Apparel Online Bangladesh Magazine October Issue 2018 | Page 24

BANGLADESH INSIGHT
Will Bangladesh
beat Mexico in denim
exports to USA?
D
enim exports from Bangladesh
have been exceptionally positive
over the last few years. The country
has already topped the EU market
with a 27 per cent market share
and US $ 1.30 billion worth of denim
shipment in 2017, noting a surge
of 0.54 per cent over 2016, while it
is fiercely moving towards beating
Mexico to gain the second spot after
China in denim exports as far as the
USA is concerned.
Bangladesh clocked US $ 507.90
million in its denim exports to USA
in 2017, noting 9.57 per cent surge
over 2016. While, Bangladesh’s close
competitor Mexico plunged 7.92 per
cent on the yearly note to US $ 793.46
million in 2017. Even during January
to June ’18 period, Bangladesh
exported denim apparels to USA
worth US $ 245 million, marking 16.86
per cent growth, according to the data
released by OTEXA. Interestingly,
Mexico, which is the second biggest
The reasons
behind
Bangladesh’s
steep climb in
denim exports to
USA are many
but the key factor
that will remain
are the the low
unit prices.
Bangladesh
shipped 3.22
million dozen of
jeans in H1 ’18 in
the US market.
denim apparel supplier to USA, fell
by 2.73 per cent to clock US $ 360
million in the same period.
This continuous decline of Mexico
indicates that the business from
USA is gradually skewing towards
Bangladesh, probably due to rising
wages in Mexico as well as trade
negotiation on NAFTA agreement. On
the other hand, Bangladesh’s growing
denim fabric base, low wages and
automation have helped Bangladesh
manufacture more of value-added
garments and beat Mexico (which
fell 5.21 per cent to US $ 44 million
in H1 ’18) in Women and Girls (WG)
category of jeans export. Bangladesh
grew 16.19 per cent in WG category
exports to touch US $ 104.17 million
in the same period.
The reasons behind
Bangladesh’s lead…
The reasons behind Bangladesh’s
steep climb in denim exports to USA
are many but the key factor that will
remain are the the low unit prices.
Bangladesh shipped 3.22 million
dozen of jeans in H1 ’18 in the US
market, while the shipment from
Mexico stood at 3.53 million dozen in
the same period. Unit prices offered
by Bangladesh were valued at US $
76.27 per dozen, which were way less
than what Mexico (US $ 101.92 per
dozen) offered.
In an era of massive cost-
competitiveness, such high UVR
from Mexico is definitely hurting its
denim exports despite being in close
proximity to the USA and getting an
advantage of ‘zero’ duty rates for
jeans shipped to USA under the North
American Free Trade Agreement
(NAFTA). Mexico is CMT industry
for denim and imports denim fabrics
from USA itself. The American
companies are scared of what will
happen if President Trump sticks
to his stand on NAFTA. Supported
by all these factors, in FY 2017-18,
Bangladesh exported denim apparels
worth US $ 2 billion which is expected
to cross US $ 6 billion by 2021,
provided the new investments by
Bangladeshi denim exporters, both in
fabrics and garments manufacturing,
increase in capacity, push export
earnings up, offer competitive prices,
and take the lead in the global denim
trade, especially in US denim market.
The manufacturers of Bangladesh
are therefore sourcing denim
24 Apparel Online Bangladesh | October 2018 | www.apparelresources.com
fabrics locally instead of importing.
According to Bangladesh Textile Mills
Association (BTMA), Bangladesh
currently has 31 denim fabrics
manufacturing mills, which have an
annual fabric production capacity
of over 400 million-metre fabrics.
However, local suppliers can only
meet 50 per cent of Bangladesh’s
annual demand for denim fabrics and
the rest is met through imports from
China, India, and Pakistan.
Commenting on the same, Gazi
Mahbubul Alam, Director, Mahmud
Group, Bangladesh, shared with
Apparel Online, “Since we have
our own denim mill and we produce
more than 16 million-metre denim
fabrics annually, it gives us the
leverage to control the price. Also,
we have a mechanism with which we
are somewhat immune to the price
fluctuations of the fibre. Thirdly, if
even after this, the rates seem high
to the buyers, we work with them and
explore ways and means to bring the
cost down by way of twitching the
length or changing the seam style or
removing some operators altogether.”
Another denim giant in Bangladesh,
the Delta Quality Denims Ltd. (a
sister concern of US $ 200 million
The Delta Group) believes that
technology and automation can take
the country’s denim export to a whole
new level. Rupak Chakraborty,
Director (Operations & Marketing)
of the company told Apparel Online,
“With the installed technologies,
Delta has reduced human
intervention, salary burdens and
has improved the flow of processes
to a great extent. The infusion of the
latest automated technologies is also
helping the company to maintain the
quality desired by the buyers and
that too at a much lesser cost than
the market prices, thereby, making
Delta a trusted company in the
market in an era where most of the
manufacturers are cribbing about
losing orders due to their failure of
keeping the unit prices of garments
low and, at the same time, the
quality high.”
Meanwhile, the buyers, especially
for denim, nowadays are preferring
to work with socially and
environmentally compliant factories.
Bangladesh has been successful in
having a complete control on the
entire denim supply chain and the
improvement of the safety standard