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Denim

Denim emerges as major potential export item for Bangladesh

Among all the diversified garment products in Bangladesh in recent years, denim emerged as a foremost potential item for the country. Nowadays, Bangladeshi denim is the much-talked-about items worldwide, especially in European countries.

Denim-as-potential-export-Bangladesh
Figure 1: Denim emerged as a foremost potential export item in Bangladesh.

Not only the highest supplier to the EU, but Bangladesh is also the third-largest denim supplier to the US in a year. Bangladesh exports nearly $1billion worth of denim products to the European countries in a year.

Bangladesh matters in world denim markets

In Europe, one in every three persons wears the Bangladeshi denim items. Even, Bangladesh overtook China in denim supply to the EU countries because of quality products at competitive prices.

Also, to the US, Bangladesh exports nearly $400million worth of denim in a year registering nearly 15 percent market share while China’s share is 24 percent and Mexico’s share is 20 percent.

Bangladesh-denim-industry-scenario
Figure 2: Bangladesh denim industry scenario.

It will not be an exaggeration if we say Bangladesh’s next business is denim because the demand for this specialized kind of clothing item is on the rise worldwide due to changes in fashion and style both by the males and females.

With the huge demand from the global retailers and brands, the local entrepreneurs have also established 32 mills where they invested more than $1billion in the country so far. The millers have been meeting more than 40 percent demand for fabrics from the garment makers. The remaining demand is met through import mainly from China, India, Turkey and Pakistan.

If we analyze the trend of establishing denim mills, we can see most of the modern mills were set up over the last 10 years with higher production capacity. Previously denim products were not so much known items to the local textile millers and garment makers. As a result, mainly Turkey, India, Pakistan and China were leaders in the global denim markets.

Bangladesh is relatively a new entrant in the global denim markets, which is currently nearly $60 billion. However, until now the share of Bangladesh in the global denim market is very low at $3 billion in a year.

But the prospect is very high for Bangladesh as the globally renowned retailers and brands are flocking in Bangladesh for the quality denim products at competitive prices. Bangladeshi garment makers are expecting that the total denim export will reach $7 billion by the end of 2021 for the higher demand for the products.

Globally renowned retailers and brands like H&M, C&A, JC Penney, Best Seller, Tesco, Zara, Li & Fung, K-Mart Australia, K-Mart USA, Takko, G-Star, Inditex, Only & Sons, Only, Pull & Bear, Barmoda, Nosiy May, LPP and New Look source denim garment items from Bangladesh.

Use of modern technologies for washing denim fabrics

The high-water consumption by denim manufacturing is a major concern for Bangladesh. Previously, more than 270 liters of water was needed to make a kilogram (kg) of denim fabrics. Due to focus re-shift towards sustainability Bangladeshi denim fabric makers dramatically reduced water consumption over the last few years with the adoption of the latest technologies in production, opined a leading machine supplier and producer recently.

The majority of the denim fabrics producing companies could reduce more than 50 percent of water consumption by using the latest technologies, said the industry people. And the target is to the reduction of water consumption by 80 percent in the denim making process.

Now some of the world’s leading factories in Bangladesh can wash a kg of denim fabrics with only 15 to 16 liters of water on average. The top-notch digital technologies of different companies could reduce not only water consumption but also reduce the time significantly.

Number of denim users is on the rise worldwide

With the rising use of denim, the demand for the product is also increasing worldwide. Almost 70 percent of the population in the US wear denim products regularly. An average consumer owns seven denim products at any given time.

In the UK each consumer owns an average of 17 denim garments. Annually 2.1 billion pieces of denim are sold globally. The denim sector will grow by 15 percent year-on-year until 2020. It is also predicted that the size of the global denim market will reach $64.1billion by the end of 2021.

As mentioned above, Bangladeshi entrepreneurs supply denim to major global retailers and brands. So, an increase in both trendy fashion and multi-cultural designs are suggesting for more denim business for Bangladeshi entrepreneurs.

Why Bangladesh should focus on the denim

Mainly for two significant reasons Bangladesh should go all-out in the denim manufacturing business. The reasons are ever-changing style and fashion and for the growing demand for the denim garment worldwide.

Why-Bangladesh-should-focus-denim-products
Figure 3: Why Bangladesh should focus on denim more.

Let us talk about fashion first. The fashion trend analysts are saying denim has become the main garment for both men and women due to its wider range of usability. Although the denim garment was not so much adorned item even 50 years ago. Now it turned the most favored item to the people. The denim garment can be used both as formal and casual dresses. Nowadays from wearable garments denim has diversified into many things like quilts, pillow, cover bed sheets and even showpieces are also made from denim fabrics. So, the uses of denim products widened in human life. As for the design segment, it is never-ending.

The China factor

China is the largest supplier of clothing items worldwide. However, the country is losing its market share to other players like Bangladesh, Vietnam, Cambodia, Pakistan and India. Basically, China has been leaving the garment business for two reasons including the country is shifting to the high-end garment items and a dearth of skilled workers as the cost of production has gone very high in China. So, most of the work orders are shifting to Bangladesh and Vietnam and to some extent to Myanmar a new entrant to the apparel trade.

The flip sides

There is no doubt that Bangladesh has a lot of work orders for denim products. However, the country should also do some home works for grabbing more market share.

First of all, the Bangladesh government should ensure an adequate supply of gas and power to the industrial units improving the infrastructures and the capacity of the country’s premier Chattogram port.

Both the businessmen and the government high-up’s should improve the diplomatic relationship with the major markets like the US and the EU so that the trade privileges that the country has been enjoying remains intact.

The government and businessmen must keep a constant eye in the market dynamics in fashions and demand so that they can replenish the changes according to the market dynamics.

In 2015 the demand for clothing items worldwide declined by more than 7 percent because of increases in the use of electronic gadgets like smart mobile and other appliances. So, western consumers reduced spending on clothing items and the impact of such changes in consumer behavior has been felt by Bangladeshi manufacturers. If there is a market trend analysis the manufacturers can take well-thought-out decisions in their business.

Similarly, the election in major EU countries including The Netherlands, Germany and France has impacted negatively on the export of Bangladeshi products to the EU as the consumers and businessmen in those countries were in wait and see mood due to the election.

The Brexit has also impacted negatively the export of apparel items to the UK the third largest export destination of Bangladesh. Despite some internal and externalities, the future of Bangladeshi denim is bright. Bangladeshi denim manufacturers can grab more market share now. This is the high-time to grab more denim business shares.

Sayeed Ahmad Chowdhury, General Manager (Operations) of Square Denims, said the investment in the denim industry will continue as the demand from the international buyers has been increasing. For instance, currently, a lot of work orders from China have been coming to Bangladesh because of the China-US trade war.

It is expected that by 2021, nearly 50 percent of denim work orders will come to Bangladesh from China because of the trade war and for the high cost of production in China, Sayeed Ahmad said.

The sale of denim to the EU from Bangladesh slowed down to a bit because of the silent recession in the EU nations. However, the buyers are not paying proper prices to the manufacturers. We need to emphasize to enhance our negotiation skills, Ahmad added.

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