Market Research


Initiatives for Expanding Market


In order to safeguard the sector from the wave of global recession, BKMEA’s strategy was to sustain in the main export destinations as well as explore more emerging countries for further sustainable growth rate. Finally at least seven countries had been identified based of economic indicators and named them as JBM-RCKS, which are Japan, Brazil, Mexico, Russia, China, Korea (South) and South Africa.

At the beginning of 2010s, Bangladesh Knitwear Sector has been able to export knit items to more than 145 countries with significant volume because of efficient planning and its proper implementation. Despite the prolong debt crisis in EU and USA – the main two export destinations of Bangladesh, raising export to emerging markets neutralized the adverse export growth in the main two destinations. The success resulted in market diversification, which was not automatic rather interventional. This achievement is primarily down to a numbers of attempts taken by BKMEA’s leadership during last three years with a view to trade expansion and facilitation..

Targeting these markets, BKMEA has been attempting to strengthen bilateral trade relations through scoping mission, fair arrangement, buyers’ visit, and finally branding Bangladesh. These wise initiatives fabricate immense possibilities for Bangladesh knitwear at those markets. The recent trade experiences validate the argument showing a surprising double digit export growth rate in these markets last fiscal year. In this scenario, Bangladesh garment industry is well placed to withstand the increase in competition in its export markets.

Activities for Market Expansion


Though the history of Bangladesh Knitwear industry is not ancient but within last 3 decades with efficient planning and proper implementation export of Bangladeshi Knitwear products increased in more than 170 countries across the world.  
But a myriad of changes in the economic, technological, social and political equilibriums, the 2008 Financial Crisis, Europe’s sovereign-debt crisis, slowing down of key global economies have reshaped the world structure of global manufacturing chainbr.

Again, the present scenario and the emerging trends are strongly indicating that by the end of the first quarter of this century, the major share of apparel market is expected to happen in China, India, Brazil, Russia and other countries where the growth of per capita spend on apparel will be higher than the growth of the developed economy.


Analysis of Potential Market


After the prolonging worldwide financial crisis the volume of Bangladesh knitwear export shrink in the traditional markets such as USA, Canada and EU. In this circumstance to retain the growth rate of Knitwear export; BKMEA targeted some of the new but potential market for export of Bangladeshi Knitwear items. Initially the Research and Development wing, BKMEA selected some markets around different continent. First of all, we find out the demand pattern of Apparel product in that market, the volume of import, per capita consumption, per capita income, Tariff rate, Non Tariff measures, Facilities for LCDs under the WTO rules of Origin etc. Then we organized different trade and Knit exposition on those countries. We also participated into different national and international Textile trade shows to find out the demand structure of those countries.

We also send delegates in those potential markets like Japan, Russia, South Korea, Turkey, China and India with the aim to negotiate about relaxation of Rules of Origin (RoO) and the duty free and Quota free entry of Bangladesh Knitwear product in those Markets.

Sought out the Demand Pattern of Potential Market


As apparel is a global business and the Knitwear sector of Bangladesh is 100% export oriented so the information about worldwide demand pattern of Knitwear product have a great importance on production and business of Knitwear sector. As the sole representative of Bangladesh Knitwear Sector; BKMEA with its Research & Development Cell is endeavoring to seek out the demand pattern of those countries which have high potentiality of Knitwear export from Bangladesh. We also taken initiative to discover the current structure of world apparel market and disseminate those information to the member factories, so that they can adjust their production pattern regarding the world demand.

UNIDO has long focused on the specific needs of LDCs in line with the global consensus on the achievement of the Millennium Development Goals and the Brussels Programme of Action for LDCs, which called for building LDCs’ productive capacities (commitment 4) and enhancing the role of trade in development (commitment 5). UNIDO’s strategy for supporting LDCs has been multi-dimensional, ranging from a greater allocation of technical cooperation resources to LDC-specific initiatives to global forum activities focusing on the specific needs of LDCs.

Table: Export-import and Demand pattern of some potential Countries
Country
Total Export(in Billion USD)
Total Import (in Billion USD)
Total Apparel Import (in Billion USD)
Apparel import (% of total import)
EU 28 (Up to November)
5193.31
5056.85
149.75
2.96
USA
1623.44
2409.79
85.71
3.56
Japan
691.23
813.09
29.35
3.61
Australia
252.6
228.75
6.04
2.64
Russia (Up to October)
422.96
242.29
6.84
2.82
South Korea
573.09
525.56
8.03
1.53
China (Up to October)
1903.64
1627.06
4.75
0.29
Brazil
225.1
229.06
2.56
1.12
Canada
474.84
462.82
9.19
1.99
Source: ITC Trade Map

 

Tariff and Non- Tariff Barrier of Trade

 

 

From the very Beginning of its journey BKMEA is endeavoring to expand the export of Bangladesh Knitwear products across the world. But the Tariff and different non Tariff measures imposed by different country hampering the flow of Knitwear export. To find out the rate of different Ad valorem tariff regarding the Knitwear export of Bangladesh in different countries, also negotiation to reduce the tariff rate under WTO Rules with Govt. of different countries are the major concern of BKMEA. At present Bangladesh is enjoying Duty Free Quota Free (DFQF) and preferential market access in 49 countries.

