Sweater emerges as the next big bet as China exits the market

After retiring from the police force, Mostafa Golam Quddus established a sweater factory in Bangladesh in 1987, marking the country’s entry into the predominantly Chinese-dominated global sweater market at the time.

He brought in 43 Chinese experts for his factory and what happened next stunned the local business community – he exported $ 3 million worth of products in the first year of the experimental start-up. Quddus’ Cheung Hing sweater hasn’t looked back since.

The export of $ 3 million has grown to over $ 4 billion over time and continues to expand as Bangladesh continues to increasingly conquer the international sweaters market.

Automated production lines are now buzzing around the clock in nearly 400 sweater factories while manual flat knitting devices have been replaced by modern, automated Jacquard machines.

Sweaters, cardigans, pullovers and mufflers are included in the basic knitwear category.

According to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), sweaters have seen export growth of 27% in the past six years as China has withdrawn from the manufacture of sweaters. Exporters say the growth in this area is relatively higher compared to other items.

With demand supercharged as economies reopen, shaking off fear of Covid, sweater makers are now considering new investments and factory expansion.

In 2021, there were five new investments as several sweater manufacturing units increased their production capacity, said Shahidullah Azim, vice president of BGMEA.

Two entrepreneurs tell The Business Standard that they will invest more money in the manufacture of sweaters over the next two years. Shahidullah Azim also hopes that investments in the manufacture of sweaters will increase in the coming months.

Mostafa Golam Quddus, who had to hire Chinese workers to make sweaters, says creating a skilled local workforce has been a game-changer for Bangladeshi business.

The former president of BGMEA is now known for his Pull Dragon, a knitting and spinning project he started in 1993 after training the local workforce.

“Our success inspired many people to invest in the manufacture of sweaters and paved the way for the introduction of modern technology and improved machinery,” he notes.

Local entrepreneurs booming as China pulls out

With China as the main supplier, the current size of the international sweaters market is around $ 104 billion. The other key players are Bangladesh, Cambodia, Turkey, Vietnam and Myanmar.

Mohiuddin Alamgir Romel, Managing Director of Global Knitwear, says China is leaving the global sweaters market due to rising production costs and because sweaters are a staple for knitwear. Bangladeshi entrepreneurs will gain hugely in the years to come from the release.

Designtex Knitwear, which now has three factories, began producing sweaters in the 2000s. Khandoker company owner Rafiqul Islam plans to increase his investment in sweaters by the end of 2022.

Rafiqul Islam, whose production units currently employ more than 8,000 workers, told TBS that existing factories have increased capacity in recent years rather than creating new ones.

Mohiuddin Alamgir Romel also said they would increase investments in sweaters – although he gave no details.

Inexpensive items dominate the basket

Entrepreneurs say they mostly make low-cost sweaters and export them for just $ 4-6 a piece. Only a few factories export high value items but in small quantities.

Local sweater makers can increase their income by making expensive items like “cashmere wool sweaters,” which are priced between $ 100 and $ 150 apiece. The raw materials for its production are available in India, China and Mongolia.

Mohiuddin Alamgir Romel said an entrepreneur took the initiative to manufacture this expensive item at his factory inside Cumilla EPZ, but was unsuccessful.

Bangladeshi manufacturers are now exporting acrylic fiber sweaters and fashionable accessories for additional prices.

Some 20 to 25 factories are engaged in the large-scale export of sweaters to the country.

The list includes Pioneer Knitwear (BD) Ltd., Refat Garments, Square Fashions, Flamingo Fashion, Eurozone Fashion, Pakiza Knit Composite Ltd, AG Robes Ltd. GMS Composite Knitting Ind Ltd, Nipa Fashion Wear Industry Ltd, AKH Knitting & Dying, Aswad Composite Mills, Cotton Club (BD), Pull Matrix, Pull Target and Pulls Rupayan.

Skilled jerseys crisis

Even more than three decades after the initial pullover manufacturing journey, entrepreneurs still face a serious shortage of skilled labor. The owners also said the unusual increases in cotton prices in recent times have also caused them problems.

In addition, they are lagging behind in terms of innovation, the creation of design centers and a strong upstream link.

To top it off, complexities associated with the Harmonized System code have hampered imports of raw materials. Sweater makers are also struggling to get orders from most of the big brands.

In addition, a colossal investment is necessary to establish a factory in this sector, which is not possible for entrepreneurs with relatively little capital.

Mohiuddin said setting up a small factory with 200 machines would require $ 1.6 million just for the machines. As a result, investing in this sector is not easy.

This type of factory has to operate 24 hours a day, he said, adding that at least half of those workers work piecemeal.

“The churn rate of these workers is high, hampering production. Workers could be found easily in the past, but they have now become scarce. “