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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

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


Background

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.


Background

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.


Background

T & C Growth


Background

Positive Impact of Using Local Inputs

Knit garment export fueled by the supply of indigenous yarn has

overtaken woven garment export


Background

Value Retention Using Local Fabric

2006 Bangladesh T & C business & FE retention:

(all figures in mil US $)


Background

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.


Background

Home Textile – Bangladesh in the EU market

  • Bangladesh fastest growing exporter.

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

Source : EUROSTAT


Background

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


Background

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.


Background

Top Ten Gainers in USA Market 2004 - 2006

Source : OTEXA. USA

Bangladesh gains inspite of US import duty.


Background

Top Ten Losers in USA Market 2004 - 2006

Source : OTEXA. USA

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


Background

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 $


Background

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.


Background

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.


Background

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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