Bangladesh’s apparel sector is likely to see a decline in apparel export orders while sourcing from China may pick up again as the demand for textile inspections and audits from global buyers decreased in Bangladesh and increased significantly in China in January-September of 2023, according to a Quality Inspection MAnagement report.
QIMA, a leading provider of supply chain compliance solutions, in its quarter 4, 2023 barometer titled ‘Is China Sourcing Back in the Spotlight as Consumer Demand Slows Down in the West?’ said that inspection and audit demand from global buyers during the first nine months of 2023 decreased by 10 per cent year on year.
In the period, the demand for textile inspections and audits in China grew by 14 per cent year on year globally and by 17 per cent among the western buyers, it said.
The report also said that inspection and audit demand in two of South Asia’s textile powerhouses, Bangladesh and India, contracted year-on-year in January to September 2023, while remaining above 2021 levels.
‘US-based buyers in particular appear to be scaling back textile and clothing sourcing from Bangladesh,’ the QIMA report observed.
The report mentioned that in the context of cooling consumer demand, global brands and retailers appeared to be pushing China sourcing higher on their agenda again.
Meanwhile, many of China’s competitors struggle with the recent influx of new business, and some of them are better equipped than others to handle the rapid growth, it said.
Bangladesh Garment Manufacturers and Exporters Association president Faruque Hassan on Saturday told New Age that the country’s apparel manufactures were struggling for the past few months due to a global economic slowdown and recently the situation deteriorated further due to the political and labour unrest in the country.
The BGMEA president said that work orders remained lower for the past several months due to slow global demand fuelled by high inflation.
‘China has own raw materials and the country has scope for increasing its apparel exports, but I think its exports would not increase significantly,’ he said.
The barometer report, informed by the QIMA’s data on product inspections and factory audits, offers an insight into the shifting state of the global sourcing landscape as 2023 draws to a close.
During the past few years, in the wake of tariffs wars, Covid lockdowns and geopolitical uncertainty, western buyers have shifted significant sourcing volumes from China to other supplier markets, including in Southeast and South Asia, as well as nearshoring regions.
The QIMA data suggested that interest in China sourcing might be picking up again in the global market as the relative share of China in the supplier portfolios of the buyers of United States and the European Union increased in the first nine months of 2023 for the first time since 2019.
‘It appears that as consumer spending in the West is slowing down due to fears of economic downturn, brands and retailers may be prioritising China as a supplier again, to leverage the benefits of its well-established manufacturing infrastructure,’ the report reads.
The report suggested that Bangladesh should diversify its exports to remain competitive amid declining demand for South Asia textile sourcing.
‘The country’s apparel industry, which is currently heavily cotton-oriented, can benefit from branching out into manmade textiles,’ the report said.
Outside the RMG sector, there is a lot of export potential in other consumer goods, such as footwear, leather and home textiles, among others, it observed.
According to QIMA, electrical and electronic goods also offer valuable export opportunities, but to compete on the global stage in this field, Bangladesh needs to strengthen local institutions responsible for internationally recognised certifications.
The QIMA data showed that 57 per cent of businesses with international supply chains included nearshoring as part of their short- and medium-term supply chain strategy.
Due to the ‘working with suppliers close to home’ strategy, Mexico, surpassed China as the US’s largest trading partner in 2023, and the demand for inspections and audit in the market grew by 17 per cent year on year in Q3.
As Mexico offers many benefits to US-based buyers, such as geographic proximity, zero tariffs, low labour costs and a relatively matured manufacturing base, the country has been attracting new business at an impressive pace, QIMA found.
The report, however, identified infrastructure, power availability and security as challenges in sourcing from Mexico.
The QIMA report found that the EU-based brands were still doing a lot of business with suppliers around the Mediterranean and demand for inspections and audits witnessed a double digit growth in Turkey, Jordan, Tunisia and Egypt.
Fazlul Hoque, a former president of the Bangladesh Knitwear Manufacturers and Exporters Association, said that China was trying to regain its market with the support from its government.
‘It is true, we are not in a good position in this time and it is uncertain whether Bangladesh’s RMG exports would rebound within the short time,’ he said.
‘But I do not go for any conclusion based on the report of QIMA whether apparel sourcing China would increase significantly by the western buyers,’ he added.
New Age
