A International Trade Center (ITC) report ‘The Garment Costing Guide’, shows Bangladeshi suppliers are getting the rough end of the stick in the buying price-points they receive compared to fellow nations that supply readymade garments to the international market. This revelation corroborates the complaints that the nation’s garment exporters have been complaining about for the longest time about their products consistently being placed at lower points than others. ITC connects small businesses in developing and underdeveloped countries to international markets, offering the former to seek profitable exporting opportunities worldwide. It has a joint mandate with the World Trade Organisation (WTO) and with the United Nations through the United Nations Conference on Trade and Development (UNCTAD).

Comparing apples with apples

Bangladesh has established its pole position as one of the leading exporters of readymade garments, second only to China. In fact, in 2022, it overtook China in the EU market and further strengthened and increased its market share in the US. Then why is Bangladesh fetching such low prices? As per the ITC report, retailers and buyers choose to pay anywhere between 32 and 83 per cent less for Bangladesh- manufactured garments, than they pay for the same products from other countries they buy from.

While Bangladesh has the company of Pakistan and Cambodia in fetching much lower prices than other supplier countries, this is no consolation for the world leader in garment exports. Vietnam, Indonesia, Turkey and Mexico are consistently given higher than the average rates.

The report went into specific examples based on purchasing price-points in 2020: A men’s woven trouser from Bangladesh fetched $7.01 per piece, which was 9.20 per cent below the global average of $7.72. For the same product, Vietnam received $10.76 per piece and Sri Lanka and India received $8 and $8.41 respectively. Similarly, a bra made from man-made fiber in Bangladesh received only $3.19 per piece, 18 per cent below the average global price but Vietnam pulled in $6.60 for the same unit. Although jeans from Bangladesh are considered world-class, the prices they fetch are anything but. A pair of jeans manufactured in Bangladesh got $7.81, 7.2 per cent less than the global average. On the other hand, a pair of jeans manufactured in Vietnam secured $11.55.

Bangladesh needs to catch up to global trends

Looking into reason for Bangladesh’s poor price-point performance, ITC’s report points out the new hubs of garment manufacturing such as Hong Kong, Singapore and South Korea have transformed the manufacturing model from simple and basic products to creating global brands that retail globally, and invest heavily in engineering, contemporary IT and cutting-edge technology.

Unfortunately, under-developed countries like Bangladesh, Pakistan and Cambodia did not catch on to this trend in manufacturing and did not invest in product modernization. They remain stuck to simple cut and sew operations, producing vast quantities of commodity-type clothing which cannot command a premium. The report advices manufacturers in these under-developed nations to consider upgrading their production technology and IT to catch up and fetch prices they deserve. Another factor that affects Bangladesh’s low price-points is its aggressive strategy to secure Western orders for which it is flexible to lowering prices that has created a situation where international buyers are aware that they can manipulate price negotiations.

ITC advised Bangladeshi manufacturers to first assess the global market and reflect the demand for value-added goods such as garments made from technical textiles, sportswear, leisure wear, etc. The advice suggests realigning their business model and manufacturing lines to a modern and automated line that is digitally enabled to manufacture style-enhanced products.