Why Vietnam earns more than Bangladesh?????
It
is Vietnam, the South Asian nation, which reaped the highest benefits from the
US-China trade war, through exports of apparel goods in 2019 that hit the economy of both countries.
Over
the past year, China's garment exports to the United States have declined by
9.10% to $2.8 billion from $26.37 billion a year earlier, to $28.7 billion. Of
the $2.5 billion export deficit in the U.S. market, Vietnam’s only export order
increased by $1.34 billion or 54% or $13.56 billion.
At the same time, China is only 21.30% or $531 million in the US market.
Bangladesh has achieved $5.9 billion, despite being the second-largest exporter
of garments worldwide.
Last
year, Bangladesh's garment exports to the U.S. grew 9.10% to $5.93 billion, up
from $5.40 billion a year ago.
The
increased earnings from apparel shipments to the US came from previously placed
work orders and due to the trade war between China and the US said, MA Jabbar,
Managing Director of DBL Group, a leading garment exporter.
Although
Bangladesh seemed to benefit from the trade conflict, the garment export may
come under pressure in the coming months because of the fast-spreading
coronavirus in the world and in particular in the developed economies that are
also the country’s major export destinations.
Our experts may also be in trouble if the coronavirus situation in Europe and the US does not improve soon. The crisis
being faced by these two markets has only deepened after the outbreak was
declared a pandemic, he recently said to a national newspaper.
Jordan, an emerging competitor of Bangladesh bagged nearly $300 million or 12%, while Cambodia earned $271 million or 10.87% and India $259 million or 10.37% from the Chinese losing a market in the US.
Push factors for Vietnam gains-
The
question of why Vietnam makes the most profit and the only answer that comes first
is the diversified export basket. The second issue is how exporters are blaming
the competition for losing to its competitors. The manufacturers also explained the appreciation of the Bangladeshi currency against the US dollar and the
increase in production costs and utility charges due to the new wage structure.
“Vietnam is closer to China, it is mostly
Chinese investment where products from China are developed and manufactured in
Vietnam,” Ziaur Rahman, country manager of Swedish retail giant H&M for
Bangladesh, Pakistan, and Ethiopia told Textile Today.
That
means faster leadership times and stronger product development have helped
Vietnam gets the most out of the US-China trade war, Rahman said.
But
exporters have blamed the country's business environment for slower growth in
the US market than its closest rival, Vietnam.
“Ease
of doing business and the cost of doing business, Bangladeshi traders lag
behind Vietnam in terms of US export earnings. As a result, Bangladesh failed
to capture more market share than its competitors because they could not take
orders and deliver on time, ”Farooq Hassan, former vice-president of BGMEA,
told Textile Today. What is needed is to stop the hassle of supplying imported
goods and flexibility in business. After all, Vietnam is very strong at
inventing and creating fancy items made of man-made stable fibers, which has
given them extra mileage in obtaining work orders to relocate from China, said
Hassan, managing director of Giant Group.
How to gain more?
On
the other, they are more price competitive due to the devaluation of exchange,
while the Bangladeshi taka is appreciated, said the economist. Foreign Direct
Investment (FDI) contributed a lot to Vietnam’s capacity and diversification. So, Bangladesh needs to focus on product diversification and
attracting new investments, which will help transfer technical knowledge, Zahid
said. On the other, Bangladesh improves its ease of doing business ranking and
ensures quicker delivery of a shipment to reduce lead time otherwise, the
buyers will prefer to shift business to the shorter lead-time country, he
added.
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