• خبرگزاری آریافارسی
    • Arya News AgencyEnglish
    • Arya News Agencyالعربیه
خبرگزاری آریا
Tuesday, June 17, 2025
  • Home
  • iran
    • world
      • Economy
        • Sports
          • Technology
            • Archive
            Economy

            Fast fashion, fat margins: How global retailers cash in on low-cost Bangladeshi RMG

            Monday, May 19, 2025 - 09:51:04
            Fast fashion, fat margins: How global retailers cash in on low-cost Bangladeshi RMG
            Arya News - Global fashion brands are reaping triple-digit profits on Bangladeshi garments, buying at $3 and selling for three to four times more. Yet, they continue to pressure factories to cut prices further.

            DHAKA – Global fashion brands are reaping triple-digit profits on Bangladeshi garments, buying at $3 and selling for three to four times more. Yet, they continue to pressure factories to cut prices further.
            A shirt manufactured in Bangladesh at a free-on-board (FoB) price of $5 often retails for as much as $28 in Europe or North America. Once shipping, warehousing, duties, and other operational costs are added, bringing the total to around $16, retailers may still earn a profit of about $12 per item.
            Western retailers and brands often justify their pricing strategies by pointing to the high costs associated with global operations, including freight charges, currency hedging, warehousing, demurrage, markdowns, and advertising.
            “There are overheads, of course, but let’s not pretend they’re not making money,” said Fazle Shamim Ehsan, proprietor of Fatullah Apparels. “Especially in the mid to high-end market, many brands earn huge profits from goods made in Bangladesh.”
            Still, many Western buyers continue to pressure Bangladeshi factories to reduce the prices further.
            A 2020 study by the European non-profit Fair Wear Foundation found that nearly 39 percent of garment manufacturers in the country had sold products at a loss.
            The practice, exporters say, is mainly to preserve long-standing relationships with global retailers and to secure future contracts.
            Meanwhile, data from the Centre for Policy Dialogue (CPD), a Dhaka-based think tank, suggests that Bangladesh consistently receives lower prices than its Asian competitors for similar products.
            In 2020, Bangladeshi cotton T-shirts exported to the European Union (EU) fetched €1,091.5 per 100 kilogrammes, a 1 percent decline from the previous year, while Vietnam’s equivalent product saw a 3 percent price increase, rising to €2,157.9.
            The contrast was even sharper in pullovers.
            Bangladesh’s average price fell 7 percent to €1,329.5, whereas Vietnamese pullovers held steady at €2,157.8.
            For garments made from man-made fibres, Bangladeshi exports declined 6 percent to €1,319.4, while Vietnam’s fell by just 3 percent to €1,906.2.
            The United States market reflected similar patterns, as shown in the CPD data.
            The average price for a dozen Bangladeshi-made cotton T-shirts dropped from $22.43 in 2019 to $17.99 in 2020, a 20 percent fall, while Vietnamese suppliers experienced a slightly smaller decline, with prices falling from $38.2 to $31.9.
            Bangladeshi sweaters and pullovers also saw a 2 percent price drop to $39.31 per dozen, whereas Vietnamese equivalents remained largely unchanged, with prices hovering around $47.
            For trousers, the gap was wider still. A dozen cotton-fibre trousers for women and girls exported from Bangladesh earned $64.17 in 2020, down 12 percent from the year before. Vietnam, by comparison, received $84.6 for the same product after a smaller price adjustment of just 6 percent.
            SYSTEMIC UNDERVALUATION
            A 2022 report by the International Trade Centre (ITC) underscored the pattern of systemic undervaluation of Bangladeshi garments.
            Men’s woven cotton trousers exported from Bangladesh earned an FoB price of $7.01 per piece, which was 9.2 percent below the global average of $7.72. Vietnam received $10.76 for the same item, while Sri Lanka and India fetched $8 and $8.41.
            Similarly, men’s cotton jeans made in Bangladesh were sold at $7.81 per piece, 7.2 percent below the global average of $8.41, while Vietnamese jeans sold for $11.55.
            Even in niche categories like man-made fibre bras, Bangladesh was paid considerably less, with exporters earning $3.19 per unit compared to Vietnam’s $6.06.
            Only two Bangladeshi products — women’s cotton trousers and men’s cotton T-shirts — were sold at slightly above the global average.
            Women’s cotton trousers earned $6.43 apiece, exceeding the world average of $5.22 by 23.3 percent, while men’s T-shirts fetched $1.47, roughly 23.1 percent higher than the global benchmark.
            Still, these figures were dwarfed by the earnings of countries like Turkey and Peru, which received up to four times more for similar items.
            According to the ITC, which has a joint mandate with the World Trade Organization and the United Nations, these pricing gaps represent an entrenched imbalance in the global supply chain.
            Industry insiders say Bangladesh’s quality has improved, but its bargaining power remains weak.
            RETAILERS CITE HIGH OPERATIONAL COSTS
            Ehsan, owner of Fatullah Apparels, said jackets and outerwear produced in Bangladesh, often sold to retailers at FoB prices ranging from $20 to $25, regularly appear in stores for $100 to $110.
            He added that some of the world’s richest individuals have built their fortunes in fashion retail, with Bangladesh as a key production hub.
            The profit chain often stretches beyond the retailers themselves.
            Md Fazlul Hoque, managing director of Plummy Fashions Ltd, pointed out that a significant share of Bangladesh’s garment exports is managed by intermediaries or third-party importers, who also take a cut before the goods reach retail shelves.
            “Sometimes we sell a T-shirt at $3.50, and it ends up in a branded store for $39,” Hoque said. “Of course, it doesn’t stay at that price forever — discounting comes in later, but the markup is still substantial.”
            He added that while pricing can vary across seasons and product categories, the general rule of thumb remains: most garments are sold at three to four times their FoB value.
            However, a European retailer, on condition of anonymity, disputed the claims of excessive markups. “Those suggesting a substantial markup on Bangladeshi garment items are gravely mistaken,” he said.
            “In the garment supply chain, a European retailer must rent large warehouses to store goods, which is quite costly,” he said, adding that transportation expenses also factor in.
            “Renting retail space is another major expense, and ultimately, retailers and brands can sell, at best, 70 percent of the goods from a single consignment,” he said. “Once the season ends, unsold items can no longer be offered to customers.”
            The retailer said that European companies pay higher wages than their Asian counterparts, which also affects profit margins. “Ultimately, European retailers earn less than 10 percent profit annually. The claims of high markups are exaggerated.”
            CALL FOR FAIR PRICING
            Apparel industry advocates and multilateral organisations are increasingly urging retailers to adopt more equitable pricing models.
            The ITC noted in its report that while apparel manufacturing has grown more complex, involving design, logistics, and branding, the actual cut-and-sew operations, which remain concentrated in countries like Bangladesh, continue to be the least rewarded.
            Khondaker Golam Moazzem, research director at CPD, said that China and Vietnam are getting higher prices for their garments by utilising diverse fabrics and innovative product designs, despite sharing the same HS codes as Bangladesh.
            In contrast, Bangladesh’s garment exports are heavily reliant on just five or six products, accounting for 70 percent of its total exports. This concentration creates unhealthy competition, tempting local exporters to undercut prices, said Moazzem.
            He also pointed out that the industry’s heavy dependence on cotton and limited use of man-made fibres are also obstructing better prices.
            “Bringing in more foreign investment could be a viable solution, as foreign investors usually have access to upmarket buyers and advanced technologies,” said the CPD research director.
            Like or Dislike: 0

