Apparel orders pick up after three dull months
The trend of buyers shifting orders from China has also proved to be beneficial for Bangladesh
Apparel orders have started to pick up after three slow months as fresh inquiries are coming in from top buyers for the spring season, with manufacturers considering it a positive sign for the country amid the global economic downturn.
On another positive note, buyers are also taking in products they previously kept on hold or asked not to ship, say RMG exporters.
Neela Hosna Ara, chairperson of Crony Group, one of the country's top knitwear exporters, said that currently many buyers are in town and are making more inquiries as well as placing more orders than in the past few months.
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However, entrepreneurs have pointed out that despite an increase in inquiries, buyers are quoting low prices.
They said Bangladesh produces a bigger chunk of basic apparel items, demand for which is higher than any other value-added products.
Besides, the trend of buyers shifting orders from China – as the country is still in Covid-induced lockdown – has proved to be beneficial for Bangladesh.
According to sources at the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), RMG export in the first 20 days of November has seen nearly a 6% year-on-year growth. The growth dropped 19% YoY in October.
Shahidullah Azim, vice-president of the BGMEA, told The Business Standard, "We expect the apparel export growth to remain positive till the month end."
TBS spoke with 11 RMG and textile entrepreneurs and seven of them reported an increase in order inquiries over the past two to three months while some have said the buyers have started taking previously ordered products.
Mahmud Hasan Khan Babu, managing director of Rising Group, said they are expecting new orders from next month.
But, apparel-makers are concerned about the current gas and electricity crisis in the country.
"The shortage of gas and electricity did not reflect in our reputation until now as the volume of orders was low," said Mahmud Hasan, a former vice-president of the BGMEA.
"If orders start to increase now and we cannot ship on time due to the gas-electricity crisis, we will have to send the products by air at 14 times higher the cost at our own expense. In that case, apart from our own losses, our reputations will be at risk," he added.
Mohammad Hatem, executive vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), told TBS, "As buyers are quoting low prices, we are taking selective orders."
Order flow usually picks up during four seasons of the major clothing markets. Export for the winter season, one of the biggest of the year, is almost nearing end while orders for the spring season are coming in with the products expected to be shipped between January and March.
Prices of textiles, a key raw material for the apparel sector, have fallen in recent months due to low demands. However, the country's leading textile mill Mithela Textile Industries' Managing Director Md Azahar Khan said orders have started increasing.
Dr Ahsan H Mansur, economist and executive director of the Policy Research Institute told TBS, "Although the global economy is still in a downturn, data suggests a positive trend in the coming days."
Meanwhile, buyers are shifting orders from China to Bangladesh. According to Dr Mansur, the Covid-induced lockdown in Beijing and the global political tension are the main reasons why Bangladesh is getting a good portion of the orders.
After the economy started to gain pace, which the economists call pent-up demand, Bangladesh exported a record $42 billion worth of garments in the last fiscal year, marking a growth of over 35%.
The abnormal increase in the price of cotton, the main raw material of clothing, was also a reason behind this.
However, after the Russia-Ukraine war began in the beginning of the year, Bangladesh's export was hit as the global economy was experiencing a downturn. The immediate aftermath of the war-induced economic shocks were a shortage of gas and electricity in the country. As a result, on the one hand, the orders kept decreasing while the overall production cost increased, said exporters.
