US retailers cautious on sourcing expansion from B’desh: study

A file photo shows workers sewing clothes at a readymade garment factory in Dhaka. Bangladesh has slipped to the 7th position from the 5th as an apparel sourcing destination for the United States as US fashion companies deem Bangladesh risky in terms of trade compliance, according to the US Fashion Industry Benchmarking Study revealed on July 20. — New Age photo

Bangladesh has slipped to the 7th position from the 5th as an apparel sourcing destination for the United States as US fashion companies deem Bangladesh risky in terms of trade compliance, according to the US Fashion Industry Benchmarking Study revealed on July 20.
The survey jointly conducted by the United States Fashion Industry Association and Sheng Lu, assistant professor at University of Delaware, asked 34 executives from the leading fashion and apparel brands, retailers, importers, and wholesalers about the business outlook, sourcing practices, utilisation of free trade agreements and preference programmes, and views on trade policy.
Among all sourcing destinations examined this year, the study found Bangladesh as the most competitive in terms of price, but the riskiest in terms of trade compliance.
This year, Bangladesh is the 7th sourcing destination with 61 per cent of the respondents sourcing there, while it was 5th (70 per cent) in 2016, the survey said.
The survey was conducted in the period between April and May this year.
‘The United States demonstrates a competitive edge against other sourcing destinations, whereas respondents say Bangladesh, Cambodia, and India are relatively high risk in terms of compliance,’ the report said.
Overall, the respondents are cautious about expanding sourcing from Bangladesh in the next two years, with only 32 per cent expecting to somewhat increase sourcing there, and none expecting to substantially increase sourcing there, the report observed.
Country’s apparel exporters, however, differed with the outcome of the survey saying that Bangladesh made significant progress in factory compliance in last three years.
‘There may be some information gap in the respondents’ knowledge of Bangladesh’s readymade garment sector as the country’s RMG sector is closely working with the Alliance for Bangladesh Worker Safety, a platform of North American retailers and buyers, and a good number of Bangladeshi factories have already achieved international recognition in terms of safety and security,’ Abdus Salam Murshedy, president of the
Exporters Association of Bangladesh, told New Age on Saturday.
He said that following the Rana Plaza collapse, exporters were losing their competitive edge due to massive investment in the areas of compliance that caused a fall in export to the US market.
The study also said that although US fashion companies continued to seek alternatives to ‘Made in China’, China’s position as the top sourcing destination remained unshakable.
Meanwhile, sourcing from Vietnam and Bangladesh may continue to grow over the next two years, but at a relatively slow pace, it said.
The study showed that 91 per cent of the respondents sourced from China this year, while it was 100 per cent in the past three studies.
According to the report, China is still the top-ranked sourcing destination this year, and the percentage of those expecting to decrease sourcing from the country fell from 60 per cent in 2016 to 46 per cent this year and many more expect to maintain their current sourcing value or volume from the country in the next two years.
Only 36 per cent of the executives expect to increase sourcing from Vietnam compared with 56 per cent last year.
‘This is likely due to the United States’ withdrawal from the Trans-Pacific Partnership,’ the USFIA survey said.
According to the respondents, Bangladesh offers the most competitive price followed by members of the African Growth and Opportunity Act and several other Asian suppliers.
While the majority of respondents remained confident about the five-year outlook for the US fashion industry, the percentage of those who were optimistic or somewhat optimistic dropped to 71.0 per cent in 2017 from 92.3 per cent in 2016, which is a record low since the USFIA began conducting such study in 2014.
This change could be due to concerns about the protectionist trade policy agenda and market competition in the US, the report observed.
According to the report, 100 per cent of the respondents opposed the US border adjustment tax proposal.

Source: New Age

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