Bangladesh's bid to expand into new destinations with its potential export items continues with an eye on a bigger slice of the $10.5 billion South Korean apparel market.
Business insiders say with apparel manufacturing increasingly moving out of China because of rising costs, Bangladeshi entrepreneurs now have the opportunity to grab the Korean market that currently sources 34% of their clothing items from Beijing.
The apparel sector expects to hit the $1 billion mark export to Korea in the current fiscal year with a diverse basket of items like lingerie, denim, shirt, jacket and pullover, said the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Korean buyers and brands are showing interest in increasing their sourcing from Bangladesh because of the very competitive prices the country can offer.
Since 2017, Bangladesh's stake in the Korean clothing market has kept on growing but at a slow pace and reached a little over 4% with export earnings at $440 million in FY22, according to the Export Promotion Bureau (EPB).
Apparel shipments to the Korean market experienced a positive growth in the last five consecutive years despite the pandemic-led slowdown. Industry owners think that to increase the share of the South Korean market this year, a big push is needed which will be coming from the shifting orders from China, Vietnam and Myanmar.
According to EPB data, apparel shipments to the South Korean market saw about 70% growth to $98.86 million in the first two months (July-August) of the current fiscal year, while it was $58.28million in the same period of the last fiscal.
Shinsung Tongsan, a Korean retailer that owns three brands – Topten, Pulham and Ziozia, is going to open a sourcing office in Dhaka by October this year, said the head of business development of a buying house in Dhaka with knowledge of the development.
The retailer, with an annual sales amounting to $430 million of its Topten brand, has recently started sourcing knitwear items alongside its main imports, such as underwear, denim and shirts. He noted.
Moreover, Coupang, the largest e-commerce company based in Seoul, also dubbed as Korean Amazon, has started importing garment items from Bangladesh.
To find new buyers and draw in investments, representatives of RMG owners, the commerce ministry, the EPB, the Bangladesh Bank and Bangladesh Investment Development Authority will go on a seven-day visit to Korea on 22 October.
BGMEA President Faruque Hassan told The Business Standard, "We will invite big buyers and brands in Korea to source products from us. We will also offer them a joint collaboration in manufacturing manmade fibre-based products."
Faruque informed that the BGMEA had identified several potential export markets with their own study, notable among them are Korea, Japan, India, Mid-East and Africa. He added that they have appointed an internationally reputed firm to study and identify global business opportunities and markets for their products.
Referring to a similar trade mission to Latin America that has taken apparel exports to more than $6 billion from a mere $600 million in the destination over the last 10 years, BGMEA Vice-president Shahidullah Azim told TBS, "We hope our next month's Korean mission will help our apparel exports to the country reach $5 billion by 2030."
They will take their export receipts from Korea to that level, mainly on the back of a great demand for high value winter clothing and denim in Korea, he noted.
Other potential products that have good demand in the country are non-leather footwear, home textile, jute and jute goods etc.
In a recent interview with TBS, South Korean Ambassador to Bangladesh Lee Jang-keun said South Korea is looking to other sectors apart from readymade garments for its future investments.
"Going beyond the RMG is what we are looking at in the future. We want companies from other sectors to invest here," he said.
According to the International Trade Centre (ITC) data, South Korea's apparel imports stood at $10.53 billion in 2021. China is the largest export source, $3.54 billion, followed by Vietnam, Italy and Indonesia.
On the other hand, Bangladesh exported only $530 million in FY2022 to Korea, of which apparel shipments amounted to $440 million, according to the EPB.
Korea is the country's 20th largest export partner out of 202 destinations.
Desh Garments, a pioneer in the export-oriented garment industry in Bangladesh, sent 133 workers and mid-level managers to the world-renowned Daewoo's garment manufacturing plant in Busan, South Korea in 1979 to receive training in modern machinery.
The team returned home after six months of training in South Korea. Desh Garments set up a new plant with those people and it marked the beginning of a new journey to turn Bangladesh into an economically self-sufficient nation through apparel exports.
The planned visit to Korea in October is a part of the single country-focused drive initiated by the private sector and government agencies to find new export markets. The export promotion agency will organise a trade and investment fair in Riyadh on 6-8 October to help exporters showcase their products to grab a slice of Saudi Arabia's over $152 billion import market.
The kingdom's annual imports of food and beverage, apparel, and jute and leather amount to $35 billion and Bangladesh has export potentials of the products. The apparel sector association BGMEA has also planned to organise export fairs in China and Japan to explore potential markets beyond its traditional destinations in Europe and USA.
Commerce Minister Tipu Munshi yesterday told reporters about the government's target of merchandise export of $80 billion by 2024 and $100 billion by 2026.
Apart from the ready-made garment that accounts 82% of the national export, the government is exploring Asian markets for some 10 products including ICT, leather, plastic, light engineering and jute.