The garments industry started its venture in the late 1970s with only 9 production units. However, it evolved into as the main exporting industry by the late 1980s. Currently, more than 5000 factories are in the country, where about 4 million peoples are directly employed. Knitwear is a higher value added RMG product in Bangladesh considering foreign exchange retention. Bangladesh exported its first consignment of knitwear products in 1973. Currently, the country is the second largest knitwear exporter in the world after China. Though, at the beginning, about 7.64% of total national export earnings were from knitwear exports, the sector has continued to capture lion’s share in national exports since FY 2007-08. Prior to 2007, more than 92.48 % of total knitwear products were exported to EU & USA. This percentage reduced to 75.74% in 2011, which indicates that Bangladesh knitwear export market is now more diversified. Moreover, in 2002, Bangladesh exported knitwear products to only 86 countries, where in 2012 it exported RMG products to 148 countries. Hence, Bangladesh explored 62 new destinations for its knitwear export during last 10 years.
Traditionally, the knitwear or RMG export bundle of Bangladesh has been leaning towards EU and the USA. These two destinations can influence knitwear export of our country significantly and that is why, the macroeconomic stability in the EU & USA is very crucial to our economy. The recent Euro Zone debt crisis as well as recession in USA hampered our knitwear export considerably.
In order to sustain the knitwear export earnings or save the sector from the wave of adverse external shocks, we should diversify our knitwear export markets. Among the knitwear exporters, only Chinese knitwear export earning is sustainable because of its diversified export markets. The Chinese new manufacturing strategy as well as allocation of the factor of production may be appeared to us as positive external shock to our apparel sector. Now BKMEA is aiming to diversify its knitwear markets for exporting US$ 20 billion by 2020.
Generally, a new destination is targeted based on its Population size, Per-capita GDP, Gini Coefficient, Per-capita imported knitwear or RMG consumption, domestic knitwear or RMG production capacity and subsequent domestic supply and so on. Japan for example, a new destination for our knitwear export. The per-capita imported knitwear consumption of Japan was about US$ 122.84 in 2012. An estimated about 30% of total knitwear demand is supplied by domestic sources. Therefore, the country will be a prospective destination for our knitwear export. Targeting the country, BKMEA conducts market research about the new destination. In 2008, BKMEA conducted the research on Japan market. After completing the market research, BKMEA sends “Scoping Mission” to that destination for having firsthand knowledge about the potentiality as well as bottlenecks to enter into the market. In case of Japan, BKMEA sent its “Scoping Mission” in September 2009 and the mission identified some trade barriers. It is relevant to mention that previously Bangladesh had to fulfill three-stage conversion processes (from fiber to yarn, yarn to fabric, and fabric to apparel) in Rules of Origin for exporting knitwear to Japan.
In order to relieve the trade barriers, BKMEA pursues government trade agencies (e.g. Ministry of Commerce, EPB etc.) and both internal trade bodies (e.g. FBCCI, BGMEA etc.) and external ones. Most impotently, BKMEA sends “Trade Mission” to the targeted destination for enhancing trade liberalization process through improving business-to-business relationship (B2B Relationship). In case of Japan market, it sent its “Trade Mission” in October 2010. As a result, the Japanese government relaxed criteria of Rules of origin for Bangladeshi RMG export in April 2011. It is the praiseworthy success of Bangladesh government to ensure the relaxation of Rules of origin in Japan market through its strong diplomatic relations. BKMEA believes that the continuous B2B interaction may be one of the effective strategies for fostering knitwear export to the targeted destination. As a result, it invited a delegation of Japanese trade association to Bangladesh in December 2011. The interaction was proved as fruitful in accelerating RMG trade. After completing the chapter of buyer visit to Bangladesh, BKMEA initiates “Trade Fair in the targeted destination” lastly. In Japan, BKMEA initiated trade fair with the active cooperation of EPB in January 2012. The fair attracted Japanese retailers and final consumers to Bangladeshi knitwear products.
Impact analysis of previously undertaken interventions into the targeted destination and further subsequent policies are important to boost up export to the market. In Japan market, for example Bangladesh has been experiencing exponential growth in knitwear export since FY 2008-09. During FY 2011-12, knitwear export earnings of Bangladesh to Japan was about US$ 239.99 million with growth rate of 56.16%, whereas it was about US$ 153.68 million with 27.79% growth rate in FY 2010-11. China is the lead knitwear supplier to the market exporting US$ 12.97 billion in 2012. The market share of the lead supplier is about 82.89% in 2012, whereas Bangladesh supplied about 1.33% of Japan’s total knitwear imports. Though Japan produces high valued knitwear products, it reduces clothing production following concentration on high technology based electronic device production, which results a howling demand of knitwear import. Moreover, Japan is following China plus policy in its trade arena. Therefore it is expected that Bangladesh could capitalize from the opportunities and enhance knitwear export.
BKMEA has taken well-built initiatives to explore new destination for knitwear export. As a result number of new destinations increased notably. Now BKMEA is planning to raise its knitwear export and sets its target at US$ 20 billion by 2020. It targets other ten countries again to boost up export. These countries are selected based on economic forecasting done by several agencies like WB, IMF, and WTO etc. These targeted countries are mainly Japan, Brazil, Mexico, Russia, China, South Korea and South Africa. BKMEA named these countries together as “JBM-RCKS”. However, Bangladeshi knitwear export faces high tariff barrier in these markets except China and Japan. Therefore, all sorts of initiatives should be undertaken to reap the possible trade benefits from these destinations. Finally BKMEA believes that the targeted export earnings may be realized, if it continues to explore new destinations for knitwear products and is provided all the subsequent supports from government.