Study on Sourcing Opportunities in Bangladesh by john williams

Dragon Sourcing Your Tailored Approach to Emerging Markets

Study on Sourcing Opportunities in Bangladesh

Dec, 2019 www.dragonsourcing.com

Table of Contents − − − − − − −

Executive Summary Bangladesh – Macro Economics Textile & Garments

Jute & Allied Products Fish, Crustaceans & Allied Products Footwear Raw Hide & Leather Products

Executive Summary- Top Export Categories Category

Top Products

CAGR of % of total Export Value exports value export (2018) in USD (5 years) (2011)

Top Export Destinations

Import Duty into EU

Import Duty into US

0% (textile & synthetic fibers) -28.2% (for products containing animal hair)

Knit Apparel Textile & Garments

Non Woven

238 Bil

18%

87%

Germany, UK, France, USA & Spain

0% (jute products) 14.5%(wool/fin e animal hair)

0-7.5%

Beddings & Curtains Vegetable textile fibers, paper yarn, woven fabric Vegetable Fiber & Allied Products

Yarn of jute or of other textile bast fibres

721.5 Mil

10%

2.7%

Turkey, India, China, Pakistan & Belgium

460 Mil

2.5%

USA, Belgium, UK, Germany& Russia

No of Suppliers

Woven fabrics of jute

Fish, Crustaceans & Allied Products

Shrimp, Shark fin, Crab

Footwear

1 Bil

33%

1.5%

Japan, France, Germany, Spain & Italy

0%(footwear made on the base of wood)37.5%(waterpr oof footwear of rubber or plastics)

Raw Bovine Hide & Leather Products

Leather Products

88 Mil

1.7%

1.2%

Hong Kong, S. Korea, Italy, China & Japan

0-5%

Legend

More than 100 suppliers

Between 50-100 suppliers

Less than 50 suppliers

Executive Summary- Emerging Export Products Emerging Products

Export Value % of total export (2018) in (2018) Thousand USD

Top Export Destinations

Growth Rate

Import Duty Import Duty into US into EU

Export Duty

Shrimp, Dry Fish

377,226

0.2%

USA, Belgium, UK, Germany & Russia

99%

Leather Footwear

695,746

0.4%

Japan, France, Germany, Spain & Italy

99%

Textile Footwear

207,836

0.08%

Hong Kong, S. Korea, Italy, China & Japan

100%

Goat Skin

43,756

0.17%

Hong Kong, S. Korea, Italy, China & Japan

100%

3.7%

Iron Waste, Scrap

40,741

0.150%

China, USA, India, Belgium & Germany

99.5%

0 -6.5%

Cements

19,944

0.08%

India, Nigeria, Italy, UK & S. Africa

53%

Basket work

3,977

0.02%

USA, Germany, Austria, UK & Italy

78%

Cigars, cheroots & cigarette

2,578

<0.01%

Netherland, USA, Germany, Belgium & S. Africa

98%

23.9Â˘/kg

Bricks

1281

<0.01%

USA, Italy, Turkey, UK & Norway

71%

Leather Sheet & Strips

1215

<0.01%

Hong Kong, S. Korea, Italy, China & Japan

100%

4.2%

Mats

291

<0.01%

USA, Germany, Austria, UK & Italy

83%

Tiles

284

<0.01%

USA, Italy, Turkey, UK & Norway

92%

0-10%

Clay

202

<0.01%

India, Nigeria, Italy, UK & S. Africa

79%

Hats

<0.01%

USA, Canada, Australia, Germany & Brazil

89%

1.4%

Legend

More than 100 suppliers

Between 50- 100suppliers

0% 0-37.5% (depending on specific product) 0-37.5%(depending on specific product)

