Grow Your Business with the Duty-Free Facility in Chinese Market: Focus on Readymade Garment (RMG)

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The Bangladesh textile and apparel industry is trying to grab the duty-free facilities given by the Chinese government. On 16 June 2020, China govt. declared the duty free facility for Bangladesh, which has been effected from 01 July 2020 and currently covers more than 97% products of Bangladesh including RMG, Leather, Plastics, etc. sector.

Figure: Amin & Jahan Corporation Ltd has organized a webinar on 3 December 2020, about ‘Grow Your Business with the Duty-Free Facility in Chinese Market: Focus on Readymade Garment (RMG)’.

Alibaba, the international online marketplace, can be the best partner to aid Bangladeshi manufacturers to grab the Chinese market. In this regard, Amin & Jahan Corporation Ltd has organized a webinar on 3 December 2020, about ‘Grow Your Business with the Duty-Free Facility in Chinese Market: Focus on Readymade Garment (RMG)’.

Also Read:

Decoding China’s duty-free facility for the knitwear sector of Bangladesh: The Chinese market dynamics (Part-1)

Decoding China’s duty-free facility for the knitwear sector of Bangladesh: Provisions and the product-wise tariff (Part-2)

Decoding China’s duty-free facility for knitwear sector of Bangladesh: Tapping unexploited export potentials (Part-3)

 

Enamul Hafiz Latifee and Mohammad Musleh Uddin- both are the Deputy Secretary of Research & Development and SME Development of the Dhaka Chamber of Commerce & Industry (DCCI)–were the keynote speakers. There is also a special guest from China–Andy Chen–ICBU (International Core business unit), Alibaba.com, BD & ID Country Manager. The webinar was moderated by Md. Eousup Novee, GM-HR & Strategy @ PEOPLE Project (People, Process & Profit) Textile Today.

Enamul Hafiz Latifee in his keynote speech on ‘Grow Your Export with the Duty-Free Facility in Chinese Market: Focus on RMG Knitwear Sector of Bangladesh’ highlighted many opportunities for Bangladeshi knitwear manufacturers to the Chinese market.

Enamul Hafiz Latifee mentioned that As per the agreement of Asia Pacific Bangladesh used to get the duty-free facility for only 3095 products which has now increased to 8256 products but due to the Covid-19 pandemic our GDP fell to 5.24%.

The Knitwear Sector has about 5.57% contribution to the GDP of Bangladesh. The domestic value addition in the knitwear sector is about 70%, which is much higher than woven products. Also, the knitwear production process starts from cotton or cotton import to dispatch and delivery. So there is huge scope to add more value than other manufactured goods through the production chain, he highlighted.

As the Chinese Duty-Free (DF) facility sets local value addition criteria to be 40%, so the knitwear sector satisfies this provision comfortably.

Bangladesh exports knitwear items to North America at 12.31%, Europe at 74.99% and Asia at 8.25%. Mentioning that the country needs to grow its export to Asian countries Latifee said, “Bangladesh is ranked fifth among the top ten knitwear exporters in China. Bangladesh’s export of knitwear items to China grew by 54-33% to the US $ 261.53 million from the US $ 169.46 million between CY 2015-2019. About 25 knitwear items led Bangladesh to take a better bite of the pie and already 4 items experienced double-digit CAGR 2 items showed staggering three-digit and 1 item registered four-digit CAGR in the last 5 years.”

In a response to a question, Enamul Hafiz Latifee said, “Regional Comprehensive Economic Partnership (RCEP) would not be a threat for Bangladesh until 2024, firstly, if the country can implement cross-border paperless trade completely resulting Bangladesh to save US$ 700 million annually, and secondly, if Bangladeshi RMG entrepreneurs can take immediate market exploitation advantages by using e-commerce platforms like Alibaba.com for building-up trade relations with the Chinese counterparts utilizing the Chinese duty free facility declared for Bangladesh.”

Eousup Novee added that the RMG sector is now the second-largest exporter but before that we were behind Germany, France, Italy, etc. and now we are exporting our products to them. Explaining the importance of exports to China, he said that Bangladesh’s market is divided into two parts, one is Western Europe where about 200 million people and the other is the USA where there are 330 million people.

It is estimated that there are 840 million people in the whole of Europe, of which 1.3 billion are in China alone. Millions of people, if we could use this duty-free facility to move forward, we could easily come to the forefront.

In the second keynote speech on ‘Grow Your Export with the Duty-Free Facility in Chinese Market: Focus on RMG Woven Garments HS Code 62’ Musleh Uddin mentioned that Bangladesh RMG sector has a demand of approximately 3 billion meters of woven fabric as a raw material in a year but local mills can produce around 45 million meters of fabric which is around 14-15% of the demand. So there is a huge gap in our production and we need to overcome this situation to grab the Chinese market.

The woven industry contributed to export escalation of Bangladesh in 2014-2015 was 55% but the percentage decreased in 2018-19 to 47%. Mentioning the decline as a bad aspect for the industry he said that the duty-free facility is offering us a chance to get our desired goal to increase the export of woven product.

In 2010, China imported $1.4 billion worth of woven goods from the world, and in 2019 this amount increased to $4.48 billion and the market share for Bangladesh exports of woven products to China in 2019 was about 7%.

“So there is great opportunity to grow more with an efficient way.”

Now 117 woven products are getting ‘O’ tariff in China. BD RMG sector has already exported 79 woven products to China in 2019. Bangladesh is also exporting 14 out of the top 25 exported woven products in China. The imported value of the 14 top woven products by China from other countries is $1.14 billion.

“In 2019, Bangladesh exported $0.06 billion worth of woven products to China. We have an opportunity to bring more than $1.01 billion through exporting the top 14 woven products of Bangladesh in China. If we can take 50% benefits of DFQF in over, we may earn more than $2bn from woven products,” he highlighted.

Andy Chan showed how alibaba.com can help Bangladesh to increase its export to China. According to Andy Chan alibaba.com can be the best way to increase its export in China as their platform has 180,000 active small businesses and brands and nearly 960 million buyers shop using their platform.

Also, more than 190 countries are connected with the platform, which can be an easier way to build the relationship between seller and buyer. Now more than 39% of manufacturers have an e-commerce site and 29% of small businessmen sell their products online. Their 3 months growth surpassed the record of the past 10 years, 3 months ago it was 16% and now it’s increased to 33%.

“Alibaba is currently hosting 200 sellers in Bangladesh and they aimed for 10,000 members from Bangladesh in the next 5 years. We also aimed for a 200% YoY growth of buyers from September 2020 to March 2021,” he mentioned.

He also showed few steps to attract new buyers these are: 1. Short Videos 2. Live-streaming and 3. Improved Capabilities.

Quoting Jack Ma he said, “Today is difficult, tomorrow is more difficult but the day after tomorrow is beautiful, we need to work very hard to survive in the long journey and believe that you can.”

The keynote presentation can be downloaded here.

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