RMG shines as US buyers rate high its labour compliance

US apparel buyers have acknowledged the improvements in Bangladesh's readymade garment (RMG) industry by rating high its social and labour compliance, according to a latest study.

"Respondents reported relatively lower social and labor compliance risks this year when sourcing apparel from Bangladesh. The movement from a rating of 2.0 in the past few years to 2.5 in 2022 reflects fashion companies' acknowledgment of the continuous efforts to improve social responsibility in the Bangladeshi garment industry," reads the study.

In comparison, more than 70 percent of respondents say sourcing from China now involves 'high' or 'very high' labour and social compliance risks.

The rate for China is 2.0 while Vietnam 3.0, according to the survey.

Since 2014, Bangladesh was ranked much lower than average in this category, while US buyers gave the country 1.5 points out of 5.0 in 2018. Bangladesh received 2.0 points from 2019 to 2021.

The study, titled '2022 Fashion Industry Benchmarking Study', also reveals that despite current economic conditions and continuing setbacks due to Covid-19 pandemic, Bangladesh still offers the most competitive prices in 2022.

Bangladesh regained the third largest sourcing country for the US-based apparel and fashion companies in 2022.

Bangladesh was the third sourcing hotspot in 2019 and 2020, fourth in 2021, fifth in 2016 and 2018, and seventh in 2017.

The ninth edition of the survey report, jointly conducted by the United States Fashion Industry Association (USFIA) and the University of Delaware, was released last week.

It surveyed executives from over 30 leading fashion brands, retailers, importers, and wholesalers, including some of the largest brands and retailers in the country.

Increasing sourcing and production costs remain a top concern for the US fashion industry and, for the first time in the nine-year history of the Benchmarking Study, 100 percent of respondents expect their sourcing costs to increase in 2022, including nearly 40 percent expecting a substantial cost increase from a year ago.

Highly consistent with the macro trade statistics, Asia remains the dominant sourcing base for US fashion companies. Notably, eight out of the top ten most-utilised sourcing destinations are Asia-based, led by China (91 percent utilisation rate), Vietnam (88 percent), Bangladesh (84 percent), and India (72 percent).

Regarding Asia-based suppliers, India, Bangladesh, Indonesia, and Vietnam are among the most popular destinations where respondents plan to increase sourcing over the next two years.

"In general, these countries have relatively large-scale production capacity and stable economic and political situation," the survey reads.

This year, respondents reported sourcing their apparel products from as many as 48 countries, up from 43 in 2021.

More than 80 percent of respondents expected to decrease sourcing from China over the next two years as they are adopting a more diverse sourcing base in response to supply chain disruptions and the need to mitigate growing sourcing risks.

Asked, Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) Vice President Fazlee Shamim Ehsan welcomed the recognition, saying Bangladesh had invested a huge amount of money in improving workplace safety in the last few years.

"Bangladesh is now the role model for workplace safety and compliance," he noted.

Regarding the competitive price, he said during the Covid pandemic local exporters had received work orders below their production cost to keep the factories running.

"Exporters even made less or no profit despite the high prices of raw materials and other logistic costs. That is why the country received huge work orders from major economies after (Covid) lockdowns," Mr Ehsan said.

He, however, said they had been receiving fewer work orders in recent months for the next season.

According to OTEXA, an affiliate of the US Department of Commerce, Bangladesh fetched US$4.11 billion during the January-May period of the current calendar year marking over 59 per cent growth, compared to the corresponding period of last year.

The country's RMG exports to its single destination of US stood at $9.01 billion in the just concluded fiscal year of 2021-22 which was $5.94 billion in FY 2020-21, according to BGMEA data.