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Europe-US to reduce import of RMG from Asia by 2025

To meet the customers’ needs, apparel companies need to focus on nearshoring, automation, and sustainability.

Desk report

Within the next 10 years, major brands and buyers from Europe and the United States can shorten their import of ready-made garments from countries like China, Bangladesh, and Vietnam, Mackenzie and Company’s report ‘Is apparel manufacturing coming home?’ said these. The report was made after conducting a survey of 180 brands, buyers and executives jointly with the business journalistic Sourcing Journal.

Mackenzie and Company’s report-Europe-US to reduce import of RMG from Asia by 2025
Figure: Mackenzie and Company’s report says, Europe-US to reduce import of RMG from Asia by 2025.

The report mentioned that tomorrow’s successful apparel companies would be those that take the lead to enhance the apparel value chain on two fronts: nearshoring and automation. Both must be addressed and in a sustainable way. Apparel brands and retailers in Europe and the United States can no longer do business as usual and expect to thrive.

Foreign brands have made such plans because of the increased cost of production due to the increase in wages in these countries. The brands and buyers from Europe and US want to manufacture clothing from nearby countries like Mexico and Turkey instead of China, Bangladesh, and Vietnam.

We have been producing fast fashion clothing for many brands and buyers for a long time. Not all the buyers want fast fashion clothing. Apart from that, we have the capability to produce cheap clothing. After 10 years, not only our costs will increase, rather the cost of Mexico and Turkey will be increased at the same time.

Fazlul Huq, Former President of BKMEA

They think that they will be able to pick up clothes at their own retail in less time. As fashion is changing day by day so buyers want clothes in less time and at less cost.

According to Mackenzie’s report, to produce a pair of jeans pants from China to export the US, it costs US$12.04. At the same time, it costs US$10.57 from Mexico. Again, to produce a pair of jeans pants from China to Europe, it costs US$ 12.46. It takes US$ 12.08 from Turkey. That means less cost of producing goods in Turkey and Mexico than China.

Table 1: These values are valid in case of exporting to the US. Source: McKinsey and Sourcing Journal survey.
Country Time Required(In days) Landed cost price (a pair of jeans in USD) Compare to China (In %)
Bangladesh 30 10.68 -11%
China 30 12.04 0%
Mexico 2 10.57 -12%

Besides, it takes 30 days for shipping goods from China to the United States. On the other hand, 2 days needed for shipping to the United States from Mexico and 3 to 6 days needed to Germany from Turkey.

However, Bangladesh’s production cost is far less from China so she belongs in a good position.

Table 2: These values are valid in the case of exporting to Germany. Source: McKinsey and Sourcing Journal survey.
Country Time Required(In days) Landed cost price (a pair of jeans in USD) Compare to China (In %)
Bangladesh 30 9.94 -20%
China 30 12.46 0%
Turkey 3-6 12.08 -3%

Fazlul Huq, Former President of BKMEA, and Managing Director of Plummy Fashions Ltd., said about the report that, “We have been producing fast fashion clothing for many brands and buyers for a long time. Not all the buyers want fast fashion clothing. Apart from that, we have the capability to produce cheap clothing. After 10 years, not only our costs will increase, rather the cost of Mexico and Turkey will be increased at the same time.”

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