Apparel exports growing in volume not in value

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The garment exporters’ profitability has hit a rock-bottom level due to the continuous downward price pressure by the international retailers amid rising production costs. “In fact we are just keeping our businesses running”, said a garment manufacturer who exports apparel items worth nearly $500 million a year. “The price of garment items has been falling 5-8 percent every year whereas the cost of production is increasing 15-18 percent”, he added.

Figure:  Apparel export of billion $. Source: EPB
Figure: Apparel export of billion $. Source: EPB

In a recent research Textile Today has identified ‘the price pressure, increase of cost and reduction of profitability’ as the biggest challenge for the textile and apparel industry. The research also suggested some solutions.

According to the commerce ministry, although the export of garment items grew 10 percent in volume in fiscal 2016-17, the value remained almost the same as in the previous year. In fiscal 2016-17, the growth of garment exports, which account for 82 percent of the total national exports, was also the lowest in the past 15 years.

Primarily, the demand for apparel items is declining in the Western world as customers progressively become more environment-minded. They are making more conscientious buying decisions: purchasing less and focusing on quality. The garment industry is producing 50 garments for each of the roughly three billion people who have the means to consume them.

Moreover, the profitability from the sales of basic garment items that Bangladesh specializes in is also low. More than 70 percent of the exported garment items from Bangladesh are basic items, so that the retailers offer low prices to the manufacturers.

“Garment exporters are surviving because of our value-added items, lower bank interest rate, and higher efficiency in the use of water, power and workforce”, said Siddiqur Rahman, president of Bangladesh Garment Manufacturers and Exporters Association. “The bigger factories are automating their whole production process to reduce costs and cope with the falling prices”, Rahman added.

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