Export orders from Bangladesh-based readymade garment factories have dropped by 20 per cent during the January-June period of 2014 against the same period of last year. Small and medium readymade garment units have no fresh work orders as buyers prefer large and compliant factories. A large number of factories have gone for a long vacation for want of work orders. Almost all global brands including Wal-Mart, JC Penny, Zara, Tesco, IKEA, Marks & Spencer, H&M, Uniqlo and Li & Fung are increasingly sourcing from compliant factories.
In such a situation, garment units are desperate for export orders and are searching for new markets like Brazil, Russia, South Africa and Japan. Cost of production has increased due to a 77 per cent wage hike and manufacturers and exporters expect fair prices from retailers.
Bangladesh will face challenges in the European market as the trade block has awarded trade preferences to Pakistan too for the same products. Currently, Bangladesh enjoys zero-duty benefits from the EU under the GSP scheme. Bangladesh also imports textiles and cotton. Given that the country grows little cotton of its own, the local textile and apparel sector is almost entirely dependent on imports of the fiber to spin. Cotton consumption in Bangladesh may rise 8.75 per cent in 2014-15 with higher demand for garments.