Table: Zero Tariff facilities for Bangladesh Readymade Product in Different Countries
Sr. No.
Name of The Country
No. of Tariff Line
Total Ad valorem equivalent Tariff
Sr. No.
Name of The Country
No. of Tariff Line
Total Ad valorem equivalent Tariff
1
Albania
147
0%
26
Italy
172
0%
2
Andorra
103
0%
27
Japan(29 Products)
282
0%
3
Australia
132
0%
28
Latvia
172
0%
4
Austria
171
0%
29
Libya
116
0%
5
Belgium
172
0%
30
Lithuania
172
0%
6
Brunei Darussalam
189
0%
31
Luxembourg
172
0%
7
Bulgaria
171
0%
32
Martinique
119
0%
8
Canada
121
0%
33
Malta
171
0%
9
Croatia
171
0%
34
Netherlands
172
0%
10
Cyprus
171
0%
35
New Zealand
154
0%
11
Czech Republic
171
0%
36
Norway
134
0%
12
Denmark
172
0%
37
Poland
172
0%
13
Estonia
171
0%
38
Portugal
172
0%
14
Finland
172
0%
39
Romania
172
0%
15
France
172
0%
40
Scotland
47
0%
16
Georgia
173
0%
41
Singapore
124
0%
17
Germany
172
0%
42
Slovakia
172
0%
18
Greece
172
0%
43
Slovenia
172
0%
19
Greenland
172
0%
44
Spain
172
0%
20
Hong Kong
248
0%
45
San Marino
129
0%
21
Hungary
171
0%
46
Sweden
172
0%
22
Hawaii
198
0%
47
Turkey
231
0%
23
Iceland
125
0%
48
Taiwan
23
0%
24
Ireland
172
0%
49
United Kingdom (UK)
172
0%
25
India(46 Products)
197
0%
50
     

Along with Tariff barriers Bangladesh Knitwear sector facing several non tariff measures in terms of different environmental & health certification, Labeling & Packaging certification, Third party inspection, Raw material sourcing, Documentation is imposed by the buyers of different countries. Research & Development cell, BKMEA is continuously working to find out these Non Tariff Measures through several field work survey and suggesting different policy to minimize these Non tariff Barriers.

 

Organizing and Attending Trade Show


“Introducing Bangladesh Knitwear to Global” with this slogan, BKMEA organized single country Knit Exposition in different but potential countries worldwide. BKMEA also organized several knit exposition jointly EPB and different international organization like International Apparel Federation. As always, BKMEA is spreading out the elegance of our unique knitwear products across the world as part of its constant efforts to tap new destinations as well as to make strong footholds in the existing market bases.  

To showcase the strength of the knitwear sector of Bangladesh and to exchange views with potential buyers and investors under the same platform, BKMEA frequently arranges shows and fairs at national and international levels. Like,

 
  • Bangladesh Knitwear Sourcing Trade Show, New York, USA, 2005
 
  • Western Hemisphere promotion show, ASAP Global Sourcing Show in 2007
 
  • Bangladesh Knit expo in Germany, 2006;
 
  • Bangladesh Knit Expo in Toronto, Canada, 2007
 
  • China market promotion 8th Western China Fair in 2007
 
  • Participation in Bangladesh Development Fair 2010 
 
  • Participation in CPM, Moscow, September, 2010,  Russia
 
  • Participation in Hong Kong Fashion Week, July, 2010,Hong Kong
 
  • Participation in Australian International Sourcing Fair (AISF), 2011,Australia,
 
  • Participation in the Business trip in Las Vegas, USA with Commerce Minister, February 2012.
 
  • Participation in the Business trip in Uzbekistan with Commerce Minister, April, 2012.
 
  • Organized the 6th Knit Exposition in Tokyo, Japan; January 25-27, 2012


Initiative for Relaxation of Rules of Origin and GSP


As Bangladesh knitwear exports heavily concentrated to three markets (European Union, USA, Canada) which associated with several hazards, on the other hand, there are huge opportunities in several potential market worldwide like Japan, Russia, South Korea, China, Australia etc. In an effort to removing the hurdles and expanding the opportunities of Knitwear export, BKMEA is thus looking to increasing knitwear export to Japan.

