|In a McKinsey report in 2012 it said that Bangladesh is going to double its clothing biz by 2015 and triple it by 2020. Attractive price competitiveness, capacity and satisfactory quality are the advantages Bangladesh clothing industry is enjoying over the other producing countries. But McKinsey also mentioned five challenges that Bangladesh needs to overcome to make the prediction factual. Infrastructure, compliance, supplier’s performance, raw materials, economic and political stability are the five pillars that Bangladesh needs to strengthen. 2015 is only one year away and time has come to take a close look to the McKinsey prediction whether the industry is moving in the right track or not. Recent pre and post-election chaos didn’t bring any good to the industry and the industry has lost a huge amount of buying orders. The image crisis is even worse. GSP issues are a major concern now. Bangladesh Textile Today is to depict the challenges & threats, the textile and clothing industry is facing in the recent times.|
The global apparel industry is now worth of 510 billion USD and it is expected to reach 1 trillion USD by 2020. Bangladesh is expected to grab a major share of this business. China is still conquering with more than 50% of the share and Bangladesh is right behind with surprisingly only 5% share.
Fig: The figure clearly depicts the rise of export in 2014 and the share of knit and woven are still evens to even according to value (Billion USD).
It easily depicts the big gap in capacity and scope of capitalizing. China is gradually leaving textiles production as environmental issues are rising and clothing production as labor and operation cost is rising. This is the normal global trend but in reality, is Bangladesh gaining the amount of business that it should have been grabbed?
Clothing export is growing but we need sustainability ahead
Clothing export rose by a loud 19.95 per cent year-on-year during the first half of financial year 2013-14, confronting various odds like image crisis and political instability during the period.
From July to December 2013, Bangladesh’s garment exports totaled USD 11.932 billion as against exports of USD 9.946 billion made during the corresponding period of the previous year.
The exports of woven garments from Bangladesh jumped by 20.37 per cent to $5.983 billion during the six-month period, compared to exports of $4.971 billion made during the same period in FY ’13.Knitwear exports from the country leaped to $5.948 billion during the period under review, registering a growth of 19.55 per cent over exports worth $4.975 billion made in July-December 2013 period. 
The 19.95 per cent year-on-year growth in exports of apparel was higher than the 16.56 per cent year-on-year rise observed in overall exports from Bangladesh during July-December 2013 period.
In fiscal year 2012-13 that ended on June 30, Bangladesh exported US$ 21.515 billion worth of knitted and woven garments, and the country has set an export target of US$ 24.147 billion for the current fiscal year, which would be an increase of 12.33 per cent.
In the meantime, Bangladesh implemented a 76.66 per cent hike in minimum wage for entry-level workers in the clothing industry since December 1, 2013. The extent of impact of this wage rise on the competitiveness of the country’s apparel industry, and thereby its exports, would be visible in the export figures of the country in the second half of the ongoing financial year.
The growth is good in naked eye but when you consider the potential of growth than one should say that it should have been better. The growth in other neighboring countries in the mean time has been rapid and no doubt many of them are transferred orders from Bangladesh due to undesirable conditions here.
India gets diverted orders& tries to get European GSP
One of the most renowned textile intelligence providers stated that, Indian garment exports are on the rise as the world’s buyers divert orders from China and Bangladesh. Ordersdiverting from China is absolutely normal as their cost of production is not anymore feasible enough for the
Month wise rise of Indian garments export Year on Year (million USD)
buyers in EU and USA when basic clothing items are in concern, but this is really alarming for us when you hear that orders are also diverting from Bangladesh to India.
India’s garment exports to EU increased by 5.9 per cent year-on-year in January-May 2013, whereas those of China and Bangladesh declined by 9.7 per cent and 1.8 per cent year-on-year, respectively, in the same period. 
Apparel exports for the month of September 2013 grew by 14.95 per cent registering to the $1.11 billion for September 2013. This is the sixth consecutive month where garment exports grew at an average of 13 per cent. In the first half of the current fiscal, India exported apparel worth $7.9 billion, a growth of 13 per cent over last year.
By the way recent reports said that India is also trying to convince European Union to give them GSP Plus status as it is given to Pakistan recently. Posing the advantage enjoyed by the neibouring countries they are trying to get this though economically the country is way ahead of Bangladesh & Pakistan. If India can come with something like that Bangladeshi industry is going to get the next biggest shock for sure.
The fall in the value of Rupee against USD has increased Indian apparel exporters’ competitiveness. The Chinese Yuan has also increased against the USD in the mean time, causing them to lose its competitive edge. But the main reason behind this boost in the Indian garments industry in the last few months is due to issues in Bangladesh. M Shivkumar, CFO, Raymonds says, Importers now prefer to import from India than Bangladesh due to safety compliance issues.
Pakistan getting advantage of GSP Plus from EU
Pakistan secured the long awaited duty-free access to European markets, through the EU Generalized System of Preferences (GSP) Plus status few months back.The country is all set to send 20% of their exports to Europe duty free and the rest 80% at a preferential rate.
