Challenges And Opportunities Of Bangladesh Denim Industry

- May 30, 2018 -

Bangladesh is the second largest producer of denim products after China. Bangladesh is exporting denim products approximately 200 million pieces every year all over the world mostly in the EU and US market. This thriving industry is mainly driven by its large-scale manufacturing capacity and lower production cost. According to Bangladesh Textile Mill Association (BTMA), Bangladesh currently has 31 denim fabrics manufacturing mills, which produce over 437.877 million yards of fabrics every year.

Denim export trends 

Bangladesh has become a major hub for sourcing trendy denim products for international retailers mainly due to its competitive pricing. Brands like Charles Voegele, G-Star, Jack and Jones, s.Oliver, River Island, H&M, C&A, PVH and Gap, Uniqlo, Tesco, Walmart, Levi’s, Diesel, Wrangler, and Hugo Boss have turned to Bangladesh in the last couple of years for denim product imports.

Popularity of denim products for youth is increasing significantlyFigure 1: Popularity of denim products for youth is increasing significantly.

Many companies in Bangladesh are doubling their capacity. Nowadays Bangladesh exports Blue Denim Trousers WG, Blue Denim Trousers MB, Blue Denim Skirts, Blue Denim Jackets, Blue Denim Suit Type Coats MB, Playsuits, and Sunsuits, among other products, to the international markets.

Bangladesh denim exports scenario at a glanceFigure 2: Bangladesh denim exports scenario at a glance.

According to the Table 1 and 2, Bangladesh denim export to the US and EU is rising significantly and denim export to the US has been increased more than that of EU.

Bangladesh’s denim export to the USTable 1: Bangladesh’s denim export to the US. Source: Eurostat

According to Eurostat, statistics directorate of the European Commission, Bangladesh exported denim products worth of €1.30 billion in 2017, a 0.54% hike from 2016’s €1.29 billion. According to data from the Office of Textiles and Apparel (Otexa) in the US, Bangladesh earned $507.92 million, a 9.55% growth – exporting denim products to the US markets in 2017, which was $463.61 million in 2016.

Bangladesh’s denim export to EUTable 2: Bangladesh’s denim export to EU. Source: Eurostat

China earned $921.90 million with 1.41% negative growth, while Mexico registered 7.9% negative growth by earning $793.42 million. Meanwhile, Pakistan and Vietnam, the two closest competitors of Bangladesh, posted positive growths by over 13% earning $213.78 million and nearly 20% earning $207.28 million, respectively.

Opportunities 

The previous discussion has proved that demand of denim fabrics and products is increasing rapidly in the global market. According to a study by Cotton Inc, almost 71% of people in Europe and Latin America recline wearing denim, followed by 70% in the US, 58% in China, and 57% in Japan.

To meet the growing demand of denim fabric to International market, the local mills are enrobing enormously on state-of-the-art imported machinery especially on the weaving and processing side and setting up large plants in the country.

Sayeed Ahmad Chowdhury, General Manager of Square Denim, said, “Investment in denim fabrics and denim manufacturing has increased sharply. As a result, production capacity has increased too, pushing the export earnings up and taking the lead in the global markets.”

‘’Manufacturers are now also taking less time to produce the products as they are sourcing the fabrics from local mills instead of importing. As a result, buyers are placing more orders here,” he added.

He also said that “In the last two years, Square Denim has increased its production capacity from 1.5 million meters to three million. Considering the increasing demand they will be launching another unit soon.’’

“Buyers always want quality fabrics in case of denim products. To manufacture quality fabrics, the latest technology is must for any industry. And we have already established that,” said Abdus Salam Murshedy, Managing Director of Envoy Textiles.

Two years back, Bangladesh was highly dependent on imported denim fabrics, but now Bangladesh can meet about 50% of the demand locally and are also exporting to some of the globally renowned buyers.

Challenges

Along with opportunities, the industry has some challenges also. Infrastructure is a major challenge. Inefficiency in ports, inadequate rail and road networks, gas and electricity crisis and the need for a deep sea port are some of the major challenges for Bangladesh denim industry (and for other industry also). These are also the root causes of why Bangladesh is among the highest lead-time countries.

Another major challenge is dependency on external sources for fabrics, as Bangladesh still has to import about 50% denim fabrics.

On the other hand, production cost has onward, but the manufacturers are forced to offer lower prices due to price cuts in the finished products by global retailers.

The challenge for Bangladesh is also adding further value to denim products through design development and innovation. In this regard, the sector currently needs more investment in research and innovation to meet the goal. Moving towards value-added products is another issue that needs more attention.

In fine, Bangladesh has an enormous opportunity to grow in the RMG export markets as denim products have emerged as major players in the global markets. There are challenges to grow the sector, however, the industry has great prospect to overcome the challenges and to become the leader in the global market. In this regard, Bangladesh government should prioritize denim products and provide all-out support to the entrepreneurs.


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