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Exports doubled! Will this country's clothing exports become the world's first?
Sep 06,2023
In the context of the continued conflict between Russia and Ukraine, the tightening of the international financial environment, the weakening of terminal demand in the major developed economies of the United States and Europe, and stubborn inflation, the global economic growth has slowed down significantly, and the improvement of trade has become more weak. Some changes have taken place in the performance.
Bangladesh to become world No. 1
According to the USDA report, Bangladesh's cotton consumption is expected to increase by 800000 bales to 8 million bales in 2023/24 due to strong garment exports.
Almost all of Bangladesh's cotton yarn is digested in the domestic market for the production of fabrics and garments.At present, Bangladesh is close to replacing China as the world's largest exporter of cotton clothing. The future export demand will further strengthen, driving the country's cotton consumption growth.
Garment exports are crucial to Bangladesh's economic growth, ensuring the stability of the currency exchange rate, especially through exports to achieve foreign exchange earnings in US dollars.
According to the Bangladesh Garment Manufacturers and Exporters Association, clothing accounted for more than 80% of Bangladesh's exports in fiscal year 2023 (July 2022-June 2023), reaching about US $47 billion.
It has more than doubled from a decade ago, surpassing the previous year's all-time high, indicating that the acceptance of Bangladesh's cotton products by global importers is increasing.
Bangladesh's knitwear exports are critical to the country's garment exports, which have almost tripled in the past decade.
Bangladesh's clothing exports to the United States and the European Union continue to grow. In 2022, the country's cotton clothing exports are particularly prominent. The annual report of the American Fashion Industry Association shows that American fashion companies have tried to reduce their purchases from China and shift orders to include Bangladesh. In the market.
The reasons are the Xinjiang cotton ban, U.S. tariffs on Chinese clothing imports, and sourcing from nearby to avoid logistical and political risks.
In this context, Bangladesh, India and Vietnam will become the three most important sources of clothing purchases outside of China for US retailers in the next two years. At the same time, Bangladesh is also the most competitive country in terms of procurement costs among all countries.
The Bangladesh Export Promotion Bureau is targeting garment exports of more than $50 billion in fiscal year 2024, slightly higher than the level of the previous fiscal year. As the inventory of the textile supply chain is digested, the operating rate of Bangladesh's cotton mills is expected to rise in 2023/24.
According to the "Fashion Industry Benchmarking Study 2023" conducted by the American Fashion Industry Association (USFIA), Bangladesh is still the most price-competitive country among global garment manufacturers, while Vietnam's price competitiveness has declined this year.
Vietnam's Textile Industry Decreased
According to data from the Vietnam Bureau of Statistics, Vietnam's clothing exports from January to May this year were 12.3 billion billion U.S. dollars, a year-on-year decrease of 17.8 percent, mainly due to the decline in global demand.
In 2022, textile and clothing exports will become Vietnam's second largest export earner, second only to mobile phones and electronic products. In 2022, Vietnam's textile and clothing exports will reach 44 billion billion US dollars, which will play a vital role in Vietnam's economic growth.
However, Vietnamese industry sources also said that the decline in orders and the decline in prices of end products have had a huge impact on manufacturers' profits. At the same time, the devaluation of the Vietnamese currency has also increased the cost of importing raw materials, making it difficult for garment exporters to complete orders, especially the high-priced contracts signed in the early stage.
In addition to the above factors, Vietnam's low-cost advantage is also weakening. The average monthly salary of garment factory workers is already around US $300, compared with the global average of US $200.
Vietnam's enterprises of all sizes have admitted that the export orders of the textile and garment industry continue to decline. Data show that it is not uncommon for companies to see a sharp drop of 40-50% in sales. Revenue of large enterprises also fell by 20-30%.
Why is Bangladesh's textile industry growing?
Bangladesh's performance remained strong even during the global economic slowdown. While other countries were weak in their exports to the US market, Bangladesh's home-grown garment exports were strong.
For example, from January to April this year, Bangladesh's clothing exports to the United States fell by 17%, but at the same time, China's clothing exports to the United States fell by nearly 35%.
China is losing market share due to the tariff war, so Bangladesh is strong in the US market. In addition, Bangladeshi garment manufacturers have been supplying goods to U.S. customers during the neo-crowning pandemic.
As a result, U.S. retailers and brands have confidence in local suppliers, which also strengthens the image of the textile and apparel industry and the country, enhancing workplace safety and factory greening.
Not only for the United States, but even during the global economic slowdown, Bangladesh has performed relatively strongly in the European Union, the United Kingdom and emerging markets, especially in Asian regions such as Japan, Australia, India and South Korea.
The surge in exports of home-made clothing to these destinations suggests that consumer demand for these goods is also increasing significantly, which is also related to price competitiveness.
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