Bangladesh is on fast-track to becoming a developing nation by 2021. Having made significant progress on the key parameters of transition – Economic Vulnerability Index (EVI), Human Assets Index (HAI) and Gross National Income Per Capita (GNI) – it’s just a matter of time before the country sheds its LDC tag to join the big league of developing nations.
A significant achievement to say the least, graduating to a developing nation comes with its own share of limitations, the biggest of which is perhaps losing the international support measures (ISMs), provided by the global community. A beneficiary of trade privileges offered by various nations, Bangladesh readymade garment sector runs risk of facing business constraints following a successful transition. Key to the country’s economy, Bangladesh Government has already initiated moves to ensure that the apparel sector is not hamstrung in such a scenario, keeping with which it is reportedly pushing for FTAs and continuance of duty-free market access from existing and new export destinations. And a big name from Bangladesh’s perspective to assure the former duty-free access is Japan.
World’s third largest economy with a population of 127.1 million and GDP per capita (PPS) of US $ 36,194, Japan is emerging as a very promising market for Bangladesh. As per data from the Export Promotion Bureau (EPB), in the fiscal year 2017-18, Bangladesh earned US $ 1.13 billion from exports to Japan, which is 11.73 per cent higher compared to earnings of US $ 1.01 billion in FY17.
Out of the US $ 1.13 billion, US $ 846.73 million or 74.8 per cent came from the RMG sector alone with apparel export to Japan witnessing a 13.73 per cent rise compared to previous year’s earnings of US $ 744.48 million.
“The Japanese Government has assured us of continued free market access after we graduate to developing country status for all goods except hand gloves and arms,” said Commerce Minister Tofail Ahmed following his recent trip to Japan, adding, “Japan is a high-potential market for Bangladeshi products and very soon it would be a large export destination for our goods, especially apparel and leather, and export earnings would reach to US $ 2 billion over the next two to three years”.
As a Least Developed Country (LDC), Bangladesh enjoys duty-free and quota-free (DFQF) trade to Japanese market, and further continuance of the same post LDC-transition would come as a big boost to the apparel exporters of the country.
But is the industry ready to capitalise on this big opportunity? “Japan market is not easy to handle. They are very choosy and highly quality conscious with zero tolerance for errors. However, if one is good at what one does, price is not a problem with the Japanese buyers; they pay for workmanship and quality,” maintained Mir Gulzar-A-Alam, CEO of Western Fashion Tex & Sourcing, a buying house specializing in suites to cater to Japan market alongside UK, while speaking to Apparel Resources.
Alam’s sentiments on quality parameters as sought by Japanese buyers was also resonated by Rajiv Islam, MD of buying house Prisma BD Ltd., who maintained that stringent quality requirements is a major reason behind many Bangladeshi manufacturers yet to successfully venture into the lucrative Japan market.
“A lot of them (manufacturers) are not capable of offering such standards. You need to be very high on quality and commitment to be successful in Japan,” maintains Islam, who is currently working with three manufacturing units exclusively to cater to the demands for knit, woven and sweaters from the Japanese clients.
Despite the challenges, some Bangladeshi manufacturers have successfully forayed into Japan. Specialising in woven products, Dhaka-based AKR Group (AKR FASHIONS Limited, AKR Design Limited & BANEX APPAREL Limited) is one such name which has entered the Japanese market with its range of woven products (men, women, and children) including standup pack, flat pack, formal shirts, casual shirts, ladies blouses, etc.
“Ever since we started working with Japan, I am hearing that Japan could be a very promising export destination for Bangladesh but honestly speaking, till date, I have not seen any big volume orders from the Japanese buyers. I have a feeling that they are not yet comfortable working with Bangladeshi suppliers. The main reason for that, I feel, is the lack of trust. The Japanese buyers are still sceptical about the capabilities of Bangladeshi manufacturers,” underlined Khokon Chandra Kundu, Director of Marketing-AKR Group.
Given the business scopes in Japan, it’s perhaps time the Bangladeshi manufacturers work a little harder towards commitment and quality to make the most of this opportunity. After all, success in business is all about client satisfaction and if Japan has assured Bangladesh of continued trade benefits, it would be to the industry’s interest to reciprocate the same by offering quality products and better services.