With this goal in mind, BKMEA carried out an exploratory mission to Japan at the mid of 2009 and another scoping mission in September, 2009 in collaboration with GTZ to intensify the existing contacts and trade links. Apart from gaining more market access to Japan, the main purpose of the visit was to propose that the Japanese Government relax the existing Rules of Origin (ROO) for knitwear so that the Japanese GSP could apply to this sector.

With such effort, the Rule on 2nd stage GSP facilities for Bangladesh passed on the parliament on 2nd March and on 1th April 2012, The Govt. of Japan relaxed the RoO for Knitwear of Bangladesh to two stage transformation (that is yarn can be sourced locally or from abroad) from three stages. This was an important achievement for Knitwear sector of Bangladesh which boosts up the export volume of Knitwear export to Japan. With 2nd stage GSP facilities, In FY2013-14, the knitwear export has recorded a growth rate of 27.75 percent from the last fiscal year.

After that in 2014, the Business delegate from BKMEA with Prime Minister of Bangladesh visited Japan and discussed with Japan Ministry of Commerce to relax the Rules of Origin for Bangladeshi Ready Made Products from 2nd stage GSP facilities to Single Stage GSP facilities. The Ministry of Commerce, Japan already announced the Rules of Origin relaxation regarding single stage GSP facilities for RMG export in Japan

Initiative for Free and Preferential Market Access


Bangladesh’s knitwear export is concentrated on both products and markets. About 82 percent of total knitwear export goes to only two markets: European Union (72%) and USA (9.94%). Any kind of shock in these economies may create disasters to our knit sector as well as the economy. It is high time we took market diversification activities to reduce the dependency on a few market. As a Least Developed Country (LDC), Bangladesh can seek DFQF market access in the developed and developing countries for 97% of its product.

But Bangladesh’s export is concentrated on RMG products (81% of total export came from RMG in FY2013-14). So rest 3% may cover the important product categories of Bangladesh.

In this circumstance, BKMEA has taken initiative to find out some of the potential regional and multilateral trade block for expanding the market share of Bangladesh Knitwear Product. BKMEA also has taken initiative to negotiate with those trade blocks to get preferential market access. Some trade blocks are as below:

 
  • CUBKR (Customs Union of Belarus, Kazakhstan & Russia): Bangladesh may seek Generalized System of Preferences (GSP) facility in these markets.
 
  • SACU (Southern African Customs Union of Botswana, Lesotho, Namibia, South Africa, and Swaziland): Bangladesh has to face more than 50% tariff barrier in exporting knitwear product in these markets. Negotiation to reduce tariff rate may create favourable environment for Bangladeshi knitwear exporters.
 
  • MERCOSUR (Customs Union of Argentina, Brazil, Paraguay, Uruguay, and Bolivia): Bangladesh also has to face high tariff barrier in these markets. We can have preferential trading agreement (PTA) with this block.
 
  • NAFTA (North American Free Trade Agreement of USA, Canada and Mexico): We can seek DFQF facility from this block.
 
  • GCC (Gulf Cooperation Council of Saudi Arabia, Kuwait, Qatar, Bahrain, UAE and Oman): We can negotiate to get DFQF facility from this block.

 

In some especial cases, negotiation with a single country may bring better result than regional trade block. So BKMEA also has taken initiative to bio lateral negotiation with some of these potential countries.   Such as,

 
  • USA: Bangladesh is getting DFQF facility in exporting RMG products in almost all developed countries except USA. Bangladesh has to pay more than 16 percent tariff in exporting knit products to USA. RMG products fall under 3% margin. 
 
  • Russia: Bangladesh can seek GSP facility in Russia for its RMG products. Russia is very potential market for Bangladesh knit products.
 
  • Japan: Bangladesh is enjoying GSP facility in exporting knit products in Japan. But the product coverage under GSP is negligible (only 7 knit products as HS Code 9).
 
  • Bangladesh can have an agreement (FTA or Preferential Trading Agreement) with emerging and potential countries. Like Russia, Brazil, Chile, Mexico, South Africa, United Arab Emirate, Saudi Arabia, Argentina, China etc.