0% 0% 0%

Less than 50 suppliers

No of Suppliers

Sourcing Opportunities in Bangladesh

Bangladesh- MACRO ECONOMICS

Bangladesh Overview â&#x20AC;&#x201C; Bangladesh is situated in South East Asia: + a population of: ~161 million (2011 statistics) ; 28% population is concentrated in urban areas + a surface area equivalent to: ~140,000 Sq Km + 92%of total area is land + Economy in Bangladesh extremely centralized in Dhaka & Chittagong + Major cities are Dhaka & Chittagong + 2 main cities: Population

Dhaka

10.35 million

Chittagong

3.92 million

Growth (2018) Gross Domestic Product

7.9%

Value (2018)

USD 274.03 billion

Source: Bangladesh Bureau Of Statistics

Textile & Garments

Textile & Garments - Market Trends HS 61 Series- Knitted Apparel and Accessories in USD 1000s in 2018 Rest of the World Belgium India Cambodia Turkey Italy Germany Viet Nam Bangladesh China

$63,606,519 $5,757,457 $7,561,110 $8,834,167 $9,043,113 $9,522,758 $11,079,502 $13,859,283 $21,164,739 $90,489,695

20,000,000 40,000,000 60,000,000 80,000,000 100,000,000

HS 62 Series- Apparel and Accessories NOT Knit in USD 1000s in 2018 Title Rest of the World

– The garment industry has become the mainstay of the Bangladesh economy, accounting for more than 80 percent of the country's exports – Bangladesh's exports in 2018 was close to $40 billion, both and knitted and unknitted apparel – Export of Garments is increasing at 25 %CAGR . – Cotton consumption has accelerated from 488 thousand metric tons in 2011 to 700 thousand metric tons in 2017. – The EU imported a 61% share of Bangladeshi knitwear with USD 3.36 billion exports. – The sector is now capable of supplying 90 per cent of fabrics for the knitwear sub-sector and 40 per cent of fabrics for the woven sub-sector – Narayanganj, Dhaka & Chittagong are major locations of this sector. Supplier Locations

$71,778,651

Turkey

$6,262,454

France

$6,726,168

India

$8,126,006

Spain

$8,752,941

Germany

$12,248,305

Italy

$13,701,102

Viet Nam

$14,324,005

Bangladesh

$18,818,701

China

$77,611,859 -

20,000,000 40,000,000 60,000,000 80,000,000 100,000,000

Textile & Garments - Suppliers in Bangladesh Top Importing Countries of HS 62 Series from Bangladesh in 2017 United States of America

Germany

United Kingdom

Spain

France

Canada

Italy

Japan

Turkey

Belgium

19% 31%

2% 2% 3% 3% 4% 5%

13% 6% 12%

Rest of the World

Source: International Trade Centre – – – – –

Bangladesh Garment Manufacturers and Exporters Association is major trading body encouraging garment industry. Germany, UK, France, USA & Spain are the major trading partner of Bangladesh for this sector. There were about 5 million people employed in this industry in Bangladesh in 2017. Most companies in this sector have ISO & Other certificates The strength of the country’s apparel sector is well understood through its ability to supply high-end items to famous global brands such as Hugo Boss, Adidas, Puma, Tommy Hilfiger, G-Star, Diesel, Ralph Lauren, Calvin Klein, DKNY, Nike, Benetton, IKEA and Mango. Currently, more than 30 per cent of the total RMG export is high-end products. Global retailers like Target and Walmart now operate sourcing offices in Dhaka. – Import duty is 0% to 15% for most garments & textiles and up to 28.2% for animal hair products in the US while in EU, it enjoys nil import duty © 2019 Dragon Sourcing. All rights reserved.

