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The future is dazzling for garment sector

German retailers look to Bangladesh as a hotspot for sourcing

REFAYET ULLAH M1RDHA, from Stuttgart
Bangladesh will continue to be a hotspot for garment sourcing for its price competitiveness and quality products, German retailers said.
Furthermore, garment exports from Bangladesh will continue to grow and that too at a faster rate, as China, the world's largest apparel supplier, is struggling to retain its position owing to shortage of manpower and higher production costs.
As a result, Bangladesh will achieve the McKinsey & Company's prediaed $44.56 billion garment export by the end of 2020, the retailers said at a seminar on sustainable management in the textile and apparel industry at Stuttgart in Germany on Monday.
Garment exporters from Bangladesh, Myanmar and Ethiopia attended the seminar,
organised by the Foreign Trade Association of German Retail Trade, IHK, German Asia Pacific Business Association and Bangladesh-German Chamber of Commerce and Industry.
Currently, Germany is the top destination of Bangladeshi garment products of the 28 European Union nations, with almost all of its major retailers that include Hugo Boss, Adidas, Olymp, KiK, s.Oliver and Gerry Webber now sourcing from Bangladesh.
The country exported $4.38 billion of garment items to Germany in fiscal 2013-14, according to the Export Promotion Bureau.
At the seminar, in his keynote speech on the global market scenario, Stefan Wengler, managing director of the Foreign Trade Association of German Retail Trade, said China started losing its market share to other countries mainly for
higher costs of production.
"Interestingly, in the last few years, labour costs have increased the most in China. This results in a higher domestic demand at the expense of exports and has a corresponding impact on the domestic price level."
With regards to Turkey, Wengler said it lost its long-term position as the second biggest apparel supplier to Bangladesh in 2013.
"Throughout the last ten years, Bangladesh has continuously increased its garment exports, not always under working conditions we would like to see though."
Wengler, however, said future garment businesses depend on fulfilment of five conditions including wage, freight charge, cotton price, infrastructure and stable relationship between suppliers and retailers.
Timo Prekop, an executive member of the board of German Asia Pacific Business Association, said Bangladesh would remain a significant sourcing destination for retailers.
Lots of good things are happening in Bangladesh following the Rana Plaza episode, he added.
Bernd Hagen, general manager of the German-based quality inspection company TUVRheinland, said Bangladeshi wares are always of high quality, with failure record of just 5 percent. "Many countries, which are bigger than Bangladesh, have much bigger failure records."
If the country can manage its infrastructure and compliance issues, there will be a real positive push in the
garment business, he added.
"The year 2013 was a trouble shooting year for Bangladesh," Daniel Seidl, executive director of the BGCCI, said.
He particularly stressed the thriving business relationship between Germany and Bangladesh. “Even a few years ago BGCCI had only 60 members, as the business between Bangladesh and Germany was not so high. Now, the chamber has 600 members."
Atiqul Islam, president of Bangladesh Garment Manufacturers and Exporters Association, said the country will need to address the five issues of manpower, power, port, workplace safety and political stability to achieve $44.56 billion garment export by 2020.
The BGMEA will hold an apparel summit in December in Dhaka to showcase the progress made in the aftermath of the Rana Plaza building collapse. Representatives from global retailing firms, Goldman Sachs, JPMorgan, McKinsey & Company, Harvard University, among others will attend the summit, he added.
Hedayetullah Al Mamoon, senior secretary to the commerce ministry, said the country has already fulfilled almost all of the conditions asked on it in the US Action Plan and the Sustainability Compact signed with the EU.
"We had little compliance when the garment sector started developing in Bangladesh in early 80s, but with the growth of the sector the compliance has improved."