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Bangladesh takes lead in global denim markets

Bangladesh, the second largest exporters of apparel goods, has taken lead in the global denim export markets by grabbing more market and securing a double-digit growth.

Bangladesh leading global denim markets
Figure: Bangladesh is the number one exporter of denim goods to the European Union, while the third largest in the United States.

As of now, Bangladesh is the number one exporter of denim goods to the European Union, while the third largest in the United States.

According to eurostat, statistics directorate of the European Commission, Bangladesh in 2018 exported denim products worth $1.65 billion, up by 11.46% from $1.47 billion in 2017.

However, Bangladesh’s closest competitor Turkey has posted an 8.18% negative growth to $1.16 billion, which was $1.26 billion in 2017.

On top of that, Bangladesh has established its strong footage in the US market after China and Mexico with a gradual rise in market share and occupied 14.68% in 2018.

Denim Exports to EU

(Source: eurostat)

Year Export value in $billion
2014 1.25
2015 1.30
2016 1.43
2017 1.48
2018 1.65

According to the US Office of Textiles and Apparel (OTEXA), Bangladesh’s denim export to US market registered an 11.72% growth to $566.39 million in 2018, which was $506.94 million in the previous year.

China, on the other hand, the largest exporter of denim goods to the US saw 1.51% rise to $937 million, which was $923 million, while Mexico has seen 3.11% increase in export from 2017 to $817.82 million.

Vietnam, a close competitor of Bangladesh in the US market registered a 43% rise to $296.47 million which was $207.28 million during 2017. Cambodia saw a 20.50% rise in export to $112.86 million followed by Pakistan 15.26% growth to $246.40 million.

Denim export to the US

(Source: Otexa)

Year Export value in $ million
2014 426.45
2015 439.73
2016 463.53
2017 506.94
2018 566.39

Secrets behind the success

New investment to update technology, branding to the retailers, increased capacity in fabrics manufacturing made the denim makers more competitive in the global markets.

In addition, shorter lead and reasonable prices expedited the export earnings.

“In the global market, Bangladesh now more prominent as a supplier of denim products market, this is because of manufacturer’s continuous machinery upgradation. Right now, the sector people are using the latest technology to produce denim jeans and other products,” Abdus Salam Murshedy, managing director of Envoy Textile, a denim fabrics manufacturer told the Textile Today.

All the fabrics manufacturers have increased their capacity, which helped the jeans makers to meet the demands locally cutting lead time, said Salam, also president of Exporters Association of Bangladesh (EAB).

Currently, there are 32 denim mills with a capacity of 450 million meters of fabrics per annum, as per the Bangladesh Textile Mill Association (BTMA) data. Bangladesh can meet over 50% of denim fabrics with local capacity.

On top of that, prices and quality of products were other factors to bring the buyers to source denim good from here.

“US denim products buyers want reasonable prices and shorter lead time in shipping goods. So, Bangladesh’s opportunity in US market is very high as the country can meet over 50% demands of fabrics, which reduces lead time,” Anwar-Ul-Alam Chowdhury Parvez, Managing Director of Argon Denim told the Textile Today.

Import duty in the US market is higher compared to our competitors and if we can work here effectively in reducing tariff rate, the sector will continue to grow more, he added.

We are grabbing more from the Chinese as they are leaving basic items, while the capacity of Bangladesh increased, said Anwar, also a former Bangladesh Garments Manufacturer & Exporter Association (BGMEA).

“In the denim industry, fabric and washing are two key elements to perform well, where Bangladesh is doing better,” former BGMEA senior vice president Faruque Hassan told the Textile Today.

Bangladeshi denim makers have introduced the latest technology both in washing and fabrics manufacturing in improving the quality of goods, said Hassan, also Managing Director of Giant Group.

On top of that, the makers of denim are producing different types of denim products, while value-added products area is developing gradually here, he added.

How to grab more share

In the US market, there is more space to grow as Bangladesh is still the third largest exporters. While in the EU markets, Bangladesh enlarged its markets beating the competitors.

According to Zion Market Research, the report, the global denim jeans market was valued at around $66.02 billion in 2018 and it is expected to reach approximately $85.4 billion by 2025, at a CAGR of around 3.7% between 2019 and 2025.

In the US market, there are lots of opportunity for Bangladesh as it has more capacity.

“And the last point cheaper is the obstacle to sustain the growth. Because you cannot be any longer cheaper. But who will give you extra for producing basic denim? So innovation is the solution to sustain the growth.”

Mostafiz Uddin, Managing Director, Denim Expert Ltd. & Founder & CEO of Bangladesh Denim Expo.

“Imports duties in the US market is higher for Bangladesh comparing to our competitors. If Bangladesh can work here effectively in reducing tariff rate, the sector will continue to grow,” said Anwar Ul Alam.

In coming up with an effective solution, we have to develop apparel diplomacy and increase the negotiation capacity to avail trade facilities, he added.

According to Cotton Incorporated, consumers in the US, buy approximately 450 million pairs of jeans every year, while on average, US consumers have seven pairs of jeans in their wardrobe.

On the other hand, 71% of people in Europe and Latin America enjoy wearing denim, followed by 70% in the US, 58% in China, and 57% in Japan.

Make the growth sustainable

Now Bangladesh can offer quality products at a reasonable price, while it has the capacity to execute bulk order. To this end, Bangladesh has to move for products diversification and technology upgradation.

“In producing value-added goods, Bangladesh does not have enough skilled and experienced workforce. Allowing foreign investments will create the opportunity to acquire knowledge and create a skilled workforce from the foreign companies,” former caretaker government advisor AB Mirza Azizul Islam told the Textile Today.

He also urged the manufacturers to move for producing products, what are being left by the Chinese makers and going to value addition.

“And the last point cheaper is the obstacle to sustain the growth. Because you cannot be any longer cheaper. But who will give you extra for producing basic denim? So innovation is the solution to sustain the growth,” Mostafiz Uddin, Managing Director of Denim Expert Limited told the Textile Today.

In getting higher prices and to enter higher valued products, Bangladesh has to concentrate on tech-driven manufacturing. To this end, there is no alternative to introduce technology in washing, dyeing and also making goods, he added.

Meanwhile, denim makers demanded policy support regarding the gas and electricity connection at reasonable prices to increase the production capacity of fabrics.

For the last few years, production cost went up significantly. But the buyers did no increase the prices of goods rather cut to some extent,” Mohamed Nasir, an ex-director of BGMEA.

That is why Bangladeshi makers are losing a competitive edge in the global market to their competitors. So, it’s an earnest call from the manufacturers to give more attention to reduce the production cost, said Nasir.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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