As one of the most dynamic countries in South Asia and even the world, as an important country along the “Belt and Road” and the “Bangladesh-China-India-Myanmar Economic Corridor”, Bangladesh has become a hot spot for investment and cooperation of Chinese-funded enterprises, and the Bangladesh sewing machine market under the influence of the epidemic How's it going?
1. Natural environment
Bangladesh is divided into 8 administrative districts: Dhaka, Chittagong, Khulna, Rajshahi, Barisal, Silet, Rangpur and Mymensing, with 64 cities, 489 counties, and 4550 townships. 80% of Bangladesh's international trade and 40% of industrial output are produced in Chittagong.
2. Economic status
In terms of the investment environment, Bangladesh’s advantages are mainly reflected in the government’s attention, preferential policies, rapid economic growth, large market potential, sufficient labor resources and low prices. According to data released by the Bangladeshi government, Bangladesh’s economy has continued to grow steadily in the past 10 years, with an average annual growth rate of gross domestic product (GDP) maintained at more than 6%. As an important part of the Bangladesh-China-India-Myanmar Economic Corridor, the “Belt and Road” initiative represents a huge development opportunity for Bangladesh.
3. Policy advantages
Compared with other countries and regions, there are three main advantages in the development of the clothing industry in Bangladesh:
First, Bangladesh has an abundant and affordable sustainable labor force. Among the 164 million registered population in Bangladesh, more than 60% are of working age, especially young people in their teens and twenties. Labor costs are extremely competitive. Bangladesh stipulates that the minimum wage for textile companies is 8,000 taka (about 664 yuan) per month, and the monthly salary of skilled workers is about 10,000 taka (about 833-1245 yuan). /month.
Second, Bangladesh enjoys the Generalized System of Preferences policy granted by the European Union, Canada, Australia, and Japan, and garment exports to this market enjoy duty-free treatment. In the US market, Bangladesh has 30 categories of ready-made garment products subject to quota restrictions, which is much less than China's restricted product categories. The Bangladesh government has an extremely loose tax exemption policy. In Dhaka and Chittagong areas, the tax reduction period is 5 years, 100% exemption for the first two years, 50% exemption for the third and fourth years, and 25% exemption for the fifth year; foreigners are exempted Personal income tax for 3 years, personal income tax for the next 2 years will also be halved.
Third, as a pillar industry, the Bangladeshi government strongly supports the development of the garment industry. In addition, the relationship between China and Bangladesh is good. The Bangladeshi government has specially set up special economic zones (such as the China Special Economic Zone currently under construction in Chittagong) and other taxation support for Chinese companies, laying a good foundation for Sino-Bangladesh trade.
Situation of Bangladesh's textile and garment industry
As one of the least developed countries in the world, Bangladesh has its proud garment industry. It is the industry with the largest foreign exchange earnings in Bangladesh, accounting for more than 80% of Bangladesh’s total exports. Over the past 20 years, the growth rate of Bangladesh's garment exports has remained at around 20%. In 2019, Bangladesh's garment exports reached 34 billion U.S. dollars. Its garments are mainly exported to Europe, the United States, Canada, Australia and other markets, and the Chinese market is also showing a rapid growth trend. Bangladesh is the main producer of denim garments in the world, with an annual output of approximately 200 million pieces and a European market share of 27%, which has surpassed China.
Bangladesh's textile and garment industry has a considerable scale and has a relatively complete industrial chain. Approximately 5 million people are employed, of which over 80% are women. At present, there are about 7,000 garment manufacturers above designated size in Bangladesh, most of which have more than 1,000 employees. The largest factory even reaches 150,000. The factories are processed products for many world-renowned brands such as Walmart, Zara, H&M, JC Penny and Carrefour. . There are also tens of thousands of small processing plants with a size of 100 employees or less. Most of the garment industrial areas are located around the capital Dhaka and near Chittagong. The main garment industrial areas are located in the Narayangani District, Ashulia District, Gazipur District, Savar District around Dhaka City, and Chittagong District near Chittagong. Among them, about 90% of knitted garment factories are located in Narayanganj district.
