Multiple factors like capacity in garment manufacturing with specialisation in bulk orders of basic items, low labour and input costs, duty-free access to destinations outside the USA contribute to Bangladesh's cost competitiveness globally.
The US International Trade Commission (USITC) on Tuesday released a report titled 'Apparel: Export Competitiveness of Certain Foreign Suppliers to the United States (Inv. No. 332-602)' requested by the US Trade Representative on 20 December 2023.
The USITC, an independent, nonpartisan federal agency, examined the export competitiveness of the apparel industries in Bangladesh, Cambodia, India, Indonesia and Pakistan that accounted for a combined 27.0 per cent of $79.3 billion total US apparel imports in 2023.
The report identified four key factors - costs including material, labour, capital and logistic; product differentiation; reliability of supply and social and environmental responsibility that affect a country's apparel export competitiveness and how to become a preferred apparel sourcing base for US fashion companies.
The market shares of major US suppliers changed significantly during 2013-23, it said, adding that the share of imports from China, the largest exporter to the United States, fell during the period, while the market shares of other top suppliers such as Vietnam, Bangladesh, Cambodia and Pakistan increased.
Regarding Bangladesh that contribute 9.0 per cent of US apparel import-highest among the investigating countries, the report said as the second-largest apparel exporter in the world, Bangladesh has extensive capabilities in apparel manufacturing and specialises in bulk orders of basic garments.
"Bangladesh competes as a low-cost supplier of apparel to the US market. Low labour costs, relatively low input costs impacted by vertical integration, economies of scale, industry subsidies, and duty-free access to large destination markets aside from the US market contribute to Bangladesh's ability to supply garments at low prices," the report reads.
The size and experience of Bangladesh's apparel industry also allow it to supply a wide range of products in large and small quantities for US buyers, it said, adding that combined with a skilled workforce, the development of support services led the country to become a one-stop shop for apparel for many buyers.
Bangladesh's textile industry supplies a large share of the cotton inputs such as cotton fabrics for its own garment sector, it said adding the country remains dependent on imports for manmade fiber (MMF) inputs, and struggles with poor logistics and substandard infrastructure.
"The garment industry is very powerful within Bangladesh as a result of its size and economic importance. Consequently, strong relationships exist among apparel trade industry associations in Bangladesh, the government of Bangladesh, and apparel factory owners."
In some instances, factory owners also serve as elected government officials, it said, citing that some sources report that these dual roles have increased stability and growth for the garment sector, but others note such practices may be preventing higher unionization rates and wages as well as increased worker empowerment.
It also said that after the collapse of Rana Plaza in 2013, broad improvements were reportedly made to structural, fire, and electric safety standards in Bangladesh's apparel industry.
"However, the industry's reputation regarding social compliance remains low, particularly as it relates to labor practices," the report noted.
The US imported $7.1 billion of apparel from Bangladesh in 2023, an increase of $2.3 billion or 48.6 per cent from 2013.
After China and Vietnam, Bangladesh was the third-largest supplier of apparel to the United States in 2023.
In 2023, Bangladesh was also the second-largest global supplier of apparel, with global apparel exports totaling $39.8 billion.
Bangladesh's largest export products to the United States in 2023 included cotton trousers, knit shirts, and woven shirts.
Although Bangladesh, Cambodia, India, Indonesia and Pakistan differ with respect to the factors of competitiveness that make them attractive to US brands and retailers, they share certain similarities and are all reportedly competitive on sourcing costs, it noted.
Foreign direct investment drives Cambodia's export-oriented apparel industry with Cambodia focused on cut, make, and trim production using imports of upstream materials.
Cambodia's apparel industry is viewed as an attractive alternative to sourcing from China and its reputation for social responsibility contributes to its competitiveness.
Regarding India, the report said the country has a long history in textiles and apparel production and remains a steady source of US imports.
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