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Bangladesh becomes 3rd largest sourcing destination for US-based fashion brands

A study released earlier this month shows that Bangladesh has emerged as the third-largest sourcing country for the US-based apparel and fashion companies in 2020. Also, around 55% of fashion brands in the US are planning to increase sourcing from Bangladesh in the next 2 years.

The ‘2020 Fashion Industry Benchmarking Study’, jointly conducted by the United States Fashion Industry Association (USFIA) and the University of Delaware, released the data.

According to the previous data, Bangladesh was the fifth sourcing hotspot for US-based fashion brands in 2016 & 2018 and seventh in 2017.

The study revealed that Bangladesh’s position has improved as it has been supplying the same type of product over the years at a competitive price. However, China and Vietnam remained the first and second sourcing country respectively.

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Although, Bangladesh faced work order cancellation or postponement during the Covid-19 pandemic, it secured the third-largest sourcing destination with 85.7 percent while China and Vietnam secured 100 percent and 95.2 percent respectively followed by India 81 percent, Indonesia 71.4 percent, Cambodia 66.7 percent, Philippines 57.1 percent and Sri Lanka 52.4 percent.

According to the report, in the first five months of 2020, Bangladesh accounted for 9.4 percent of US apparel imports, a record high of more than 7.1 percent in 2019, and its exports to the United States increased despite Covid-19 and the US-China trade war.

The report further said that Bangladesh’s strong ability to produce yarn and fabric locally without relying on imports despite labor cost has contributed to a significant price advantage for ‘made in Bangladesh’, which accounted for about 77 percent of the country’s total garment exports to the United States in 2019.

Moreover, US fashion companies’ eagerness to diversify sourcing from China especially for MMF (manmade fiber) apparel could be another potential growth engine for Bangladesh as sourcing capacity in Vietnam is not available.

However, respondents still consider sourcing from Bangladesh involves higher compliance risk with 2.0 rating scores, the same as last year.

The study surveyed some of the country’s largest brands and retailers, including the top 25 US-based fashion brands, retailers, importers and wholesalers.

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