Graduating to higher priced garments
Sunday, 14 September 2008
OUR RMG exporters should realize that the drop in export earnings in the US is not only due to the competition Bangladesh is facing from some countries which have got quota-free and duty-free access to the US market. The point is that the US market has also shrunk considerably for all countries that export low-end or common RMG products to it because of the continuing recession in that country.
The demand for the sort of common apparels that Bangladesh exports to the US and other markets in developed countries is income elastic. The incomes of common consumers in the USA and other developed countries have been falling due to recession. But the demand situation for more higher priced garments bought by affluent section of people in those countries are income inelastic because these classes of people tend to buy at a steady rate regardless of price and their income. Thus, the Bangladeshi RMG exporters need to try changing over or adding to their capacities to produce higher priced garments or higher quality garments which have still good demand in the US market and the markets of other developed countries.
If our RMG producers and exporters can make this switch-over fast, then they can very probably get around the competition they now face in relation to some sub-Saharan, African and Asian countries in exporting mainly common apparels. The Bangladeshi garments operators with their experience gathered so far- and established capacities --are probably better-positioned to effect a change in their production from common to higher quality apparels. In that case, not only the RMG sector in Bangladesh will get a new lease of life, it will also actually reach a new height from fatter profit margins from exporting higher quality RMG products.
Abul Khair
Gulshan, Dhaka.
The demand for the sort of common apparels that Bangladesh exports to the US and other markets in developed countries is income elastic. The incomes of common consumers in the USA and other developed countries have been falling due to recession. But the demand situation for more higher priced garments bought by affluent section of people in those countries are income inelastic because these classes of people tend to buy at a steady rate regardless of price and their income. Thus, the Bangladeshi RMG exporters need to try changing over or adding to their capacities to produce higher priced garments or higher quality garments which have still good demand in the US market and the markets of other developed countries.
If our RMG producers and exporters can make this switch-over fast, then they can very probably get around the competition they now face in relation to some sub-Saharan, African and Asian countries in exporting mainly common apparels. The Bangladeshi garments operators with their experience gathered so far- and established capacities --are probably better-positioned to effect a change in their production from common to higher quality apparels. In that case, not only the RMG sector in Bangladesh will get a new lease of life, it will also actually reach a new height from fatter profit margins from exporting higher quality RMG products.
Abul Khair
Gulshan, Dhaka.