 

Expansion of Newer Market


At the beginning of 2010s, Bangladesh Knitwear Sector has been able to export knit items to more than 145 countries with significant volume because of efficient planning and proper implementation. But a myriad of changes in the economic, technological, social and political equilibriums, the 2008 Financial Crisis, Europe’s sovereign-debt crisis, slowing down of key global economies have reshaped the world structure of global manufacturing chain. Again, the present scenario and the emerging trends are strongly indicating that by the end of the first quarter of this century, the major share of apparel market is expected to happen in China, India, Brazil, Russia and other countries where the growth of per capita spend on apparel will be higher than the growth of the developed economy. In the meantime, the per capita spend on apparel in USA and Europe will rise at a much slower rate.

In order to safeguard the sector from the wave of global recession, BKMEA’s strategy was to sustain in the main export destinations as well as explore more emerging countries for further sustainable growth rate. Finally at least seven countries had been identified based on economic indicators and named them as JBM-RCKS, which are Japan, Brazil, Mexico, Russia, China, Korea (South) and South Africa.

The new emerging markets are Australia, Japan, China, Russia, South Africa, Korea, India, Brazil, Chile, Mexico and Turkey and these countries herald great potentials in terms of export of Bangladesh Knitwear products. According to sources, rise in export to markets such as Australia, Japan, Russia, China, South Africa and Brazil are highly encouraging.

China


For centuries China stood as a leading civilization, outpacing the rest of the world in the arts and sciences. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2013 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The government's 12th Five-Year Plan, adopted in March 2011 and reiterated at the Communist Party's "Third Plenum" meeting in November 2013, emphasizes continued economic reforms and the need to increase domestic consumption in order to make the economy less dependent in the future on fixed investments, exports, and heavy industry.  

With the program of New Market expansion form BKMEA the Knitwear export to China rises sharply in recent years. After the shock of Financial Crisis the knitwear export growth rate in China rises dramatically at the rate of 208%. The average Knitwear export growth rate in China was 96.81% during last four years.





 

Japan

In the years following World War II, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (1% of GDP) helped Japan develop a technologically advanced economy. Japan joined the Trans Pacific Partnership negotiations in 2013, a pact that would open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, Japan in 2013 stood as the fourth-largest economy in the world after second-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012.

In FY 2010-11, the Knitwear Export from Bangladesh to Japan increased sharply at 76.83% then the previous year. In 2013-14, Bangladesh exported $253.35 million Knitwear product in Japan, which was only $53.06 million in 2009-10. The average Knitwear export growth rate in Japan was 50.05% during last 4 years.

 

 

 

 

South Korea



South Korea over the past four decades has demonstrated incredible growth and global integration to become a high-tech industrialized economy. In the 1960s, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. But in 2004, South Korea joined the trillion-dollar club of world economies, and is currently the world's 12th largest economy.

In FY 2009-10, the export volume of Knitwear product from Bangladesh to South Korea was too little but the export trend was upward rising. In FY 2010-11, the growth rate of Knitwear export on South Korea was 82.14%. The average growth rate of Knitwear export in South Korea during last 5 year was 70.94%.

 

 

 

 

South Africa



South Africa is a middle-income, emerging market with an abundant supply of natural resources; well-developed financial, legal, communications, energy, and transport sectors and a stock exchange that is the 16th largest in the world. Even though the country's modern infrastructure supports a relatively efficient distribution of goods to major urban centers throughout the region, unstable electricity supplies retard growth.

In FY 2009-10, the volume of Knitwear export from Bangladesh to South Africa was 14.90 Million USD.  In FY 2010-11, the growth rate of Knitwear export in South Africa was 36.58% from previous year. The trend of upward growth continues until FY 2012-13 and went slightly downward in next fiscal year.

 

 

 

 

Russian Federation

Russia has undergone significant changes since the collapse of the Soviet Union, moving from a globally-isolated, centrally-planned economy towards a more market-based and globally-integrated economy. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy and defense-related sectors.

In FY 2009-10, the volume of Knitwear export from Bangladesh to Russia was only $13.72 million but in next year the volume reached at $42.33 million with a growth rate of 208.53%. In FY 2013-14, the Volume of Knitwear export rises to $132.82 million. The average growth rate of Knitwear export in Russia is 88.81% during last four years. 

 

 

 

Brazil

Characterized by large and well-developed agricultural, mining, manufacturing, and service sectors, and a rapidly expanding middle class, Brazil's economy outweighs that of all other South American countries, and Brazil is expanding its presence in world markets. Since 2003, Brazil has steadily improved its macroeconomic stability, building up foreign reserves, and reducing its debt profile by shifting its debt burden toward real denominated and domestically held instruments.

Unemployment is at historic lows and Brazil's traditionally high level of income inequality has declined for each of the last 14 years. Brazil's historically high interest rates have made it an attractive destination for foreign investors.

