Knitwear makers target Russia

Monira Munni

Garment makers have set their eyes on Russia, aiming to sell apparel worth US$2.0 billion to Europe's most populous nation, as part of their latest efforts to diversify export markets away from the EU and the US.

Manufacturers told the FE Thursday Russian economy has been growing fast, but retailers there buy clothing mainly from Turkey and China as direct sourcing from Bangladesh is still in its infancy.

"Russia is a good market both in terms of price and product demand," Mohammad Hatem vice president Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) told the FE.

"The fast-booming Russian market now accounts for only one per cent of our total garment exports. But a BKMEA study has shown that we can raise apparel export to Russia to at least $2.0 billion within the next three-four years," Mr. Hatem said.

As part of a drive to find new markets for the Bangladeshi apparel, two local trade promotion teams will visit Moscow this year to forge links with the Russian retailers and get them acquainted with Bangladeshi products.

Officials said the first team will be led by knitwear exporters who will attend a fair in Moscow where they will display the entire range of Bangladeshi apparel and hold parleys with the buyers and the Russian trade bureaucrats.

The second team will travel to the world's largest country the next month. Senior officials of the Bangladesh Bank, Ministry of Commerce and Export Promotion Bureau and some members of the BKMEA will make the trip.

"In the first tour our emphasis will be to exclusively promote products and try to kick off direct trade ties between Dhaka and Moscow. In the second we will hold a series of meetings so that we can cement the links and foster direct trade," said Mr. Hatem.

"What we need now is to open a direct channel to enter Russia. Many Russian retailers simply don't know that our apparel is the most cost competitive in the world and quality of our products is as good as China or Turkey," said a knitwear exporter.

Local manufacturers are making shipment through indirect sourcing via Turkey, Finland and Germany through the telegraphic transfer (TT) system due to some custom-related obstacles, he said.

EPB officials said Russian buyers cannot import directly from Bangladesh, as the two nations don't have banking links that can allow shipment of merchandise through letter of credit. They can only ship a negligible amount through the TT process.

"The BB and commerce ministry officials will hold meeting with their Russian counterparts during the September visit. Hopefully, the LC system will be in place immediately after the tour," Mr Hatem said.

The country fetched $19 billion from apparel export in the just concluded 2010-11 fiscal year, posting an impressive 42 per cent growth over the same period of the previous fiscal year.

But about 85 percent of the apparel was shipped to only two markets --- the US and the 27-nation bloc European Union --- leaving the local exporters extremely susceptible to any major economic downturn in the world's two largest economies.

In the 2009-10 fiscal year, Bangladesh apparel export fell down to a meagre two per cent after the global recession dried up consumer spending in the US and the EU.

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