abusesaffiliationarrow-downarrow-leftarrow-rightarrow-upattack-typeburgerchevron-downchevron-leftchevron-rightchevron-upClock iconclosedeletedevelopment-povertydiscriminationdollardownloademailenvironmentexternal-linkfacebookfiltergenderglobegroupshealthC4067174-3DD9-4B9E-AD64-284FDAAE6338@1xinformation-outlineinformationinstagraminvestment-trade-globalisationissueslabourlanguagesShapeCombined Shapeline, chart, up, arrow, graphLinkedInlocationmap-pinminusnewsorganisationotheroverviewpluspreviewArtboard 185profilerefreshIconnewssearchsecurityPathStock downStock steadyStock uptagticktooltiptwitteruniversalityweb

이 페이지는 한국어로 제공되지 않으며 English로 표시됩니다.

기사

2024년 7월 15일

저자:
Jasim Uddin, The Business Standard

Bangladesh: Brands demanding up to 20% reduction in prices during energy crisis, as factories face up to 40% decline in orders

"Apparel facing up to 40% fewer orders as production cost rises", 15 July 2024

Apparel exporters are facing a 25-40% decline in orders as persisting energy crisis, soaring cost of business and shipment delays have forced them to run their factories much below the capacity.

While their production cost shot up by 20-33%, global buyers are offering up to 20% lower prices, forcing many to skip taking export orders.

Competitor countries such as India, Pakistan and Sri Lanka are attracting buyers away from Bangladesh as they afford to agree on lower prices due to favourable exchange rates and faster shipments.

The country's largest export sector fears a 7% drop in sales in this year's peak winter season in the West at a time when the government cut much of incentives and corrected data revealed last 10 months' export figure was overstated by about $11 billion...

Mesbah Uddin Khan, managing director of Windy Group, said his business is facing a negative trend as buyers are offering 15% to 20% lower price than the production cost, which makes taking orders difficult for him.

The group could not secure 20% orders for August and September this year and the time is over to get orders for the Fall Holiday season, added Mesbah, who received the highest exporter's gold trophy in the woven category from the prime minister on Sunday.

Kutubuddin Ahmed, chairman of Envoy Textiles, the world's first LEED platinum-certified denim mill, said, "The textile mill is facing challenges to meet buyer prices. Sometimes we have to adjust prices, leveraging our spinning unit to manage costs."...

Sayed M Tanvir, managing director of Pacific Jeans, a pioneer in denim export from Bangladesh, said, "We also face challenges in competing with buyer prices. Pakistan and Turkey's exporters have a competitive advantage due to higher currency devaluation compared to Bangladesh."

The Business Standard talked with over two dozen apparel exporters, who reported significant drop in export orders, up to 40%, for the August-September period this year compared to the last year as most exporters had to skip orders due to poor rates offered by international fashion brands and retailers. Some found the offered prices do not cover their production costs.

Narayanganj-based MK Knit Fashion proprietor Mohammad Hatem said, "Almost every buyer is reducing apparel prices by 12-15%, despite increased production costs. In some cases, they are offering lower prices than a year ago, which puts us in a very tight corner."

A polo shirt was sold for $4 last year; the same buyers now offer $3.5 for it, he cited. "Running factories at lower capacity is better than taking orders at prices below production costs."

Hatem's monthly export dropped to $700,000 to $1 million from usual $1.5 million.

"To break even, factories need to run at least at 80% capacity, but most are currently running at 60%," said Hatem, who is also the executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

TAD Group Managing Director Ashikur Rahman Tuhin said, "Buyers are offering prices up to 15% lower. They are citing a drop in their sales due to lower demand in Western markets."

Exporters attributed the drop in orders to reduced sales in European countries, the UK, and the USA, as well as high inventory levels...

Meanwhile, apparel retail sales declined in major western markets – 1% in the US and 3% in the UK in May this year than in May 2023, according to the US Census Bureau.

"Order placement has slowed due to low demand in major markets, and buyers are offering lower prices," said Sparrow Group Managing Director Shovon Islam.

He further explained that tensions in the Red Sea have increased transportation costs, while gas and electricity price hikes and wage increases have raised overall production costs.

But buyers are not offering prices that match these increased costs, resulting in most factories being unable to book orders according to their production capacity.

Small and medium factories are struggling more than the big ones to book orders, he added.

Buyers are moving to India and Sri Lanka as they have more competitive edge than us to offer lower prices thanks to better incentives and favourable exchange rates, Shovon pointed out.

He also referred to buyers' concerns about timely shipments from Bangladesh. "That's why some top buyers are relocating their orders to Vietnam, India, and Sri Lanka," said Shovon Islam, also a director of the Bangladesh Garments Manufacturers and Exporters Association (BGMEA).

Md Rezaul Alam, managing director of Galpex Ltd, said, "Some buyers are lowering prices due to exchange rate gains, despite increased production costs." He hopes the business situation may improve by 2025.

Preferring to remain anonymous, a senior official from a European brand said factories have higher capacity installed than the orders they get. Large capacity factories are taking orders at any cost for their survival, while small and medium factories cannot...

타임라인