Bangladesh still popular destination for low-cost apparel sourcing

Published in The Daily Star on April 23, 2018

Bangladesh is still a lucrative destination for sourcing low-cost garment items, coming second to only China, according to the Global Sourcing Survey-2018 by the AsiaInspection, which provides inspection services to global brands.

“Outside of China, India and Bangladesh are increasingly given preferences for textile sourcing due to being lower-cost destinations,” said the report on the survey conducted by AI in December last year.

Top officials of more than 250 companies working in all major consumer product segments were interviewed for the survey.

Of the total respondents, 16 percent said Bangladesh is their destination of choice for sourcing textile and garment products.

China though remains in the lead: it is a regular sourcing destination for nearly 88 percent of the respondents and half of the businesses expect to buy even more from there in 2018.

“The work order situation is positive now,” said Asif Zahir, director of Ananta Group, a leading garment exporter.

Thanks to the rebound of economic situation in Europe and the US, the retailers and brands are placing work orders in bulk in Bangladesh.

At the same time, Bangladesh’s reputation has also improved due to inspection and remediation of the garment factories by the Accord and Alliance.

However, buyers do not want to pay higher prices, although the cost of production will go up further with wage hike, port congestion and higher transportation cost.

“Of course, Bangladesh is a lucrative destination for the global garment buyers,” said Anwar-ul Alam Chowdhury Parvez, a former president of the Bangladesh Garment Manufacturers and Exporters Association. Bangladesh is a favoured destination not only for the competitive price and quality, but also for technical upgrades and improved safety after the inspection and remediation.

After a journey of nearly four decades, the country’s production base is gradually shifting to high-end apparel items from basic products.

Of the total garment exports from Bangladesh in a year, 40 percent are high-end value-added garment items, he said.

“Previously the focus was on basic items but now we are looking at value-added items,” he added. In the footwear segment, 21 percent of the survey respondents said they will source from Bangladesh.

Some 36 percent respondents said they will source food items from Bangladesh, while 15 percent will buy electrical and electronics products from here, the survey said.

Among the top challenges in sourcing in 2017, the cost of manufacturing and raw materials comes first — a trend expected to continue into 2018.

Politics is expected to have a more immediate impact than technology: most of the surveyed businesses anticipate to be affected by tariffs, quotas, protectionism and embargos, rather than automation and 3D printing.

Vietnam is a notable competitor for China in footwear, chosen by 50 percent of respondents, the single most popular choice of any industry outside of China, the study said. In cross industry average, 14 percent of the respondents preferred Bangladesh as their sourcing destination.