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Asia

COVID: Bangladesh's textile industry hit hard by pandemic

Bangladesh's garment manufacturers and workers are suffering as the coronavirus pandemic has soured long-term demand and big fashion brands continue to cancel orders.

A textile factory in Dhaka

The EU is the top importer of garments from Bangladesh

Global demand for clothing plummeted amid the COVID pandemic and big fashion brands remain reluctant to place big orders, posing a major problem for Bangladesh's vital textile industry

In 2020, textile exports from the South Asian nation dropped by nearly 17%. Shipments to Europe, which is the destination for 60% of Bangladesh's garment exports, recorded a significant decline of just under 19%.

There hasn't been any uptick in demand and exports so far this year, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said.

"Apparel exports declined by 5.83% year-over-year in January," Rubana Huq, president of the association, told DW.

"Based on current scenarios and the global trade or economic outlook, retail sales trends in the West, and the slowdown in order situation by our customers, it appears that exports may continue suffering till the third quarter of this year."

Bangladesh is hugely dependent on the export of textiles for its national income as the industry accounts for more than 80% of overall exports.

About 4 million workers are employed by the garment industry, most of them female seamstresses who often support several family members and live from paycheck to paycheck.

Clothing surplus piles up

Many clothing retailers have seen their stocks pile up over the past year.

According to the US-based business consultancy McKinsey, the value of unsold clothing in stores and warehouses worldwide ranges from $168-192 billion (€140-160 billion), which is more than double the level seen before the pandemic.

Also, global fashion brands continue to cancel orders from local suppliers. Britain's Marks & Spencer and Germany's Hugo Boss, for instance, said they had placed smaller orders than usual for this year’s spring collection.

Swedish firm H&M said a drop in demand worldwide will "inevitably" have an impact on their purchases.

"Our purchasing strategy is long-term but considering the uncertainties with how the pandemic will develop, we are of course closely evaluating the situation," H&M told DW in an emailed reply.

"A drop in customer demand and temporarily closed stores inevitably have an impact on our purchases."

The retailer also said that it is keen to work closely with suppliers to find solutions to support garment workers.

"That's why we have joined the ILO global call to action where we are working together with the ILO and trade unions to establish social protection systems, which the pandemic has highlighted the need for in many countries around the world," the company said.

Delayed recovery

"Until mid-January, 24% of our existing orders were postponed," Arshad Jamal Dipu, a vice-president of BGMEA, told DW. "We will get the whole picture in April-May. We fear a 30% order loss."

The European Union is Bangladesh's biggest garment export market, while the US is the largest single-country market.

In 2020, Bangladesh's textile exports to the EU dropped by nearly 19%, whereas to the US they fell by 16% and to Canada by as much as 25%.

With the increasing spread of new variants of the virus, BGMEA fears the economic recovery will be delayed further as countries tighten restrictions on business and public movement to combat their spread.

"We are observing a 'go slow' approach by buyers since the end of last year, which appears to be taking a further drastic turn," BGMEA president Rubana Huq told DW. "We are not getting pleasant signals from the local liaison offices of the buyers." 

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