Bangladesh RMG makers see China, Japan as promising markets

Bangladesh has seen increased garment exports to 11 new destinations since 2009, including Japan and China, partly because of the government’s financial incentives for new markets. The stimulus package has been working well, said Mahmud Hasan Khan, vice-president of Bangladesh Garment Manufacturers and Exporters Association.

The two new markets Japan and China are promising markets for Bangladesh. Garment exports to China and Japan, soared in fiscal 2015-16 — the strongest sign yet of the growing stature of Bangladesh’s apparel sector in global trade.

According to data from the Export Promotion Bureau, last fiscal year, garment exports to Japan stood at $774.47 million, up 18.68 percent year-on-year and some $341.22 million of garment items were shipped to China in fiscal 2015-16, an increase of 11.9 percent from a year earlier.

The reason for the uptick is the recent relaxation of the rules of origin (RoO) by the governments of the two countries.

The RoOs are the criteria used to determine the national source of a product, and they vary from country to country. Their importance is derived from the fact that duties and restrictions in several cases depend on the source of import.

For instance, Bangladesh has duty-free access for its garment products, even for items made from imported fabrics, to the Japanese market.

The country has been enjoying duty benefits on its woven garment exports to Japan for many years now, and from April last year, its knitwear shipments were given the same privilege.

Japan’s apparel market is worth about $40 billion a year, and traditionally nearly 80 percent of it is catered by Chinese imports.

In 2008, the Japanese government adopted the ‘China plus One’ policy to reduce the overdependence on China, following which its traders started sourcing garment items from other countries such as Bangladesh, Vietnam and Cambodia.

On the other hand, Bangladesh’s garment exports to China also increased last fiscal year as the Chinese government awarded duty-free facility to 4,721 items.

China, despite being the largest apparel manufacturer in the world, is emerging as a major export destination for Bangladesh owing to its fast-expanding middle-class population.

At present, the majority of the Chinese garment makers produce high-end products for Western retailers, as they do not deem the $150 billion local market to be lucrative enough.

The development has opened doors for Bangladeshi garment manufacturers to grab a larger share of the Chinese market.

The International Textile Manufacturers Federation also recently advised Bangladesh to focus more on the growing Asian markets of India and China, where the retail value of garment and textile consumption will more than double to $750 billion by 2020.

However, garment exports to the other promising Asian market of India have not been increasing much thanks to the countervailing duty imposed by the neighbouring country’s government on Bangladeshi apparel products.

Although garment exports to India soared 30.86 percent to $136.42 million in fiscal 2015-16 from a year earlier, the value is too little.

Bangladesh considers the EU, the US and Canada as its traditional export destinations, and shipments to these markets have been increasing for many years now.