16 Aug, 2014
Vast market opening up next door
Bangladesh's export to China quadruples
Ziaur Rahman
Bangladesh's exports to China made a quantum leap in the last fiscal year (FY) indicating that a new and very potential export market, especially for the country's readymade garments, was opening up just next door.
Over the last four years, according to an official count, the volume of exports to the Chinese market increased more than four times.
The Export Promotion Bureau (EPB) data shows that merchandise shipments to China, also the country's largest source of necessary imports, totalled US$ 746.198 million in the FY 2013-14. It posted a robust 63 per cent growth compared to the $ 458.118 million of the previous FY 2012-13.
Commensurate with the steady growth in the two-way trade, export earnings from China in the first month (July) of this fiscal (2014-15) grew by 53.88 per cent to $79.47 million from $ 51.64 million during the previous corresponding period.
Exports to the world's second-largest economy--which boasts the biggest population in the world--have increased more than four times over the last four years. The export turnover was worth a modest amount of US $ 178.630 million in the FY 2009-10.
Officials and entrepreneurs attributed the phenomenal rise mainly to the zero-tariff access it provided to Bangladesh as well as the switchover to high-end fashion-design items and also graduation to hi-tech industry from basic products.
Currently, Bangladesh as a least-developed country (LDC) got duty-and quota-free access for 4,788 products to the Chinese market as of July 2010. The trading list, according to Bangladesh Tariff Commission, accounts for 67 per cent of the country's export basket.
The items Bangladesh exports to China include readymade garments and textiles, fish and crabs, leather and leather goods, jute and jute-yarn and plastic waste, according to the EPB data. The apparel products constitute a third of the exportable.
Bangladesh exported readymade garment (RMG) items worth about US$ 241.37 million to China in the last FY against $ 139.14 in the previous fiscal. The growth was 57.64 per cent. In the FY 2011-12, the amount was $ 104.52 million. "China is gradually drifting away from the basic RMG items because of high cost and switching over to high-tech industries, leaving a big scope for Bangladesh to grab the market," said Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) vice-president Mohammad Hatem.
"We are very optimistic about being able to grab the China market and hope to increase our exports to the tune of one billion dollars within a couple of years," said Mr Hatem.
The business leader described details about their initiatives on emerging markets-which are unfolding when the country is facing some problems, especially regarding compliance with conditions, in the western world.
"Among the new markets China is very important for us, next to Japan and Russia," he added.
"The internal demand for apparel items in China is worth US$ 310 billion annually. If we can grab 1 per cent of the market share, then we will be able to export apparels worth US$3 billion within the next few years to China," he said.
According to sources, at present Bangladesh accounts for 5.0 per cent of world RMG exports while China's share of the trade is 30 per cent. But China is slipping from its top position, losing 5.0 per cent of its contribution annually due to labour shortages and high labour costs.
Due to declining profit margins and capacity constraints in China, investors are looking for other lower-cost countries for making investments in readymade garment (RMG) manufacturing, and producing and sourcing garment products.
Bangladesh's apparel exports could triple by 2020 as the European and the US buyers also plan to strengthen their presence in the country and new players are planning to enter the market, seen as 'Next China', according to a study.
According to industry sources, the prospect of sequestering the upscale products also looks bright. Even Chinese investors are coming to Bangladesh to explore export possibilities here.