How Bangladesh Leads the Denim Industry Around the World
After the MFA (Multi Fibre Agreement) expired in 2005, anyone and everyone in the apparel industry thought that clothing manufacturing industries in Bangladesh and neighboring countries would face their decimation in the face of stiff competition from China. But what happened was something truly amazing. Apparel exports from Bangladesh picked up significantly over the next few years, and fast forward to 2018, the Bangladesh clothing manufacturing industry is now the second biggest just behind China.
One product to rise as a favorite, is of course Denim. Because of the advantage of low cost of production and the manufacturing sector’s expertise in denim production, the country has gained a competitive advantage in the product. Coupling that with the fact that China’s denim production is decreasing, orders are being diverted into the country’s clothing manufacturing industry. Here’s a snapshot of denim production in Bangladesh.
But first, a walk down memory lane.
Back in the 1990s, denim manufacturing plants in Bangladesh were few if non-existent. All denim fabrics were imported from China, India, Pakistan and other countries. Eventually, Shasha Denim Ltd found Banladesh’s first ever modern denim manufacturing plant. Thus began the country’s love affair with denim.
Shasha was instrumental in advancing denim manufacturing in Bangladesh. They even gave back to the industry through rigorously training their workforce and allowing them to take their learnings and the fruit of their labors to more of the new denim manufacturing plants being constructed. The industry was taking off.
Challenges and Opportunities
Fast forward to 2018, Bangladesh clothing manufacturers now produce around 25% of denim products sold around the world. Chinese clothing manufacturers are moving away from producing basic denim and this is giving way to the Bangladesh apparel industry to pick up the demand. The industry is currently actually the top producer of denim to the European Union. The denim industry is slated to go past $64BN by 2020, and with that denim exports from Bangladesh as well. By 2020/2021, clothing manufacturers in Bangladesh will be exporting more than $7BN worth of denim to traditional and non-traditional markets combined.
Denim Expo back in 2016. The largest denim networking event in Bangladesh.
As the denim manufacturing industry is growing, so is the backward linked denim industries. Currently, there are about 30 denim mills producing about 435 million yards of denim fabric per year. That number provides around 40% of the denim that Bangladesh clothing manufacturers use. The rest are obtained through imports. The country has also advanced when it comes to denim washing and dyeing and denim manufacturers are adding to that by investing heavily. Over the next two years six new denim mills are slated to be constructed, and $100 million will be poured in them. This will go a long way to meet the growing demand for denim consumption in the country.
The future of denim manufacturing in Bangladesh lies in producing high-end denim products. As the denim industry in Bangladesh is maturing, investments have to be made into research and development are allowing clothing manufacturers in Bangladesh to move beyond just basic denim products. Factories in the country have to start acquiring the machinery and the technology to produce value added and high end denim apparel. As the management in the industry gets more experienced in high-end products, and the brand image gets even better, the industry has to position itself for a denim revolution.
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