The United States Fashion Industry Association (USFIA) represents brands, retailers, importers, and wholesalers based in the US and doing business globally. It recently concluded a survey among 30 US-based fashion brands, most of them being large organisations with over a 1,000 employees. The survey conducted between April and June 2023 highlighted Asia continues to be the dominant source for American garment importers. Seven out of the top utilized sources for 2023 were: China and Vietnam at 97 per cent utilization, Bangladesh 83 per cent utilization and India 76 per cent utilization. Unanimously, Bangladesh emerged as the least expensive apparel sourcing nation.

Gains for being least expensive

Yes, Bangladesh is the least expensive and therefore, much of its sustainability comes from enormous volumes of basic apparel, a Catch-22 situation. Bangladesh garment manufacturers' claim they are constantly receiving lower prices from global buyers and underscore the importance of moving up the value chain. Moreover, India is slowly edging out this cost competitiveness as energy prices in Bangladesh soar and unravel the tight cost-controlled operations Bangladesh is known for, whereas energy prices in India remain stable and comparatively lower.

 Another fallout of being the least expensive has come in the form of criticism Bangladesh faced about its social and labour-related concerns, on which the nation has improved its operating standards in the last two years. Various rights groups in the US and Europe are already saying Bangladesh is involved in ‘cotton laundering’ by importing its cotton from Xinjiang. Such accusations have become detrimental to for the RMG industry. 

However, Bangladesh had to reiterate often the main source of raw cotton is the US and India and a small amount is imported from China. The study scores Bangladesh a good 4.5 in terms of sourcing cost, followed by Indonesia at 4 points. However, in speed to market, Bangladesh is the worst among Asian competitors with a mere 2 points. China leads with a 3.5. Similarly, in environmental compliance Bangladesh appears at the bottom with 2.5 sharing the place with India, Vietnam and China. 

Respondents rated China and Vietnam as the most competitive in sourcing flexibility and agility this year stating the lifting of Covid restrictions in these two countries has significantly reduced supply chain disruptions and facilitated smooth movement of goods. 

Commenting on the USFIA report that Bangladesh is the least expensive sourcing point, Fazlul Hoque, managing director at Plummy Fashions and former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said US buyers are convinced Bangladesh has developed the capacity in the last few years to produce garment products other than basic items and based on this, Bangladesh hopes to see an increase in orders. However, the ground reality is different as the USFIA also mentions that Bangladesh is behind India, Cambodia and CFTA-DR countries when it comes to planned growth of orders. 

Moving away from China to boost Bangladesh

Almost 80 per cent respondents are looking to diversify their order basket with the primary objective of relocating them from China. Bangladesh being among top four Asian sourcing destinations is therefore in a favourable position to gain new business taking away from China’s share. But will Bangladesh continue to be the cheapest to keep it in the running? India is slowly gaining ground in terms of being less expensive, Bangladesh rates poorly in speed to market as well as sourcing flexibility and agility and the US is also beginning to diversify to Central and Latin American countries. In this scenario, may be Bangladesh might have to step up its act beyond being the least expensive, especially when high energy costs and inflated raw material imports are proving costly as overheads.