Apparel exporters eye Asian countries for higher prices, comfortable conditions

As the Western buyers keep on putting harsher conditions on Bangladesh’s factories without rewards, apparel exporters now eye intra-regional trade, exporters said.

They said the market is the largest one and offers higher rates.

The garment players said the European importers are setting harsher conditions on safety matters but are not interested in raising prices. Implementing those preconditions are expensive while rewards are trivial, they added.

It is why for the survival of trade; they are now eyeing Asian countries.

The demand for ready-to-wear garments in the Asian region hiked because of geographical proximity during Covid-19 pandemic when shipping costs rose abruptly.

Exporters said shipments to Asian destinations have increased during the 2021-’22 fiscal year in spite of ongoing stagflation caused by the Russia-Ukraine war.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), apparel export to India has increased to $715 million from $422 million, Japan to $1.06 billion from $945 million, Korea to $440 million from $322 million, United Arab Emirates to $282 million from $226 million and Malaysia to $209 million from $155 million, respectively, in 2021-’22 FY.

“As Asia has markets closer to us, the freight costs are lower. And, we can negotiate for ethical prices with Asian buyers. Moreover, as this is considered as a non-conventional market for Bangladesh, the sector gets 4 percent (govt) incentives,” Sahahidullah Azim, Acting President of BGMEA told Business Insider Bangladesh on Monday.

He said apparel shipment to Asian nations will be able to fetch more foreign currency than the EU from the same volume of work orders.

Gradually, the EU buyers are imposing harsher conditions regarding the safety issues but they are not interested in paying for complying, he added.

Azim, however, said he is afraid that any invasion of Taiwan will make their intra-regional trading complicated.

Another exporter said regional importers do not inflict stringent conditions.

Delivering products to Asian nations takes only 10 to 12 days as against 35 to 40 days to European and American destinations. “And, importers will have to pay less freight charges. The most important thing for us is that the buyers here are not unforgiving over the rules and regulations inside the factories,” Fazle Ahsan Shamim, Director of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said.

He said although the volume of work orders has increased, other expenses are eating up profits.

Meanwhile, due to Covid-19 restrictions across the global ports, exports declined in 2020. The losses were largely recovered in 2021. But, as the exporters started gaining profits, the war bit into it.    

However, Bangladesh mainly exports trousers, shirts, skirts, blouses, underwear, and sweaters to the global markets. 

According to BGMEA, the country fetched $42.61 billion from the global market in the 2022 fiscal year.