Bangladesh needs to expand its apparel export to East Asia

Bangladeshi businesses must work to achieve the level of efficiency, low waste, and quality needed to enter the Japanese market because the Japanese will not change their regulations to accommodate them. Photo: Mumit M

For Bangladesh's apparel sector (RMG), South Korea, Taiwan and Japan have a lot of promises. Bangladesh now holds roughly a 3.0% market share in Japan, which has an annual market size of about $23 billion. 

If one looks at history, the Japanese market opened up to Bangladeshi RMG in 2010, and there are many reasons why the country's share hasn't increased dramatically. In fact, woven goods from Bangladesh have been able to enter that market duty-free since April 2014 and knit goods since 1 April 2011.

So why, given that goods produced here are priced reasonably, have RMG exports to Japan not performed better? As several industry insiders have noted, Japanese quality control is quite strict. Before accepting items, many Japanese customers literally have a third party inspect individual pieces of clothing from shipments as samples. It has been difficult for many Bangladeshi clothing producers to meet such high-quality standards. 

Secondly, the industry as a whole has historically sought out the 'low-hanging fruits' or the more lenient terms and conditions provided by the US and EU buyers. As a result, RMG makers have hitherto avoided the Japanese market.

In any case, times have changed. Over the course of four decades, the RMG industry has developed and grown, taking over second place in the world's production. With that capacity has come the fact that an increasing number of factories have gone "green" or are in the process of doing so, providing top-notch manufacturing techniques that can—and are in fact—competing with those from other nations to capture a larger share of the Japanese garment market. 

Of course, China, which has a stake of around 53%, is the biggest contributor to the Japanese market. Japan is currently aggressively pursuing a China+1 policy, whereby there is interest in moving away from this overwhelmingly dependent relationship with China in terms of procuring RMG products as a result of recent changes in policies.

Although there are many growth opportunities, there is still much to be done on the policy front. It would surely help if Bangladeshi politicians could secure Japan's commitment to the 'most preferred nation' designation. A free trade agreement (FTA) between Bangladesh and Japan is also being discussed. These would strengthen the apparel industry if they came to pass. 

Due to the country's strict regulations, major RMG producers have historically avoided the Japanese market. However, some businesses have made the effort and are seeing success. According to some industry insiders, it takes time and patience to achieve the degree of efficiency that Japanese buyers want, and it all comes down to mindset. Bangladeshi businesses must work to achieve the level of efficiency, low waste, and quality needed to enter that market because the Japanese will not change their regulations to accommodate them.

The top body of clothing makers, BGMEA (Bangladesh Garments Makers' Export Association), has been doing its share to move things along, looking beyond what the government can or should be doing to enable trade pacts or status to support the industry. 

Last year, BGMEA organised a "Made in Bangladesh" event to demonstrate to foreign clients how far the RMG sector had advanced in terms of quality and the economies-of-scale on offer that couple quality and affordability. The idea was to make Bangladesh seem like an obvious place to find RMG goods. Through seminars, the event successfully showcased to foreign clients and potential buyers the changes that have occurred in the industry over the past ten years. 

In the same interview, Ashraf said that now we intend to organise events in foreign countries where customers reside since not all customers travel to Bangladesh. He believes they will be interested in visiting the nation after learning more about what the regional manufacturing sector offers. According to this itinerary, they will first visit Australia before travelling to Japan and South Korea as scheduled. 

In order to achieve diversity in both export markets and product lines, Bangladesh must be able to obtain duty-free access for T&C (textile and clothing) items to markets such as Japan and elsewhere. As such, this should be a top policy priority for the government over the next few years.

Anup Sinha is a researcher and freelance columnist specialising in South Asian Affairs.

Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinions and views of The Business Standard.