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Denim prospects for Bangladesh

Among the new textile items, denim fabrics and its diversified products is gradually becoming the flagship product for the local exporter. The ability to supply denim fabrics at a competitive price has helped the country to gain great global market access. The growth of denim in terms of production, export and investment marked a 30-35% rise in the local market over the last three years as almost all major textile producers have been producing denim especially since 2005 after withdrawing the quota system.

Presently, the local denim factories can supply 20 million meters per month against the domestic demand of 50 million meters per month. The demand for the remaining 30 million meters of fabric is met through its import from China, India, Pakistan and Indonesia. It is expected that an additional five million meters of denim fabric will come locally as a good number of denim manufacturing factories are supposed to start production very shortly.

 Position of Bangladesh in International Denim Market

Globally denim products have a $70 billion worth annual export market. The global buyers were rushing to Bangladesh after the expiry of the quota regime, finding most competitive prices. Global market reports reveal that Bangladeshi trouser makers are beating fast their competitors in the US and EU markets and grabbing significant market shares. According to the US commerce department, exports of cotton denim trousers increased 126 per cent in terms of volume

Exports of Mens/Boys jeans from Bangladesh to USA in 2006 and 2007

Bangladesh  2006(doz pcs)  2007(doz pcs)  Change(%)
1st quarter 205000 312000 52
2nd quarter 390000 454000 16
3rd quarter 599000 739000 23
4th quarter 570000  –

Source : US customs

Export performance in the European market is also impressive. The latest report from the European Commission shows Bangladesh had consolidated its leading position in EU’s jeans market during the first half of 2006. Bangladesh, however, ranked third in the EU market because of the exporters’ concentration in low cost dresses. During the January-June 2006 period, Bangladeshi apparel manufacturers shipped about 24 million pairs of denim jeans in men’s & boys category to Europe. In women & girls’ denim category, Bangladesh exporters saw the volume increased by more than 91 per cent to about 17 million pairs during January-June 2006. Industries insiders said the local entrepreneurs are interested in denim production due to mainly higher demand and duty-free access opportunities to the European market, the main market of Bangladeshi denim.

 Present Domestic Denim Manufacturing Plant

Denim garments are very important export items among the exportable textiles from the rising of textile sector in Bangladesh. At beginning of the last decade, there was no such export oriented denim manufacturing plant to mention. Almost 100% fabric was imported from China, India, Pakistan & Indonesia. The first modern denim manufacturing plant is Shasha Denim Ltd. It has a great contribution in raising the denim market in Bangladesh. Its success encourages others to invest in modern denim manufacturing plant. Another great contribution of it is to create skill work force of all level like operation, quality control, management, marketing etc related to denim manufacturing process.

It has reduced the dependence on foreign expert. In this consequence, most of the recently running denim projects are running by our local experts. This encourages the investor to run the new denim plant and expand the existing plant. Presently Bangladesh has 20 denim fabric manufacturing plants. Most of them equipped with modern machineries have been set up with in two years. They are now giving quality production with their maximum capacity. Moreover, some new plants are going to start their production within few months. Some established factories are extending their capacity with new machines. At least one dozen of investors of both local & Join venture financiers invested more than Tk 100 billions during last one year in this sector.

Some Running Modern Denim Manufacturing Plant

  • Shasha Denim Ltd.
  • Jamuna Denim Ltd.
  • Nassa-Taipe Denim Ltd.
  • Partex Denim Ltd.
  • Sinha Denim Ltd.
  • Royal Denim Ltd.
  • Chittagong Denim Ltd.
  • Hameem Denim Ltd.
  • Pacific Denim Ltd.
 Denim manufacturing plant under Errection

  • Titas Denim Ltd.
  • Envoy Denim Ltd.
  • Sinha Denim Ltd. (Rope Unit)
  • One Denim Ltd.
  • Desh Denim Ltd.

 

 

Problems of Denim Backward Linkage

  • High investment Cost:

A Standard Denim Fabric manufacturing plant requires about Tk 1000 millions. It is considerably higher than some other investments like Knit Composite Project another large sector of the country. So, most of the investors want to make sure the return more cautiously before investing in this type of project. However, the situation is changing as the demand of our denim products is rising day by day in both US & EU. Moreover, our local banks are showing   interest to sanction loan in this sector. Now a dozen of project profiles are submitted to our local banks.

  • Lack of R&D:

In this rapid changing fashion world, denim products are facing massive diversification very frequently. Continuous research is required for this purpose. Nevertheless, the management of the denim industries very often shows interest in research work. Without adequate budget, it is impossible to achieve a fruitful output. Management should consider importance of R&D to survive in the competitive denim market to develop new product and low cost process.

  • Inadequate Local Yarn Supply:

Denim fabric is mainly produced from the open-end (Rotor) yarn. Local rotor yarn manufacturing industries can supply less than 50% of the domestic demand. On the other hand the slub yarn (Ring or Rotor) used in both warp and weft in fancy denim products (e.g. X-hatch denim) & the core spun yarn used as weft in stretch denim fabric are mainly imported from neighboring countries like India, Pakistan, China, Taiwan, and Thailand. Recently some domestic spinning mills are producing quality slub yarn but not meeting the rapidly growing local demand. When it is about the core spun yarn or polyester filament yarn, our local infrastructure is not satisfactory in both quantity and quality. Investor in textile sector should pay attention on this, as it can be a great opportunity of investment to feed the denim manufacturing plants.

  • Dependent on imported Chemical:

Colorants & auxiliaries required for warp dyeing and garment washing are fully imported from abroad. When other Asian low cost denim exporting countries of like China, India, Pakistan are using their own chemicals which save their product cost, Greatest tool of competing is definitely cheap labor in our country. It is the high time to establish local chemical industries to support our wet processing sector including denim.

In spite of many limitations, our denim backward linkage is going to be strong day by day. It must be accelerated to compete in the global market especially in fancy yarn production. Continuous research is required to develop diversified products & cost saving process. Moreover, versatile finishing range has to develop for the value added surface effect. To increase the percentage of contribution in the world denim market share, our manufacturers have to be as responsive and flexible as we can possibly be, by rapid response time with quality product and competitive price. However, application research, as its impacts on product quality and Right First Time (RFT) application, is still essential. There is thus a hope that these aspects of application R&D will emphasize.

 

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