            Short Link:
            News Code:
            Member Code:

            More News
            Perfectly connected for the future
            Perfectly connected for the future
            Kuwait Eyes AI Collaboration With Russia
            Kuwait Eyes AI Collaboration With Russia
            SP Global Declares Ukraine Defaulted on Its GDP-Linked Securities
            SP Global Declares Ukraine Defaulted on Its GDP-Linked Securities
            `Temporary Reversals Don`t Matter`: Why Trump`s Tariff Agenda May Prevail Despite Court Challenges
            `Temporary Reversals Don`t Matter`: Why Trump`s Tariff Agenda May Prevail Despite Court Challenges
            Kiss the Dollar Goodbye? China & Indonesia Go All-In on Local Currency Deal
            Kiss the Dollar Goodbye? China & Indonesia Go All-In on Local Currency Deal
            US President Trump’s 25% tariffs threaten Apple, Samsung, global supply chains
            US President Trump’s 25% tariffs threaten Apple, Samsung, global supply chains
            Electricity prices surge in Laos amid rising demand and weakened kip
            Electricity prices surge in Laos amid rising demand and weakened kip
            Asian shares climb and oil prices gain after a report Israel may attack Iran`s nuclear facilities
            Asian shares climb and oil prices gain after a report Israel may attack Iran`s nuclear facilities
            UK looks to reset EU relations 5 years after Brexit
            UK looks to reset EU relations 5 years after Brexit
            درج نظر الزامی میباشد
            Protected by FormShield
            Send
            • More News
            • True Promise III: Iran Launches Massive Retaliatory Missile Barrage on Israel
            • Lao PM Sonexay vows to take action on inflation and debt amid National Assembly’s concerns
            • South Korean President Lee Jae-myung’s economic playbook: big spending, bigger control
            • India’s cable television sector experiences sharp downturn, 500k jobs lost over 7 years: Report
            • AI from Germany: Europe’s smart alternative
            • Perfectly connected for the future
            • Economic gunboat diplomacy: The Jakarta Post
            • Russia Becomes Sixth Among Major Economies With Lowest Dependence on Exports
            • Kuwait Eyes AI Collaboration With Russia
            • Bhutan’s vehicle tax cut to make small and medium cars cheaper by 10%
            • SP Global Declares Ukraine Defaulted on Its GDP-Linked Securities
            • Why is everyone talking about an ASEAN power grid?
            • Laos eyes more Malaysian investments
            • 24% US tariff looms over Malaysia
            • 22 crew members safe after fire aboard cargo ship carrying vehicles off Alaska
            • `Temporary Reversals Don`t Matter`: Why Trump`s Tariff Agenda May Prevail Despite Court Challenges
            • Google, Justice Department face off in climactic showdown in search monopoly case
            • German Automakers Negotiate With US to Remove Trade Tariffs
            • China’s 30-Million-Ton Lithium and Uranium Bonanza Could Blow Up Global Energy Markets
            • Lawsuits aim to hold fossil fuel companies responsible for climate change
            • What is a stablecoin and what could it mean for your finances?
            • Latest data points to China’s economic resilience despite trade headwinds
            • Kiss the Dollar Goodbye? China & Indonesia Go All-In on Local Currency Deal
            • Using AI to fight diseases
            • US President Trump’s 25% tariffs threaten Apple, Samsung, global supply chains


              خبرگزاری آریا

              "Arya News Agency" is an official and independent Iranian news agency with the slogan "Transparent, honest and professional movement in information dissemination."

              Join with Us:

              Tuesday, June 17, 2025
              News Groups:
              • iran
              • world
              • Economy
              • Sports
              • Technology
              Arya Group:
              • مرکز مطالعات استراتژیک آریا
              • شرکت سرزمین هوشمند آریا
              • انتشارات پیشگامان اندیشه آریا
              © - Arya News Agency
              About us| Contact us| RSS| Links| Advanced search