Insiders say the country’s export will be increased by at least $2 billion with this facility and only the textile industry will be viable to cut profit of more than 1 trillion rupees. With this preferential rate Pakistani products are going to be 10% cheaper than the Indian products in the European market and highly competitive with the Bangladeshi products. With worker wages rising by 76% in Bangladesh, Pakistan is now a big threat for us. Moreover, with the in-house cotton production Pakistan can easily enjoy a healthy edge over Bangladesh.
Shaikh ShafiqRafiq, Chairman South Zone of Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) say “We expect to see some of the business shifting to us from Bangladesh. They have two advantages over us – one is lower wages and other is duty-free access for their products to European countries, we are catching up on both fronts.”
In this situation working condition will be a major concern for Bangladesh to retain European orders. By this time the minimum worker wage is no morethat cheaper here in Bangladesh compared to Pakistan andwith their own cotton Pakistan can easily make it up for the end product price.
Foreign textile and garment investments flow into Vietnam
Vietnam is another potential garment producing country though far behind in terms of capacity, its revenue is rising robustly. Vietnam’s garment export revenue rose 44.9% in February from the same month last year to US$1.3 billion. 
For the first two months of this year, the export revenue was up 30.1% against the same period in 2013. Many garment companies have orders up to the end of the second and third quarters of this year.
Exports of casual wear in February and in the first two months of this year witnessed 33% and 18.5% year-on-year increases, respectively. Production of fabrics in February rose higher than previous years with increases of 36.9% in natural fabric and 6.5% in synthetic fabric.
The country’s industry is weak in infrastructure but domestic garment companies have already began construction of several projects to expand production capacity in order to be ready for opportunities resulting from the Trans-Pacific Partnership, expected to be signed by the year’s end. The TPP, which has entered the final stretch of negotiations, will lower import taxes in many large member economies like the US, Canada, Australia, and Japan. China is not a member. Import tariffs in the US, the biggest buyers of Vietnam’s leading export, textiles, will be cut from 17-32 per cent now to zero.
|Share of Imports||Annual growth rate|
Table: Share of Garments Import to US with growth rate 
The table clearly shows the acceptance of Vietnamese garments in the US market is increasing rapidly when compared to the other exporters.
Keeping an eye on the upcoming opportunities through TPP, a lot of textile conglomerates are planning to invest big.Jiangsu Yulun Textile Group of China recently got a license for a $68-million textile, dyeing, and yarn plant in an industrial zone in Nam Dinh Province near Hanoi. Industrial zone managers said the factory would go on stream in the middle of 2016 and produce 9,816 tonnes of yarn and21.6 million meters of cloth and dye 24 million meters of both a year. Nam Dinh authorities said a Hong Kong investor also wants to build a garment and textile industrial zone on 1,000 hectares in the province.
In Ho Chi Minh City, Forever Glorious Company belonging to Taiwanese corporation Sheico has committed a $50-million investment to produce clothing and accessories for water sports. The factory is said to need 3,550 workers.
Gain Lucky Limited belonging to China-based Shenzhou International, who makes garments for Nike, Adidas, and Puma, also announced plans to invest $140 million in the city to build a 45-hectare center for designing and producing high-end products.
With these big investments Vietnam is gaining capacity day by day to be one of the strong competitors in garments export to the world.
Global textile and garments industry drive relies on profitability and safety conditions. India, Pakistan, Vietnam, Indonesia, Cambodia and Sri Lanka are the major basic garments manufacturers along with Bangladesh and China. And all of them are looking to capitalize the transferred orders from China as they are moving towards value added products. Bangladesh is in a great position geographically and economically to grab most of the business but as Mckinsey report alarmed, Bangladesh really have to strengthen its safety and compliance issue to be sustainable in this trade. Many of the importers are not blindly coming to Bangladesh rather they are also trying other producing countries over Bangladesh primarily because of working condition, safety and unrest issues.Recent mega programs on safety & compliance namely Accord & Alliance would bring some short term challenges for the Bangladeshi factories, but in the long run the sector will be able reap on these programs.
In India the garments industries are mainly of small and medium scale when compared to the large vertical set ups in Bangladesh. Labour shortage is also a big issue in India. Even with the 76% increased wage, Bangladesh still holds upper hand over India in terms of pricing.
India and Pakistan enjoys the luxury of using their own cotton but Bangladesh due to its large capacity of production has been making it off. Now with the EU GSP we have to see how Pakistan performs. Pakistan is not likely to change its focus towards apparel making due to its GSP plus facilities rather they would continue making textiles. Energy shortage as always seems to be a great problem for the country.
Vietnam is composing special growth in the US market due its preference in that market. Cambodia lacks in infrastructure and Indonesia is almost in the matured position with less scope of growth.
Bangladesh clearly remains the best choice with its excellent competencies in apparel making. Skilled workers & resilient workers are always ready to perform more for growing further. In cost & efficiency Bangladesh still remains most competitive in the world for most of the apparel items. But when question arises onlabour unrests and working conditions, buyers may even compromise with some cents to produce their products from a clean and composite factory. And so with the programs like Accord & Alliance,Bangladesh garments industry has to work really quickly to improve in those areas as if the country can keep the momentum going and explore new horizon.
 Technopac Advisors Research Report
 EPB Export Statistics 2013
 Apparel Export Promotion Council Statistics Report 2013
 Ministry of Industry and Trade, Vietnam
 ITC report, 2013