Photo : Messenger
Bangladesh is paving the way to become the leading exporter of readymade garments in the global markets, yet the sector cannot ensure receiving fair comparative prices from importers.
The sector earns annually $45 billion from the international market, but experts think if buyers agree to pay fair prices, Bangladesh may earn 30 percent more by shipping the same amounts of clothes.
Industry insiders believe that apparel manufacturers in Bangladesh are trying to negotiate with buyers for fair product prices after the pandemic relaxed, as raw material prices and import costs have increased, but buyers have yet to respond because per-unit prices haven't increased in the retail markets, and sometimes retail consumption has decreased.
The garment players are toiling to sustain their businesses even while work orders are pouring into the country because within a year, raw material prices, import costs, and accessories prices have increased by 40 to 60 percent. However, buyers are reluctant to hike the prices.
Meanwhile, most giant apparel players have started to expand their businesses; however, experts suggest following the "go slowly" strategy for expansion as the backward linkage industry fabrics are still unable to supply adequate quality materials.
“After the Covid-19 situation, the buying capacity of end customers has not increased, therefore, per-unit prices have not increased in the retail market, resulting in buyers being unable to offer much. Moreover, the war has affected the market for a long time,” Dolly Thay, managing director of Cloths 'R' Us Ltd., a buying house, told The Daily Messenger.
She also said that the world economy is still struggling to recover to the pre-pandemic situation, so until prices hike in the retail market, buyers will not increase prices to the level that manufacturers expect.
Dr. Najet Draper, vice president of Research Better Buying, told The Daily Messenger, “Both buyers and manufacturers have to consider the reality. World markets are still struggling to regain momentum.”
Tusher Asrafee, Senior Executive of Marketing at Bhaskar Denim Industries Ltd, said, “We are really going through a hard time. On one hand, we don't have adequate work orders, on the other hand, buyers are offering the minimum price while all the raw material prices, freight costs, and wages have increased by over 60 percent.”
“According to the work orders, we could expand the business, but we are afraid of whether the business will be profitable or not. Now, we have a big establishment, we cannot leave the business whenever we want; that is the dilemma of the sector,” he said.
Shafiur Rahman, regional operations manager of G-Star Raw, told The Daily Messenger, “Though we have 34 denim fabrics mills in the country, we still have to import from China, Pakistan, and Turkey to ensure the best quality. So, without developing the backward linkage industry, the business should not be expanded massively despite having demand.”
“In the adverse situation of the world, the supply chain might be hampered at any time. Freight costs may go beyond our capacity,” he added.
He opined, “Bangladesh should focus on product diversification. There are huge opportunities in the $7 trillion market. Unless we can manufacture high-end products, prices will not rise to the expected level due to the buyers' mindset, as they think the country is for cheap, basic products.”
In the ten months of the current fiscal year, apparel exports fetched $32.85 billion in the eight months of the 2024 fiscal year against the target of $34.66 billion.
Messenger/Fameema
