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Denim exports in US: A strong arena for Bangladesh RMG

Amid the COVID-19 heavy blow in Bangladesh’s readymade garment (RMG) industry in 2020, denim segment fared surprisingly well. Beating all odds. Holding the top supplier position for blue denim apparel to both the US and EU.

Not to mention, Bangladesh has been the largest exporter of jeans clothing to the EU (including the UK) for the last few years, according to Eurostat data. Generating US$1.6bn (EUR1.31bn) in denim exports in 2019.

Bangladesh-Denim-exports-USA
Figure 1: According to US trade data, Bangladesh was also the major external supplier of denim to the US by value in 2020.

According to US trade data, Bangladesh was also the major external supplier of denim to the US by value in 2020, nudging out Mexico.

Meanwhile, exports to the US, enlarged by 3.47% year-on-year in 2019 to US$585.54 million, according to US Office of Textiles and Apparel (OTEXA) figures.

While according to just-released trade data slid 4% to US$561.3 million in 2020.

US denim market share of Bangladesh now stands at 20% by value, compared to Mexico’s 16.7%. In 3rd place is Vietnam, whose exports fallen 1% last year to US$368.2 million; 4th is China, which fell 52.3% to US$331.9 million; and 5th is Pakistan, whose denim apparel exports to the US dropped by 2.8% to US$251.8 million.

In volume terms, Bangladesh holds the biggest market share of 23.8% after exporting 7.13 million dozen pairs to the US last year.

Sustainable denim practices in BD

Bangladesh has some of the best LEED certified factories with state of the art green facilities. Leading this growth story, Shasha Denims Over the past year has reinvested, expanded and in 2019 acquired EOS Textile Mills, then the Bangladesh unit of Italy’s Berto EG Industria Tessile.

Shams Mahmud, Managing Director, Shasha Denims said, “In the last 12 months, we have invested US$23.5million mostly into the value addition of machinery.”

Also, Shasha Denims last year launched eco-friendly denim fabric sourced from recycled plastic waste for some Scandinavian brands, such as Legends. Even smaller players are thriving. For instance, Chittagong-based Denim Expert bagged the World Economic Forum’s New Champion Award in November.

The Geneva-based forum picked Denim Expert for its “exemplary sustainable practices and initiatives to promote inclusivity,” including creating employment for transgender population and human trafficking survivors, says Mostafiz Uddin, the company’s managing director.

“Up to 70% materials of our produced jeans are sustainable,” adds Uddin, who has been promoting Bangladeshi denim globally since 2014 by staging trade shows.

Growth opportunities

Dr Rubana Huq, President of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), stresses that even though Bangladesh is a leading exporter, it still has “tremendous opportunities” in a world denim market valued at over US$65bn prior to Covid-19.

Sustainable-denim -practices-Bangladesh
Figure: In volume terms, Bangladesh holds the biggest market share of 23.8% after exporting 7.13 million dozen pairs to the US last year.

H&M, Inditex, Walmart, Uniqlo, Levi’s, C&A, Tesco, Marks & Spencer, Old Navy, Calvin Klein, American Eagle and Gap are the key brands that already source Bangladeshi denim products, according to industry executives in Dhaka. They are attracted by a sustainable and compliant industry offering price competitiveness.

Dr Huq says sales could increase by diversifying product range away from bottoms into tops and lifestyle items such as faded jeans, sweatshirts, activewear and ladies’ stretch denims. With more than 30 modern mills in the country supplying half of the current demand for fabric by export-oriented denim garment producers, backward integration is solid, offering reliability in supply chains, she adds.

Other Bangladesh manufacturers producing denim products include Pacific Jeans, Beximco, Pioneer, Ananta, Envoy, Square, Ha-Meem, the Standard Group and Argon.

Given this capacity Dr Huq recommends that the sub-sector expands its value addition by expanding design and development services. This would help the industry undertake “qualitative shifts” towards mid-priced and high-end segments, she suggests.

Capacity challenges

Such movement is especially important given some major manufacturers have struggled with denim sales during the COVID-19 pandemic. Last year, for example, the Ananta Group slashed its denim production capacity from 3 million pieces to 2.8 million.

Although its export volumes had been increasing, slumping prices caused by the Covid-19 pandemic prompted Ananta, which has focused on more innovative products, to scale down its capacity.

“We won’t do anything new before June,” said Sharif Zahir, Managing Director of Ananta Group.

When the pandemic ends, Bangladeshi denim mills should, he suggests, focus on producing specialised denim fabric to compete directly with Chinese suppliers.

Denim shipments make up as much as 60% of Ananta’s US$300m overseas sales – key buyers include Hennes & Mauritz (H&M), Levi’s and Gap.

Meanwhile, Anwar-ul Alam Chowdhury, Managing Director of Argon Denims, has frozen his mill’s expansion because of the global Covid-19-related slump in demand for apparel.

“What will we do with the capacity if growth is not there?” says Chowdhury. “We’re now concentrating on capacity fill-up.”

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

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