Bangladesh Poised to Overtake China as EU’s Largest Garment Exporter

Black_cats · Mar 14, 2023

Bangladesh Poised to Overtake China as EU’s Largest Garment Exporter

Employees produce down coats at a factory for Chinese clothing company Bosideng in Nantong in China's eastern Jiangsu province on Sept. 24, 2019. (STR/AFP via Getty Images)MORE

By Kane Zhang and Olivia Li
March 12, 2023Updated: March 12, 2023

China has seen a large number of clothing orders canceled by international buyers in the wake of the COVID-19 pandemic and the U.S.-China trade war, with many of these orders having been transferred to Bangladesh, the world’s second-largest garment processing exporter.

Ahsan H. Mansur, executive director of the Bangladesh Policy Institute, said that Bangladesh is expected to overtake China and become the EU’s largest garment exporter.

According to Eurostat data, in the first nine months of 2022, Bangladesh’s apparel exports to the EU reached $19.4 billion, a year-over-year increase of nearly 42 percent, while China’s exports in the same period grew about 22 percent to $25.5 billion.

Nikkei Asia previously reported in mid-February that with the influx of European garment orders, Bangladesh’s ready-made garment (RMG) manufacturing accounted for nearly one-fifth of the country’s GDP, and more than 80 percent of its total export revenue. Many EU buyers look to Bangladesh for garments, including H&M, Zara, Primark, G-Star Raw, and Marks & Spencer.

With a population of nearly 170 million, Bangladesh has a substantial potential labor force. Moreover, it is one of about 45 developing countries that have unrestricted access to all EU markets, excluding arms and ammunition. In contrast, Chinese exporters have to pay duties when selling goods to EU countries.

Mansur told Nikkei Asia that Bangladesh is close to China’s share of exports to the EU and he is confident that it will overtake China as the largest exporter to the EU in the next four to five years.

“China’s RMG market share is decreasing worldwide. I think China has no strategic interest to protect this share as the country is now focusing on developing and producing higher valued goods like electric cars. So they are not concentrating on the apparel industry as before,” he said.

There are at least 4,600 garment processing factories in Bangladesh that employ about 4.1 million people. Most of the garments processed in Bangladesh are exported to retailers in Europe, the United States, and Canada.

China’s Garment Industry Hit Hard by Zero-COVID Policy

China’s garment processing and export industry has experienced a significant decline in the past three years due to its draconian “zero-COVID” policy.

There is a saying in China’s apparel industry: China is the indicator for global garment industry; Guangzhou is the indicator for China’s garment industry, and the Zhongda Textile Business District is the indicator for Guangzhou’s garment industry.

The Zhongda Textile Business District and the surrounding area is a huge garment industrial chain consisting of more than 30,000 apparel manufacturers and retailers, providing job opportunities for over 300,000 employees.

According to Chinese news portal NetEase, before the outbreak of the COVID-19 epidemic in 2020, there were nearly 23,000 fabric stores in the textile business district, with an estimated annual transaction volume exceeding 200 billion yuan ($28.972 billion). The finished products were exported to the United States, Italy, Spain, Japan, and many other countries around the world.

However, during the COVID-19 lockdown measures over the past three years, the textile business district was shut down several times, and all wholesale and logistics were suspended. This situation also dealt a heavy blow to the surrounding apparel market.

Yang Kai (pseudonym), the owner of a clothing store in Baiyun District of Guangzhou City, told The Epoch Times on March 5 that Chinese authorities’ three-year epidemic prevention and control policy, especially the zero-COVID policy, had brought the entire city to a standstill and the supply chain of clothing production has been broken. As a result, orders have been canceled, factories have gone out of business, and a large number of people have lost their jobs. Many foreign companies have withdrawn from China and turned to East Asian countries.

“Rows of shops in our alley are closed. Foreign orders are gone, and domestic orders are scarce,” Yang said. “The once-bustling urban village is now a bleak place. Although it is now open for business, there are no orders at all. There is no hope.”

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