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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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slide1

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

slide2

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.
slide3

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.
slide5

Positive Impact of Using Local Inputs

Knit garment export fueled by the supply of indigenous yarn has

overtaken woven garment export

slide6

Value Retention Using Local Fabric

2006 Bangladesh T & C business & FE retention:

(all figures in mil US $)

slide7

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.
slide8

Home Textile – Bangladesh in the EU market

  • Bangladesh fastest growing exporter.
  • Grew from €49 mil 2003 to €98 mil in 2004.

Source : EUROSTAT

slide9

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
slide10

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.
slide11

Top Ten Gainers in USA Market 2004 - 2006

Source : OTEXA. USA

Bangladesh gains inspite of US import duty.

slide12

Top Ten Losers in USA Market 2004 - 2006

Source : OTEXA. USA

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

slide13

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 Growth In Million $

slide14

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.
slide15

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.
slide16

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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