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Eighty per cent of fashion brands and retailers of United States having business with Bangladesh have expressed their interest in expanding sourcing from the country in the next two years as the companies were actively seeking China’s alternatives, according to the US Fashion Industry Benchmarking Study for 2019.
The study, released on Monday, also revealed that nearly 17 per cent of the respondents expected to increase sourcing from Bangladesh strongly.
The sixth fashion industry benchmarking study of United States Fashion Industry Association, however, identified that Bangladesh had slipped to the 6th position from the 5th as an apparel sourcing destination for the US fashion companies deeming the weakness of the country in the areas of speed to market and compliance.
‘This year, Bangladesh is the #6 top sourcing destination, with 60 per cent usage among respondents, down from #5 (75 per cent usage) in 2018,’ the study said.
Despite the price advantages, however, respondents still see Bangladesh not as attractive as many of its competitors regarding speed to market, flexibility and agility, and risk of compliance, the report read.
Bangladesh’s growth potential was restrained by the narrow categories of products it could make and cotton trousers and cotton shirts had stably accounted for nearly 60 per cent of total US apparel imports from Bangladesh in the past ten years.
Sheng Lu, associate professor of fashion and apparel studies at the University of Delaware, conducted the survey between April 2019 and May 2019.
During the survey, he asked executives from 39 leading fashion brands, retailers, importers, and wholesalers about the business outlook, sourcing practices and views on trade policy.
The study found that the US industry executives saw impact of trade disputes on costs and turn cautious on five-year outlook.
‘Sourcing executives are more cautious today and less optimistic about the five-year outlook for the US fashion industry. One year ago 84 per cent of survey respondents were “optimistic” or “somewhat optimistic” about the outlook for the next five years. This year that number dropped to 64 per cent,’ Sheng said.
The survey found that trade war between US and China increased cost of business and 84 per cent of respondents termed increase of production and sourcing costs in alternative destinations other than China as the biggest challenge for the fashion industry this year.
‘Not just costs in China are increasing, but the costs to source in the main alternatives to China – especially Vietnam, Bangladesh and India — also are soaring. And the uncertainty seems to also affect logistics and transportation costs,’ the report read.
The report showed that the average prices of US apparel imports from Bangladesh increased by 25.6 per cent in 2019 (January-May) year on year.
Although the US buyers have been shifted their sourcing from China, study finds that China does not have a near competitor in terms of the variety of product it can make.
‘The survey reveals that increasing production and sourcing cost is the top business challenge for the US Fashion Industry, which means Bangladesh will face tough competition in the coming days given its increasing unit value in recent past and price reduction by China,’ Bangladesh Garment Manufacturers and Exporters Association president Rubana Huq told New Age on Tuesday.
The study finds that Bangladesh’s growth potential was restrained by its narrow categories of products it could make and RMG makers were discussing it in recent times, she said.
‘The report shows that unit price from Bangladesh has grown at highest rate among all other producing countries during 2018 – May 2019. This is positive for us and apparently negative for them,’ Rubana said.
(NA)
