Bangladesh cashes in on China’s lost business

The export of Chinese readymade garments to the markets of the United States has significantly reduced due to the trade war between the nations.

The China’s lost businesses were shifted to many Asian countries like Bangladesh, Vietnam, India, Myanmar, and even in Pakistan.

The shifted business gave rise to Bangladesh’s export of readymade garments to the US market by 9.83 per cent.

In 2019, China exported $24.88 billion to US market, which is $2.49 billion less than that of 2018, meaning 9.10 per cent down. China wrapped up 2018 with 1.34 per cent hike in RMG export to the US market, according to the statistics provided by the Office of Textiles and Apparel (OTEXA) under the US Department of Commerce.

Despite the dwindling curve of export from China, the US buyers kept up their import. In 2019, the US procured readymade garments of $83.82 billion from many countries across the globe, meaning 1.16 per cent more than that of 2018, suggest the OTEXA statistics.

OTEX data also shows Vietnam gained most due to China’s lost RMG business. Vietnam exported RMGs worth $13.56 billion in 2019 with 11 per cent growth. Bangladesh is placed second in terms of RMG growth (9.83 per cent). This is the highest rate in RMG export growth inside the last four years. Bangladesh exported $5.9319 billion in that year alone.

Following the Rana Plaza collapse, Bangladesh lost foreign buyers significantly and that slowed down the export growth in 2016 and 2017. After 15 months of negative trends, the RMG market turned about in January 2018. It was the time when Donald Trump’s US and Xi Jinping’s China got tangled in a trade war.

Following the trade tussle, Bangladesh started receiving increasing number of business orders from the US.

Bangladesh Knitwear Manufacturers & Exporters Association’s first vice president Mohamamad Hatem said, “After the trade war, we had got increasing business orders from the American buyers. But, Vietnam, India, Turkey are fetching more benefits from the trade war. They have gained upper hand devaluing their money against dollars. We couldn’t do that. That is why we are failing to benefit much from the trade war as expected.”

Asked about the matter, Bangladesh Garment Manufacturers and Exporters Association’s former president Md Shahidullah Azim said, “The buyers from the US are continuously collecting information about the business orders from us. But, the prices they are offering are much lower than that of our production cost. That’s why have to refuse many orders.”

“If we could devalue our taka against dollars, our RMG exports might rise,” he added.

Despite the upswing in RMG export in the US market, the overall export of the garment products are falling.
According to the Export Promotion Bureau (EPB), in seven months of 2019-20 fiscal, Bangladesh exported readymade garments of $19.06 billion. This is 5.71 per cent less than that of previous fiscal year.

Last year, India exported $4.06 billion to the US with 6.80 per cent growth. Pakistan did not fare so well, exporting 1.43 billion in 2019 to the US, which is 1.79 per cent lower than that of 2018.

Luck smiled on Myanmar. Myanmar exported $40 million to the US in 2019 which is 160 per cent higher than it did in 2018.

*This report, originally published in Prothom Alo print edition, has been rewritten in English by Toriqul Islam.