October 16, 2017
According to a global survey, Bangladesh will remain the apparel sourcing hotspot for international retailers and brands over the next five years because of competitive prices and China’s declining market share in garment business.
The world’s most prestigious management consultancy firm, McKinsey & Company prepared the biennial survey based on interviews of Chief Purchasing Officers (CPOs) of top 63 global garment retailers and brands that buy apparel items worth $137 billion a year.
Figure 1 Over next five years, Bangladesh is potential for the 1st choice as she remains on top of five apparel sourcing countries (figure in %), Source: Mckinsey Apparel CPO Survey 2017.
In the survey titled “The apparel sourcing caravan’s next stop: Digitization”, CPOs said that Bangladesh is still their first choice as sourcing destination for 49 percent while 43 percent opted for Ethiopia, 37 percent for Myanmar, 35 percent for Vietnam and 22 percent for India.
Bangladesh is the second largest apparel exporter worldwide after China, Bangladesh exported garment items worth $28.14 billion in the last fiscal year, registering 0.20 percent year-on-year growth.
Atiqul Islam, former president of BGMEA said, “I believe Bangladesh will be the top choice of global retailers and brands as the garment sector improved workplace safety and other compliances after fixing the structural, electrical and fire security loopholes.”
The survey mentions that cost of raw materials and chemicals, currency exchange rates, labor costs, change in trade agreements, compliance costs, shift in purchasing power, and transport and financing costs would be the highest impacting factors for garment business.
According to the World Trade Organization, China remains by far the biggest garment exporter with its export valued at $177 billion in 2016 — compared to $28 billion for Bangladesh and $25 billion for Vietnam.
“Ethiopia, which exports garment items worth less than $1 billion a year, is not a major competitor now. But it could pose a big challenge for Bangladesh in the future as it is receiving a lot of foreign direct investment for producing low-cost basic garment items”, opined by distinguished fellow of the Centre for Policy Dialogue, Mustafizur Rahman.
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