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Footwear exports to US grow 64pc in 2022

MONIRA MUNNI | March 28, 2023 00:00:00


Bangladesh's footwear exports to the US market witnessed more than 64-percent growth in 2022, reflecting the buyers' strategy to diversify sourcing destinations and reduce dependence on China and Vietnam.

In the last calendar year, Bangladesh exported footwear worth US$451.40 million as compared to $274.78 million in 2021, according to OTEXA, an affiliate of the US Department of Commerce.

Bangladesh has huge potential to increase exports to the US and raise market share provided improvements in 'speed to market' and ease of doing business, including that of customs procedures to reduce long lead time, are ensured, industry insiders have said.

According to FDRA (Footwear Distributors and Retailers of America), the shoe business and trade association, Bangladesh ranked 9th in 2022 with exporting 19 million pairs from the 10th position in 2021.

China remained the top supplier of footwear to the US, followed by Vietnam, Indonesia, Cambodia, India, Mexico (seventh in 2021), Italy (sixth in 2021), Brazil and Germany (ninth in 2021).

Data analysis showed that, out of US$451 million footwear exports from Bangladesh to the US, the majority or $406.68 million came from leather footwear shipments.

US overall footwear import stood at $33.43 billion in 2022 which was 32.51 per cent higher than that of 2021, according to the OTEXA data.

China exported footwear worth $12.15 billion in 2022 marking 23 per cent year-on-year growth while the export from Vietnam stood at $10.48 billion last year recording over 41 per cent growth.

US footwear imports from Indonesia, Cambodia and India grew by over 53 per cent, 47 per cent and 64 per cent to $2.99 billion, $1.0 billion and $745.03 million respectively.

When asked, Syed Nasim Manzur, President of Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB) said Bangladesh's exports grew mainly because of the American brands' country of origin diversification strategy.

"The US buyers are looking for alternatives to China and Vietnam," he said, explaining that they have shifted or are shifting from China due to high duty there and trade tension between the two countries.

The buyers also want to reduce their over-dependency on Vietnam due to workers shortage mainly because of Covid-led closure and high-tech and digital production, added Mr Manzur, also managing director of Apex Footwear Ltd.

Indonesia, India and Bangladesh are doing well, he said.

Despite quality and price competitiveness, the challenge for Bangladesh is its longer lead time - 90 to 100 days compared to 45-60 days of competitor countries, he observed.

The LFMEAB leader attributed the absence of a strong supply chain for a long lead time saying that Bangladesh has to import almost all raw materials whereas they face problems both in importing and exporting goods due to 'out-dated and complicated' customs procedures.

"The US is all about 'speed to market'. If you supply goods in a short lead time it also gives a price premium," he noted.

He demanded direct air connectivity with the USA and EU for 'speed to market' and raise the market share.

The LFMEAB leader also stressed on maintaining single digit interest rate for export, continuation of EDF without reduction, making leather goods and footwear factories green under Department of Environment, and making required changes in the export policy.

Talking to the FE, Dr M Masrur Reaz, chairman and chief executive officer at the Policy Exchange Bangladesh said Bangladesh has bigger potential for exporting footwear items both leather and non-leather categories to the USA.

The country has already proved its competitiveness in terms of capacity and quality despite any duty benefits there, he said, adding that Bangladesh needs 'heavy export promotion' and application of technology to grab the opportunity.

A recent study by Policy Exchange has identified lack of skilled workforce, inadequate training programmes, dysfunctional common effluent-treatment plants, high cost of obtaining certifications, complex border procedures leading to high lead time, lack of stable tax regime and business environment for investment planning, among others, as obstacles to the growth of the sector.

It recommends some policy priorities especially for building competitive synthetic manufacturing, including facilitating joint ventures in the production of synthetic footwear and chemicals for direct supply to regional production plants to enhance backward linkage.

The study also suggests formulating a long-term strategy for developing the footwear industry with a vision covering 2041, including providing adequate incentives for investments in the backward linkage of the sector, to propel the growth of the industry, reduce lead time and increase value addition.

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