Bangladesh Export Opportunities
Bangladesh is the largest textile and garment manufacturer in the world today. But Bangladesh is struggling to keep pace with fast growing Vietnam, a country with many strategic advantages. Vietnam has a Free Trade Agreement (FTA) with the European Union. Vietnam also has a closer proximity and relationship with China and has many cities with deep water ports.
Vietnam’s industry is dominated by foreign investors, which currently is not the case in Bangladesh, so Vietnam is leading in terms of technology, capital, management, and efficiency. As BGMEA vice-president has claimed, “there was no debate on the fact that Vietnam has a better country competitive position than Bangladesh.”
But if you combine textiles and garments together, based on the World Trade Organization 2019 report, Bangladesh exported 6.8% of the world’s textiles and garments while Vietnam produced only 6.1%. Bangladesh exported garments with a total value of $34 billion and Vietnam exported garments totaling $31 billion.
It is imperative for the people of Bangladesh to get their small businesses funded with an open exporting model and FTAs with the right trading partners to keep ahead of their global competitors.
The United States is by far Bangladesh’s largest single export destination. In addition, about 97% of all the products that originate in Bangladesh have very desirable duty-free benefits in the US markets as per World Trade Organization agreements.
In late 2017, US President Donald Trump outlined a vision for a free and open Indo-Pacific in which all countries prosper side-by-side as sovereign nations. However, garment products account for 95% of Bangladesh’s total exports to the US market and the US imposes a 15.62% duty for RMG (Ready Made Garments) imports into their country. Currently Bangladesh is the third largest RMG supplier to the United States behind both China and Vietnam.
Since many counties in the world are roughly taxed by the US for RMG at the same rate, and 97% of the goods originating from Bangladesh enjoys duty-free benefits in the US markets, this is unlocking a real opportunity for even smaller Bangladesh companies to use directly global marketplaces like ShopTheGlobe.co that allow Bangladesh companies with export licenses to sell their products directly all over the globe. They can do so in every major language and currency, and smaller US and European retail chains and websites now can have direct access and coordinate directly with Bangladesh local manufactures and local wholesalers.
This allows for the elimination of most middleman and for more of the profits and risks to be kept in their own country.
“To be honest this could be a major game changer for Bangladesh” said Randy Durig – Founder of Shop The Globe. “Knowing small Bangladesh companies now have the ability to wholesale directly to the local US and European retail and online stores, this opens opportunities that in time will eliminate the stranglehold of the big brands that control whole markets cradle to grave.”
Without making considerable advancements in almost all areas such as distribution, pattern making, design development, and capital investments, it will become more difficult for Bangladesh to keep up with Vietnam in the garment industry.
Bangladesh garment leaders off the record claimed “they need better infrastructure and opportunities to further increase country competitiveness, which can be achieved through the optimized cost of business and lead time. Those are long term steps, but we need to make progress far faster.”
Business leaders also claim that the local garment manufacturers and exporters should think about true product and client distribution diversification. As an example, today Bangladesh is highly concentrated with 74% of their products cotton-made whereas the global fashion trend has been rapidly changing to all man-made fibers.
Bear in mind that even though Bangladesh might fall behind Vietnam in garment manufacturing, and it still has many challenges, the beautiful country still has a brighter future in the near term, better than it had for many years.