US-China trade war shifting apparel focus to Bangladesh
The trade spat between Washington and Beijing has been prompting more companies to move away from China to avoid US tariffs and sanctions, Nikkei Asian Review reports.
Despite being the world’s largest garment exporter, China’s share in global apparent exports came down to 30 per cent or $158.4 billion, last year, from around 40 per cent at the beginning of the decade.
This is, the report said, because apparel companies are gradually migrating to neighbouring countries with cheaper labour costs.
With cheaper labour still, Bangladesh is one of the alternatives and the country is the world’s second-largest apparel exporter, with a 6.4 per cent share, according to the report titled ‘Trade war buoys apparel industry in Bangladesh and Vietnam’.
American apparel companies are reportedly diversifying suppliers out of China.
During a period between July and September, the US-bound apparel exports from Bangladesh grew 14 per cent. Vietnam’s apparel and textile exports are expected to climb 16 per cent to a record $36 billion in 2018, according to an industry association.
The rising trend of production rise in apparent exports of Bangladesh and Vietnam is expected to accelerate further as, Nikkei pointed out, American companies continue to move production beyond China in light of the trade war.
Apparel from China is currently not subject to extra US tariffs, but it soon could be, the report said referring signal from the Donald Trump administration.
“Even the companies that were reluctant before are moving production out of China,” Nikkei quoted a source at a logistics company in Vietnam as saying.
For a nation like Bangladesh, where apparel makes up roughly 80 per cent of exports, the economic benefits of this migration will be significant, the report said.
The report added, Bangladesh is home to numerous contractors handling production for big apparel companies like Zara owner Inditex, Hennes & Mauritz and Uniqlo operator Fast Retailing.