A fair price is now a big concern that Bangladesh apparel manufacturers are always demanding from the retailers. But the scenario is completely opposite where retailers are not paying more a cent rather reducing by year.
Recent NBR data shows Bangladesh garment price clear dip 1.61% in the last 4 years. This is shocking news for the apparel exporter to stay competitive in the international market.
On the contrary, China on a year on year have a growth in the US market, up by 5.5% and value is up by 6.6% though the (recent US-China trade may impact on the growth).
The notable growth of value is more important that China gains in the US market where the Bangladesh apparel industry is having downgrade price form the retailers.
A Bangladesh-made polo shirt is sold out at around $18.35 in the western markets, while its labor cost is estimated at only $0.54 or 2.95 percent of the price. So fair pricing has been a major and long-standing demand from the apparel makers to continue higher standard-compliant apparel industries.
Price (MN USD/Net Mass (kg) in MN
|Year||Knit (61)||Woven(62)||Total||Growth||CAGR 4 Years|
If the period between fiscal 2015-16 and 2018-19 are taken into consideration, the price per unit of garment items increased only last year by 1.42 percent.
Per unit, prices fell 2.12 percent in fiscal 2016-17 compared to the previous year and it experienced another fall of 4.07 percent in fiscal 2017-18.
Dr. Rubana Huq. President, BGMEA said in this regard in her verified twitter account – “Price down by 1.61% in the last 4 years. Value addition literally insignificant. Has remediation given us nothing to except business to remain here? Is continuity of business more important than sustainability?”
“Bangladeshi garment exporters have been receiving some of the lowest prices in the world, whereas we have been spending millions of US dollars for strengthening workplace safety and for better compliance,” said Sharif Zahir, Managing Director of Ananta Group.
“Although the cost of production has been increasing every year, the retailers and brands are not increasing the prices for per unit of garment items they purchase from Bangladesh,” he continued.
Bangladesh government has increased workers minimum wage to 51% to ensure a better life for the workers. According to the sector leaders, production cost has been increased by almost 20% in the last few years.
The recent proposal of gas price hike from the national budget will lead the sector more in deep crisis.
So far, some 2,000 garment factories have spent $5 lakh on an average each for factory remediation as per the recommendations of the Accord and Alliance, according to BGMEA. However, prices were not increased and, in some cases, even the prices have been lowered.
Many owners have even been running their units accepting prices lower than production costs hoping to just stay afloat and pay the workers as they cannot make a profit. Amidst constant pressure from the buyers to lower price, some 30 factories have been shut down in the last two months, according to Rubana Huq.
Ultimately Bangladesh textile and apparel industry may not be enough competitive in the international market and the future of 50 billion export target by 2021 can remain untouched.