Distribution of clothing production areas in Bangladesh
The situation of sewing equipment market in Bangladesh
1. Import and export data
The rapid development of the clothing industry has brought about a rapid increase in Bangladesh's demand for sewing machinery products. In 2010, my country's export of Bangladeshi sewing machinery products was only less than 35 million U.S. dollars, and by 2019, my country's export of Bangladeshi sewing machinery products exceeded nearly 100 million U.S. dollars. In just nine years, my country has tripled its export value, and the demand potential cannot be underestimated.
At present, Bangladesh has ranked sixth in the export value of my country's sewing machinery products. Among them, the export value of industrial sewing machines has increased from the 20th in 2005 to the sixth in 2019. Due to the re-export phenomenon of some Japanese-owned and other branded products produced in mainland China, the actual export value of sewing machinery products from my country to Bangladesh is more than the data shown by the customs.
Changes in the amount of my country's exports of sewing machinery products to Bangladesh from 2010 to 2019
2. Sewing machine market situation
At present, the demand for sewing machinery products in the Bangladeshi market is huge. The annual amount of sewing equipment products imported from China is about 100 million U.S. dollars, and the demand is showing obvious differentiation. Some high-quality foreign-funded enterprises and the strength garment factories in Bangladesh have gradually expanded their demand for various types of high-efficiency automatic sewing machines. Intelligent products such as automatic template machines and automatic sewing units have become the focus of attention in the future; a large number of local small-scale garment processing factories are facing low-end The demand for sewing equipment, second hand phones, and blackhead machines is still very large.
At present, the largest stock of industrial sewing equipment in the Bangladesh market is still Japanese brands, accounting for about 70% of the total market. However, after nearly ten years of hard work, the Bangladesh market has generally recognized Chinese manufacturing. Toyama and other brands have successively entered Bangladeshi garment enterprises and have been well received by customers. At Garmentech, the Dhaka Sewing Equipment Exhibition, most of the exhibitors were Chinese sewing companies, and various automated sewing machine equipment exhibited good results.
Sales in Bangladesh in 2019 ranged from US$4 million to US$13 million. The main sales areas are concentrated in Dhaka, Kumila and Chittagong, and there are also certain sales in SAVAR and Narayangornh. They mostly use a combination of direct sales, specialized stores, agency sales, whole plant solutions, retail and other sales methods to intensively cultivate. The excellent after-sales service of Chinese companies has also made Bangladeshi garment companies less worries. The combination of Chinese technical personnel and local service personnel enables real-time docking and quick response to customer needs.
At present, ordinary flat-wrapped locking nail set models, special machines, template machines, automation equipment, etc. all have a certain market in Bangladesh, and their prices are slightly higher than those in China. The demand for equipment in the local market is clearly polarized. The large garment factories in Bangladesh mostly require automatic sewing equipment. The current shortage of electricity has led to small garment factories' demand for traditional non-automatic equipment. In the past few years, the number of automatic industrial sewing machines and non-automatic industrial sewing machines that my country exported to Bangladesh was basically the same. In recent years, with the gradual release of the global market's upgrading demand and the further emergence of the advantages of automatic sewing equipment, Bangladesh The market demand for automatic industrial sewing machines has also grown rapidly.
Impact of the epidemic and investment advice
Bangladesh, which is highly dependent on clothing exports, is being severely affected by the epidemic. Orders in the early part of 2020 have fallen severely, and brands have cancelled or postponed orders. This situation will continue when the global epidemic is not well controlled. At the same time, many workers return to their hometowns for isolation. In order to maintain their livelihood, they will process some small orders, which has stimulated the sales of sewing equipment to a certain extent. It is believed that with the development and launch of the new crown vaccine, the impact of the epidemic will eventually pass, and Bangladesh is still a hot spot for investment. Previously, the Bangladeshi government was increasing infrastructure construction in various places, and the future development of Bangladesh's economy and clothing industry should not be underestimated.
But at the same time, investing in Bangladesh is also faced with social system, language, cultural differences, trade union system, poor infrastructure, inconvenient transportation, etc. The economic structure is single, the economic foundation is weak, and the demonstrations and strikes triggered by the political crisis are affecting Bangladesh’s overall investment environment, weak infrastructure, imperfect legal system, and strong local protectionism have virtually increased business operating costs and risks.
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