The volume of Bangladesh Knitwear export to Brazil is increasing steadily. In FY 2009-10, Bangladesh exported $33.33 million Knitwear product in Brazil, which become almost doubled in next Fiscal year. Though there was a negative trend in Knitwear export to Brazil in FY 2013-14 but the average growth rate in Brazil is much promising.

 

 

 

 

Mexico



Mexico's $1.3 trillion economy has become increasingly oriented toward manufacturing in the 20 years since the North American Free Trade Agreement (NAFTA) entered into force. Mexico has become the United States' second-largest export market and third-largest source of imports. In 2013, two-way merchandise trade reached nearly $507 billion. Mexico has free trade agreements with over 50 countries including Guatemala, Honduras, El Salvador, the European Free Trade Area, and Japan - putting more than 90% of trade under free trade agreements.

Mexico is one of the potential markets for Knitwear export from Bangladesh. In FY 2009-10, Knitwear export from Bangladesh to Mexico was $35.88 million, over the year which rose to $50.83 million with a growth rate of 41.67%. The average growth rate of Knitwear export from Bangladesh to Mexico was 20.27 during last 4 years.

 

 

 

 

Chile


Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports of goods and services account for approximately one-third of GDP, with commodities making up some three-quarters of total exports. Copper alone provides 19% of government revenue. From 2003 through 2013, real growth averaged almost 5% per year, despite the slight contraction in 2009 that resulted from the global financial crisis. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile is providing DFQF facilities to Bangladesh in terms of export.

Though the volume of Bangladesh knitwear export to Chile is not so promising but The Latin America Bloc has huge potentiality for the export of Bangladesh Knitwear product. In FY 2009-10, Bangladesh exported $4.45 million Knitwear items to Chile, which reached at $9.31 million with a growth rate of 109.21%. The average growth rate of Bangladesh Knitwear export to Chile was 56.16% during last 4 years.

 

 

 

 

India


India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and served to accelerate the country's growth, which averaged fewer than 7% per year from 1997 to 2011. India has capitalized on its large educated English-speaking population to become a major exporter of information technology services, business outsourcing services, and software workers.

With 100 million consumer market India is one of potential market for Bangladesh Knitwear product in upcoming days. In FY 2009-10, Bangladesh exported only $2.54 million Knitwear product in India but in the following year it increased dramatically to $10.49 million with a growth rate of 312.99%. The trend of Export growth rate of Bangladesh Knitwear to India is positive and the average growth rate was 96.30% during last four years

 

 

 

 

Malaysia


Malaysia, a middle-income country, has transformed itself since the 1970s from a producer of raw materials into an emerging multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move farther up the value-added production chain by attracting investments in Islamic finance, high technology industries, biotechnology, and services. NAJIB's Economic Transformation Program (ETP) is a series of projects and policy measures intended to accelerate the country's economic growth.

With a average growth rate of 72.25% during last four years Malaysia became one of the potential market of Knitwear export of Bangladesh. In FY export of Knitwear Product from Bangladesh to Malaysia was only 6.48 million USD, which reached at $12.19 million in the following year, with a growth rate of 88.11%. 

 

 

 

 

Australia


The Australian economy has experienced continuous growth and features low unemployment, contained inflation, very low public debt, and a strong and stable financial system. By 2012, Australia had experienced more than 20 years of continued economic growth, averaging 3.5% a year. Demand for resources and energy from Asia and especially China has grown rapidly, creating a channel for resources investments and growth in commodity exports.

Australia is one of the major emerging export destinations of Bangladeshi Knitwear products. The volume of knitwear export is increasing sharply in the market of Australia. In FY 2009-10, Bangladesh exported only $60.41 million to Australia. In FY 2010-11, the volume reached at $143.08 million with a growth rate of 136.85%. The average growth rate of Knitwear export from Bangladesh to Australia was 55.11% during last 4 years.

 

 

 

Turkey


Turkey's largely free-market economy is increasingly driven by its industry and service sectors, although its traditional agriculture sector still accounts for about 25% of employment. An aggressive privatization program has reduced state involvement in basic industry, banking, transport, and communication, and an emerging cadre of middle-class entrepreneurs is adding dynamism to the economy and expanding production beyond the traditional textiles and clothing sectors. The stock value of FDI reached nearly $195 billion at year-end 2013, reflecting Turkey's robust growth even in the face of economic turmoil in Europe, the source of much of Turkey's FDI.

Though Turkey itself is a Readymade Garments producer and supplier but Turkey is one of the potential markets for Bangladesh Knitwear products. In FY 2009-10, the volume of Knitwear export from Bangladesh to Turkey was $182.52 million, which increased at a rate of 49.30% in the following year