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Background. Traditionally a textile country. Jute exports supported economy. Declined in 80’s due to technology and nationalization; had to look for alternative. Textile & Clothing (T & C) replaced jute as the major export : (a) East Asian wages were going up

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Background

  • Traditionally a textile country.

  • Jute exports supported economy. Declined in 80’s due to

    technology and nationalization; had to look for alternative.

  • Textile & Clothing (T & C) replaced jute as the major export :

    (a) East Asian wages were going up

    (b) Problems in Sri Lanka

    (c) Labour intensive industry

    (d) Favorable quotas and GSP Policy from EU and USA


T & C Export Journey

  • Initially garments were produced with imported yarn & fabric.

  • Growth could not be sustained with imported inputs :

  • Cost too high  Smaller margins.

  • Inconsistent quality leading to claims / rejections.

  • Undependable deliveries  Extended lead times.

  • Unable to respond to fashion changes.

    Thus, Bangladesh Government and the Textile & Clothing (T & C) industry decided to approach the market with dual supply chain:

    • Export using imported fabric.

    • Export using local yarn and fabric.


Policy Result :Domestic Market

  • Growth in population & per capita consumption, multifold increase in demand.

  • BTMA members & handloomweaversmet market needs & kept foreign competition out. In spite of lowering import duties and lifting all import bans/restrictions.


T & C Growth


Positive Impact of Using Local Inputs

Knit garment export fueled by the supply of indigenous yarn has

overtaken woven garment export


Value Retention Using Local Fabric

2006 Bangladesh T & C business & FE retention:

(all figures in mil US $)


Export Growth to the EU

  • Export using the GSP facility to the EU increased eleven fold

  • in the period 1998-2005.

  • Huge local inputs & foreign exchange retention.

  • Massive domestic investment in T & C.

  • Industry very favorably responding to EU GSP facility.


Home Textile – Bangladesh in the EU market

  • Bangladesh fastest growing exporter.

  • Grew from €49 mil 2003 to €98 mil in 2004.

Source : EUROSTAT


DENIM

Local availability of yarn stimulated growth in Denim fabric manufacturing :

  • This resulted in :

  • Bangladesh top denim supplier to EU in 2006 (26.76% market share)

  • Growth

    • 26.15% for Men’s denim

    • 91.00% for Women’s & Girl’s denim

  • Export to USA in 2005

    • 850,000 doz.

    • 160 % Growth


Post MFA Challenges

  • World T&C market growing at 5% annually.

  • Buyers moving to targeted countries. Large volumes and economies of scale needed. Bangladesh is strong in sweater, knit, denim and home textiles.

  • All buyers give preference to countries / companies with vertical operations to meet lead time and fashion changes, local fabric availability is necessary.

  • Bangladesh only nation excelling in dual supply chain management for export using

    • Local Inputs

    • Imported inputs

  • Therefore, in order to maintain its competitive advantage in garment

  • exports, Bangladesh supported local textile industry.


Top Ten Gainers in USA Market 2004 - 2006

Source : OTEXA. USA

Bangladesh gains inspite of US import duty.


Top Ten Losers in USA Market 2004 - 2006

Source : OTEXA. USA

Reduced from $24.94 Billion to $18.979 Billion in two years.


Opportunities

Export to the US Market

Bangladesh has take steps to fill the space created by the above countries –

inspite of uneven competition

Bangladesh’s Post-MFA US Market GrowthIn Million $


Position of our Competitors

China:

  • Price deflation ended.

  • Domestic retails growing 20 – 25% yearly

    - 2001 – 3.95 Trillion Yuan

    - 2006 – 7.84 Trillion Yuan

  • Wages – upward.

  • Subsidies reducing.

  • Currency appreciation.

  • India:

  • Hasn’t mastered high volume growth.

  • Very weak post spinning Textile industry.

  • Alternative export opportunity.

  • Still a low volume exporter.

  • Rising Wages.


Position of our Competitors

Vietnam, Sri Lanka & Mauritius :

  • Doesn’t have a local textile industry.

  • Skilled labour shortage .

  • Trying to get value added product.

    Africa:

  • Hasn’t picked up inspite of duty free access.

    NAFTA & Central America:

  • Losing out to Asia.

  • Inspite of duty free preference still occupies 6 of the top 10 losers to USA.

  • Reduction of US inputs.


Bangladesh Textile & Clothing Export in Post MFA – Era

  • Strengths

  • Aggressive investors

  • Efficient and trainable labour force

  • Dual Supply Chain Management :

    • Export with local inputs

    • Export with imported inputs

  • Backward linkage

  • Market access

    Areas for Growth

  • Knitting

  • Sweater

  • Denim

  • Bed sheet

  • Woven Garments


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