Jute & Allied Products

Jute & Allied Products - Market Trends HS 53 Series- Vegetable Textile Fibers in USD 1000s in 2018 Rest of the World

904,757

Belarus

69,709

Netherlands

74,070

Sri Lanka

105,961

Italy

269,082

Belgium

408,743

India

419,620

France

522,427

Bangladesh

721,534

China

1,398,649 -

400,000

800,000

1,200,000

1,600,000

– Bangladesh vegetable fiber market is ranked second in terms of production. It accounts for almost 30% of global production. Jute, also known as the golden fiber is the primary product. – Bangladesh is the largest exporter of Jute Products and accounts for 80% of world exports. – Bangladesh benefits from policies such as zero MFN (Most Favored Nation) & EBA( Everything but Arms) tariffs on raw jute, yarn, woven fabric, ropes, carpets, and sacks and bags. – Jute bags are considered the best replacement to plastic bags as it is environt friendly and this has attributed to an increased demand for jute bags around the world Supplier Locations

Bangladesh- Export of Jute in USD 1000s 250,000 203,570

200,000 150,000

136,749

152,206 130,680

123,473 100,000

50,000 2014

2015

2016

2017

2018

Source: International Trade Centre

Source: Dragon Sourcing Supplier Survey

Jute & Allied Products- Suppliers in Bangladesh Top Importers of HS 53 Series from Bangladesh in 2018 in USD 1000s

United States of America

4% 28%

5% 7%

Germany United Kingdom Spain France

Italy Canada 18%

Japan

23%

Belgium

Source: International Trade Centre

– – – –

–

Bangladesh Jute Association, Bangladesh Jute Goods Association, Bangladesh Jute Mills Association, Bangladesh Jute Mills corporation, and Bangladesh Jute Spinners Association are the major trading bodies encouraging jute industry. Dhaka, Khulna & Chittagong are major hubs of this sector. DSL initial research on the supplier listed in trade database indicate presence of around 200 suppliers. Some companies in sector have ISO certificates. Major players in the Industry: 1) Dhaka Zone: Pride Mills, Golden Jute, Bangladesh Jute mills, Karim Jute Mills, U.M.C Jute mills. 2) Khulna Zone: Aleem Jute Mills, Carpeting Jute Mills, Crescent Jute Mills, Eastern Jute Mills, Jessore Jute, Star Jute 3) Chittagong Zone: Amin Jute, Amin Old Field, Gul Ahmed, Hafiz Jute Mills Import duty is 0% for Jute products in USA & EU

Fish, Crustaceans & Allied Products - Market Trends Top 20 Exporers of HS 0306- Crustaceans in 2018 in USD 1000s Saudi Arabia 268,018 Honduras Belgium United Kingdom Bangladesh Spain Mexico Denmark Netherlands Australia Thailand United States of America Russian Federation China Argentina Indonesia Viet Nam Canada Ecuador India

8496, 2%

302,161 341,748 453,226 459,696 477,894 494,694 519,010 597,377 650,248 1,052,731 1,081,620 1,185,418 1,266,261 1,314,702 1,574,130 2,135,123 2,782,320 3,246,149

Top Export Products Under HS 03 from Bangladesh in 2018 in USD 1000s & in % Frozen Crustaceans- shrimps and 4708, 1% 3204, 1%

1389, 0%

prawns Crabs

Other Frozen crustaceans

64668, 14%

Frozen crabs 377226, 82%

Frozen cold-water shrimps and prawns "Pandalus spp., Crangon crangon" Others

Supplier Locations 4,469,781

1,000,000 2,000,000 3,000,000 4,000,000 5,000,000

Source: International Trade Centre

– Bangladesh Fishing Industry is largely dominated by crustaceans and shrimps. – The major types of shrimps are Black Tiger shrimp or Giant Tiger Prawn, Giant River Prawn, Speckled shrimp and Indian White shrimp. – Top exported fishes are Hilsha Shad, Pangasius and Tilapia. – Bangladesh shrimp exports in 2017 accounted for more than 50%, of total fish & shrimp exports with a value of USD 435 Million The EU was the most important market, accounting for 75% of the total export value. – The most important markets for frozen fish are the UK, Saudi Arabia, the US and to some extent Italy and China. Source: Dragon Sourcing Supplier Survey

