China, India, Pakistan now eyeing Bangladesh's RMG destinations
Political instability, labor unrest blamed
Published : Saturday, 28 September 2013
Badrul Ahsan
China, India and Pakistan are set to lure away buyers of ready-made garments (RMG) from Bangladesh by offering rock-bottom prices.
These countries have also assured timely shipment.
The move has sent Bangladesh's RMG exports into a tailspin, industry insiders said.
Garment manufacturers said their exports had been growing steadily for the last couple of years despite global recession. Orders meant for China were redirected to Bangladesh for its low-cost apparels.
But the growth has slowed down sharply since July last. It is heading towards negative trajectory as China, India and Pakistan have made moves to woo many foreign buyers by launching a price war, sources said.
They said the price gap especially of high-end products between Bangladeshi exporters and China, India and other competing countries is not high. Now the competing countries have adopted different higher production capacity-based technology like lean system and have brought production cost down. This has led them to offer rock-bottom prices, they said.
"Many buyers were redirecting their sourcing base from China and India till last financial year (FY) 2012-13, but now these countries have adopted new policy to bring those buyers back to their fold again," Managing Director of Envoy Group Abdus Salam Murshedy told the FE.
"Local manufacturers could not secure the required orders as Chinese, Indian and Pakistani exporters are offering cheaper prices along with timely shipment. Bangladeshi exporters could hardly offer these due to labor unrest," he added.
According to him, many reputed buyers would now source high and middle-end products from India and China due to political volatility as well as workers' unrest in Bangladesh. Local manufacturers are failing to ship goods on time and their manufacturing costs have also increased. The competing countries are making desperate attempts to capitalize the situation, Mr Murshedy added.
Abdul Hamid, deputy chief of the Bangladesh chapter of a buying house 'Preteli Clothing' said their buyers had been sourcing both low and middle-end cloths from Bangladesh for the last couple of years. But for the last couple of months, placement of orders in Bangladesh declined drastically.
"To be frank, RMG products from China, India and Pakistan are now cheaper than those of Bangladesh. This has forced our buyers to rethink about the sourcing destinations," he added.
"It's one of the reasons why Bangladesh's growth has suddenly fallen although it looked perfectly alright till end of last fiscal year despite global recession," he said.
According to him, these three countries are increasingly introducing highly productive technology involving less manpower and this has made their items competitive in the market.
Abdul Majid, General Manager of Top Fashion Ltd, said his company could hardly get orders of high-valued items from buyers in the last few months.
"There is a huge scramble for low to high-end products in the international market. But Bangladeshi exporters are failing to make any headway in getting such orders especially of high-end apparel items," he pointed out.
"In the past, we used to wage price war only among ourselves. But now it has gone out of our hand," Majid informed.
Mr Majid, however, said Pakistan won't be a threat in the long run, but Bangladesh should watch out China and India which have come back strongly.
However, according to data available with the Export Promotion Bureau (EPB), readymade garment export of the country maintained a marginal growth in the first two months of the current fiscal.
The EPB data showed no sub-sector of garments except knitwear could achieve its growth targeted for the period.
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