Global RMG Market: Bangladesh Projected As Next ‘China’

The government, the International Labour Organisation (ILO) and the buyers have been working together to improve working conditions in garment factories following the Rana Plaza tragedy in April 24, 2013. The discontent of workers over wages has also subsided to a great extent with the implementation of the new wage board award.
The readymade garment sector is the golden goose for Bangladesh. The country has emerged as the second largest exporter of readymade garment products trailing just behind China.
Bangladesh entered the apparel export market in 1978 with only nine units and earned US$ 0.069 million. During the last three decades, this sector has achieved a phenomenal growth due to policy support of the government and more importantly, dynamism of the private sector entrepreneurs along with extremely hardworking workers. Now the number of RMG units is around 6,000 and the export earnings have exceeded US$ 20 billion. Knit garments are exported to 148 countries and woven products to 132 countries. Analysts say the apparel export earnings can be more than doubled by the year 2020.
More than 4.0 million workers work in the RMG units, of whom around 80 per cent are women. The RMG roughly covers 78 per cent of the total export of the country. Garment workers make about two-thirds of the number of employees engaged in the manufacturing sector.
However, the leading readymade garment exporting country China now facing some structural problems. Per unit labour cost in the country is on the rise. Its labour productivity grew at 7.0 to 13 per cent in the past two decades, leading to higher wage cost and losing its foothold as the world's lowest cost manufacturer of consumer goods.
Bangladesh's per capita manufacturing value-added, for instance, is $107.65, compared to China's 1,147.12 and India's 163.44.
Bangladesh will be able to export US$ 1.0 billion worth of RMG to China within the next few years. There will be demand of US$ 650 billion in the global clothing and apparel market by 2020 where there is a scope for Bangladesh to contribute $44.56 billion. China is an untapped opportunity for Bangladesh.

A survey found that European and US companies that focus on the apparel market's value segment plan to expand the share of their sourcing from Bangladesh to 25 to 32 per cent by 2020, from an average of 20 per cent now.
Some important areas which require more attention to sustain and enhance deep-level competitiveness of the industry are reduction in production and distribution time, expansion of linkages, compliance with code of conduct of buyers and changes in product/market composition.
Bangladesh is now improving its competitiveness by reducing total production and distribution time, which will improve surface-level competitiveness by reducing lead time.
Bangladesh is now trying to diversify its markets to include Japan, Australia and other important international markets.