Fish & Allied Products- Suppliers in Bangladesh Top Importers of HS 03- Fish and Crustaceans in all forms from Bangladesh in 2017 in USD 1000s United Kingdom 15%

Netherlands

20%

Belgium Germany

3% 4%

United States of America

4% 18%

France China

Japan 12%

Saudi Arabia

14%

Rest of the World Source: International Trade Centre

– – – – – –

Bangladesh Department of Fisheries looks after major fishing operation in the country. Production and exports is looked after by 3 organizations viz. Bangladesh Shrimp and Fish Foundation (BSFF), Bangladesh Frozen Food Exporters association (BFFEA) and Bangladesh Aquaculture Alliance (BAA). The fisheries sector is a major source of employment; about 10% of the total population (14.50m) is directly or indirectly engaged in the fisheries sector for their livelihood. Shrimp production is largely concentrated in the city of Khulna which accounts for 80% of total production. The production of cultured fish is concentrated around Dhaka, Chittagong, Rajshahi and Khulna. These four divisions represent 83% of total fish production. There are 75 EU-approved seafood export establishments in Bangladesh. Bangladesh falls under the General System of Preferences (GSP) in the EU . Import duty is 0% on most fish products to in USA except for some between 3%-7.5%.

Footwear

Footwear - Market Trends – Bangladesh is major exporter of footwear and textile footwear is increasing its importance due to already developed garment industry – Leather, resin are the major raw material for footwear – The US is the major market for footwear industry followed by Belgium, UK, Germany & Russia – The government is encouraging foreign companies to gain land in Export Trade Zone for footwear industry – More than 90 % of footwear players are concentrated in Dhaka City region – The Export Processing Zones at present have more than 23 shoe and leather goods factories Supplier Locations

Top 20 Exporers of HS 64- Footwear in 2018 in USD 1000s Bangladesh

1,040,380

Brazil

1,132,651

Slovakia

1,248,584

Romania

1,555,922

United States of America

1,562,104

Poland

2,093,114

Cambodia

2,212,296

United Kingdom

2,333,709

Portugal

2,534,941

Hong Kong, China

2,823,722

India

2,846,333

Spain

3,326,736

Netherlands

3,900,450

France

4,272,793

Indonesia

5,113,294

Belgium

7,115,825

Germany

8,573,153

Italy

12,250,384

Viet Nam

16,806,015

China

47,135,169 -

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

Source: International Trade Centre

Source: Dragon Sourcing Supplier Survey

Footwear- Suppliers in Bangladesh Top Importers of HS 64 Series from Bangladesh in 2017 in USD 1000s Germany 17%

21%

Japan United States of America Netherlands

14%

Spain Italy

France China

5% 14%

United Kingdom

Rest of the World

– Bangladesh Paduka Prostutkarak Samity (BPPS) and the BangladeshPaduka Byabashayee Samiti (BPBS). BPPS is an association of footwear manufacturing concerns – The number of production units in the industry now exceeds 2,000. Most units are, however, small and medium in size and only 23 are relatively large and have mechanized and semi-mechanized production technology. – Major International footwear & retail brand have their sourcing offices in Bangladesh . – Australian manufacturer Bonbon Shoe, a supplier to Hugo Boss, and Xen Chen and Genford of Taiwan, are also building footwear factories in Bangladesh. – Apex-Adelchi, the largest exporter from Bangladesh also has a new factory that will soon start production. – Import duty is 0 to 37.5% in USA and 0% in EU for Bangladesh footwear products © 2019 Dragon Sourcing. All rights reserved.

