US Buyers To Increase Sourcing From Bangladesh Over Next 2 Years: USFIA


Bangladesh was behind India and CAFTA-DR region on the list of destinations from where the US buyers plan to increase sourcing. More than half of the US apparel executives plan to source more from Bangladesh than from China, Vietnam, Indonesia, Cambodia and other competitors over the next two years, according to the USFIA 2022 Fashion Industry Benchmarking Study.

According to the report published by the United States Fashion Industry Association (USFIA), around 55% of the US apparel executives expressed their interest to increase sourcing from Bangladesh till 2024, including 3% who expected a strong increase.

When asked from which countries or regions the US fashion companies planned to increase their sourcing value in the next two years, India led the way, followed by CAFTA-DR region and Bangladesh, with all three selected by more than half of the respondents, said the report.

CAFTA-DR or Dominican Republic-Central America FTA is the first free trade agreement between the United States and a group of smaller developing economies – Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Dominican Republic.

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Mexico ranked the fourth, while Indonesia and Vietnam tied for the fifth position on the list of destinations from where the US buyers plan to increase sourcing. The US buyers are convinced that Bangladesh has developed the capacity in the last few years to produce garment products other than the basic items. Currently they are placing a lot of orders for knitwear items from Bangladesh. As a result, the export growth of Bangladesh RMG products in that market in the last few months was more than 50%.

Moreover India has its own raw materials and is thus able to export clothes at a relatively low price, which might be the reason that they are on top of the buyers’ choice, according to Bangladesh industry sources. USFIA Fashion Industry Benchmarking Study is a survey of executives from over 30 leading fashion brands, retailers, importers, and wholesalers, including some of the largest brands and retailers in the country.

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More than 85% respondents in the survey plan to cut their cotton apparel imports from China, while 45% said they will further reduce non-cotton apparel imports.

Asia remains the dominant sourcing base for US fashion companies
Almost all the top ten most-utilised apparel sourcing destinations in 2021 are Asia-based, led by China (91%), Vietnam (88%), Bangladesh (84%), and India (72%). However, there is considerable excitement about increasing apparel sourcing from the CAFTA-DR region.

Reducing “China exposure” is one crucial driver of US fashion companies’ sourcing diversification strategy. One-third of respondents have reported sourcing less than 10% of their apparel products from China this year. In addition, a new record of 50% of respondents has sourced more from Vietnam than China in 2022.

Fashion brands, retailers face challenges
Supply chain disruptions remain a major challenge over two years into the global pandemic. Almost all the survey respondents said shipping delays and supply chain disruptions are one of their top business challenges in 2022.

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Over 95% of respondents expect implementation of the Uyghur Forced Labor Prevention Act (UFLPA) to affect their company’s sourcing. Most respondents (over 92%) do not plan to reduce apparel sourcing from Asian countries other than China. However, nearly 60% of respondents would also “explore new sourcing destinations outside Asia” in response to UFLPA.

USFIA based its new report on a survey of 34 executives at `leading’ US fashion companies, 81% of which have more than 1,000 employees. Approximately 70% self-identified as retailers, 67% as importers and wholesalers and 40% as brands. USFIA conducted its survey between April and June.


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