promote industrialization and attract foreign investment, the Bangladesh government has set up 8 export processing zones since 1983. Because these export processing zones have better infrastructure and business support services, many foreign manufacturers choose to set up production facilities in export processing zones. Export processing zones also provide one-stop management services, including customs clearance and issue of import and export licences, all of which can be processed in export processing zones. Applicants do not have to go to different government agencies for formalities.

Since its launch, the export processing zone has attracted about 500 enterprises to set up factories in the region, including enterprises from Korea, mainland China, Japan, Hongkong and Taiwan. In addition to a large number of garment and textile manufacturers, there are also manufacturers of footwear and leather products, electronic products, metals and plastic products. Their exports account for about 20% of Bangladesh's total exports.

As the 8 export processing zones have been established at different times, they are at different stages of development. Chittagong and Dhaka are the two earliest export processing zones, the two largest and have better public facilities. As of 2018, the two export processing zones attracted about 280 companies to set up factories, accounting for more than 60% of the total investment in export processing zones, and accounted for nearly 80% of total exports. In order to diversify industrial development, the government gave the manufacturers a long period of tax exemption in the low development export processing zone, which is located at UTA, einwady and Dream Lake (the farthest from Chittagong and Dhaka). Although the land rent and wage levels of these low export processing zones are relatively low, investors must be aware that these processing areas lack skilled or experienced workers, and it is more time-consuming to transport goods to and from Chittagong.

Bengal country Low cost and great advantage, huge investment space.

The huge low-cost labor force has made the country an ideal production base for labour intensive industries such as clothing and textiles. Since 1980s, Bangladesh has been a hot spot for international brands such as H&M, GAP and Adidas (Adidas) to purchase ready-made garments.

The most direct benefit of investment in Bangladesh is the low cost of labor. According to introducing, the salary of Bangladesh is very competitive (Bangladesh stipulates that the minimum wage standard of textile enterprises is 8000 Taka (about 664 RMB), which is not equal to the minimum wage standard of 1000 yuan in China.

In addition to the advantages of low labor, Bangladesh clothing exports to the European Union, the United States, Japan, Australia, Canada and other countries enjoy preferential policies:

Bangladesh enjoys free quotas and tariff free treatment in the EU market. Even in the post quota era, these preferential treatment will remain. This is the main advantage of Bangladesh's textile industry over other competitors.

Bangladesh textiles received tariff free and quota free market access preferential treatment in Canada, Norway, Japan, New Zealand and Australia in 2004 and before.

In the US market, Bangladesh has 30 categories of clothing products subject to quota restrictions, much less than China's restricted products.

Sino US trade war provides new opportunities for Bangladesh's development.

According to foreign media reports, Bangladesh insiders said that in the context of escalating Sino US trade disputes, Bangladesh's clothing exports will achieve rapid growth in the current fiscal year (fiscal year 2018-2019). Data from the Bangladesh Export Promotion Bureau (EPB) show that between July 2018 and February 2019, the export income of garment exports increased by 14.17% over the same period last year, reaching US $23 billion 120 million. In addition, the export of woven garments increased by 14.84% to $11 billion 630 million, while knitwear exports increased by 13.50% to $11 billion 490 million.

"The growth of clothing exports in China is mainly influenced by the Sino US trade war. Many factories orders are moving from China to Bangladesh due to the continuous trade war between the United States and China." M Siddiqur Rahman, President of Bangladesh garment manufacturers and Exporters Association (BGMEA), said yesterday to the new state newspaper of the country.

According to Bangladesh's Export Promotion Bureau, Bangladesh exported $30 billion 610 million worth of clothing products in the last fiscal year, up 8.76% over the same period last year. In fiscal year 2017-2018, clothing accounted for 83% of Bangladesh's total exports.

"Sino US trade war has created a very good opportunity for Bangladesh's clothing exporters. Bangladesh's clothing export earnings will continue to soar in the trade conflict. " Abdus Salam Murshedy, former chairman of BGMEA, told the new China Daily. Abdus Salam points out that tariffs have led to higher costs for US retailers to purchase goods and manufactures goods in China. In order to control costs, many US retailers are moving from China to a cost saving manufacturing center like Bangladesh.

Bangladesh exported $3 billion 890 million in July, an increase of 8.66% over the same period last year, exceeding the expected target of 61 million US dollars, and surpassed the highest record of 3 billion 310 million US dollars exported in May this month. Garment exports in July amounted to US $3 billion 310 million, an increase of 9.6%, exceeding the monthly target of 98 million US dollars. Haq, chairman of Bangladesh garment manufacturing and Export Association, said that the peak in July was due to the growth of Bangladesh's exports, while the Sino US trade war also brought convenience to Bangladesh's exports.

The vice president of the Bangladesh garment manufacturers and Exporters Association also told the delegation of the Chinese Manufacturers Association of Hongkong (CMA) that under the background of Sino US trade war, some Chinese textile and garment owners expressed the hope of establishing joint venture factories in Bangladesh, mainly due to the lack of skilled workers in the textile and garment industry, the increasing production costs, and the transformation of industries to IT and other industries. In addition, over the past 20 years, due to over investment in Vietnam and Kampuchea, more and more sunset industries are gradually shifting to Bangladesh and Burma. Compared with China, Vietnam and Kampuchea, Bangladesh clothing industry has strong competitive advantages due to low production costs and preferential trade treatment in major markets such as the European Union and China.

With the deepening of China's economic transformation and upgrading, it is a general trend to shift the middle and low end processing industry to a lower cost area. Bangladesh, an emerging market full of business opportunities and challenges, deserves more attention.

(source: global textile network, please indicate the source).