Raw Hide & Leather Products

Raw Hide & Leather Products - Market Trends Top 15 Exporters of HS 4104 Series- Tanned Hides and Skins of Bovines in 2018 in USD 1000s Australia Bangladesh Spain New Zealand Mexico Slovakia Hong Kong, China Taipei, Chinese Uruguay Germany Thailand Italy Argentina Brazil United States of America

Top Export Products from Bangladesh under HS 41 Series in 2017 in USD 1000s and in % 5,216 , 3%

79,167 88,012 93,779 104,148 113,805 118,716 121,518 121,713 129,759 146,206 164,894

1,809 , 1%

7,915 , 5%

70,171 , 40%

474,638 579,062

Leather further prepared after tanning or crusting of bovine

400,000

600,000

88,012 , 50%

Leather further prepared after tanning "incl. parchment-dressed leather", of goats Leather further prepared after tanning or crusting "incl. parchment-dressed leather", of sheep Other hide under 41 series

Supplier Locations

689,282 200,000

Tanned or crust hides and skins of bovine

Tanned or crust hides and skins of goats or kids, pigs

356,988

1,192 , 1%

800,000

Source: International Trade Centre

– Bangladesh has a long established tanning industry which produces around 2-3% of the world’s leather from a abundant supply of raw materials – The leather industry is anticipated to cross the $1-billion mark in export earnings by end 2015. – Italy, New Zealand, Poland, the UK, Belgium, France, Germany, the US, Canada and Spain are the major importers of leather products from Bangladesh – Local tanners produce four types of leather - rawhide, wet blue, crushed and finished leather. The main exports are crushed and finished leather. Source: Dragon Sourcing Supplier Survey

Raw Hide & Leather Products - Suppliers in Bangladesh Top Importing Countries of HS 41 Series from Bangladesh in 2017 in USD 1000s and in % 4,358 , 2%

11,233 , 4%

11,674 , 4% 13,301 , 4%

China

Korea, Republic of

13,730 , 5%

Italy

Japan

14,453 , 5%

126,850 , 42%

15,729 , 5%

Viet Nam Taipei, Chinese Spain

35,480 , 12%

India UK

Source: International Trade Centre

Rest of the World

52,185 , 17%

– Leather and Footwear Manufacturers and Exporters Association of Bangladesh. (LFMEAB) and Bangladesh Finished Leather, Leathergoods & Footwear Exporters’ Association (BFLLFEA) are recognized trade bodies that represent most of the major exporters. – This sector is expected to become the second highest export industry in the next five to seven years. – The labor-intensive leather industry is well suited to Bangladesh which has cheap and abundant labor force – Bangladesh has a domestic supply of good quality raw materials, such as hides and skins are a by-product of large livestock industry. – Adequate government support in the form of tax holidays, duty free imports of raw materials and machinery for export-oriented leather market – There are currently more than 200 tanneries in the country. – Import duty is 0 to 5% for leather products and 12% for garment products in the US © 2019 Dragon Sourcing. All rights reserved.

Dragon Sourcing Contact Information ASIAN Offices

EUROPEAN Offices

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NORTH AMERICAN Offices Dragon Sourcing Houston 4532 Plantation Colony Dr Missouri City, TX 77459 Phone: 832- 406-0281 Email: contact.us@dragonsourcing.com

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LATIN AMERICAN Offices

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AUSTRALIAN Offices

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Disclaimer The Analysis and Statements in this Report represent the considered views of Dragon Sourcing Ltd (DSL). The Report includes ‘forward looking statements’ and opinions based on the analyst’s current analysis and judgment of the Industry. Although DSL believes the outcomes expressed in such ‘forward looking’ statements are based on reasonable assumptions, such statements are not a guarantee of future performance and actual results or developments may differ materially from those in forward- looking statements. Factors that could cause actual results to differ materially from those in forward- looking statements include the general economic, environmental, market, business or government conditions. While DSL has made every reasonable effort to ensure the veracity of the information presented, it cannot expressly guarantee the accuracy and reliability of the estimates, forecasts and conclusions. No part of this report may be distributed, copied or reused without prior written permission from Dragon Sourcing Ltd. Please contact the author should you have any questions. Bharath Sugumar Email: bharath.sugumar@dragonsourcing.com Phone: +1 832 406 0281