{"id":3917,"date":"2016-05-05T12:27:42","date_gmt":"2016-05-05T06:27:42","guid":{"rendered":"https:\/\/bbf.digital\/new\/?p=3917"},"modified":"2017-09-09T22:58:26","modified_gmt":"2017-09-09T16:58:26","slug":"is-footwear-bangladeshs-next-export-tiger","status":"publish","type":"post","link":"https:\/\/bbf.digital\/new\/is-footwear-bangladeshs-next-export-tiger","title":{"rendered":"Is Footwear Bangladesh\u2019s Next Export Tiger?"},"content":{"rendered":"<p style=\"margin-right: 44.8pt; line-height: 120%; text-align: justify;\"><span style=\"color: #000000; font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\">Although RMG provides 80% of Bangladesh\u2019s total exports, several sectors have popped up over the last decade which represent potential for greater export diversification. Footwear is one such sector. Footwear exports have grown almost 10 times over the last decade, from 68 million USD in 2004 to 673 million USD in 2015. With eyes set on lucrative markets such as the EU, USA and India, Bangladesh\u2019s footwear industry is in a prime position to play a larger role in Bangladesh\u2019s export fortunes over the next decade. This is due, in part, to robust backward linkages, especially leather sourcing.<\/span><\/p>\n<p style=\"margin-right: 44.8pt; line-height: 120%; text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\"><a href=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture.png\" rel=\"attachment wp-att-3918\"><img fetchpriority=\"high\" decoding=\"async\" class=\" wp-image-3918 aligncenter\" src=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-300x93.png\" alt=\"Capture\" width=\"667\" height=\"207\" srcset=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-300x93.png 300w, https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture.png 718w\" sizes=\"(max-width: 667px) 100vw, 667px\" \/><br \/>\n<\/a><\/span><\/p>\n<h2 style=\"margin-right: 44.8pt; line-height: 120%; text-align: justify;\"><span style=\"color: #808080; font-family: Arial, Helvetica, sans-serif;\">Robust Industry Growth Matched by Growing Global Apetite<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\"><a href=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-1.png\" rel=\"attachment wp-att-3920\"><img decoding=\"async\" class=\"wp-image-3920 aligncenter\" src=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-1-300x97.png\" alt=\"Capture 1\" width=\"686\" height=\"222\" srcset=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-1-300x97.png 300w, https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-1.png 676w\" sizes=\"(max-width: 686px) 100vw, 686px\" \/><\/a><\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\">Bangladesh\u2019s footwear industry has experienced a meteoric rise since the last decade. With a CAGR of 25.76% per year, total footwear exports grew from 68 million USD in 2004 to 673 million USD in 2015. This growth parallels the current growth of the global footwear market, which is currently forecasted to grow to 211 billion USD by 2018. At the moment, Bangladesh only holds 0.5% of this market.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #808080; font-family: Arial, Helvetica, sans-serif;\">Strong Backward Linkages to the Leather Industry<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\">The growth of the local footwear industry is boosted to a large extent by the growth of the overall leather industry. Recently, total export has exceeded USD 1 billion mark in 2014 for the leather sector which has been due to rising global demand and renewed interest amongst local entrepreneurs for manufacturing footwear. Some international investors have forayed in the sector setting up factories in local Export Processing Zones (EPZs).<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\">The strong leather industry in Bangladesh gives unique advantages to the footwear industry, as there is the opportunity of total vertical integration in the value chain, from raw leather to the final product.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\"> For instance, Bangladesh produces superior quality leather from local livestock, which is subsequently processed by tanneries concentrated around the capital city. The annual production of leather hovers around 250 Million square feet each year with supply peaking during the religious festivals of Eid, especially Eid-ul-Adha.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\"> The tanneries in Bangladesh have often come under criticism for being environmentally unfriendly. This has prompted the government to build a 200-acre Leather Industrial Park in Savar at a cost of USD 60 Million. The park will include state of art Effluent Treatment Plants (ETPs) to treat the waste generated while processing the leather in the tanneries.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #808080; font-family: Arial, Helvetica, sans-serif;\">Demand Deficit in the Leather Industry Can be Filled by Expanding Footwear Sector<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-size: 12pt; font-family: Arial, Helvetica, sans-serif;\">As the majority of leather is exported to the EU (54%), the recent decline in demand in EU market of leather hides has adversely affected the Bangladesh leather market.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\"><a href=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-2.png\" rel=\"attachment wp-att-3921\"><img decoding=\"async\" class=\"wp-image-3921 aligncenter\" src=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-2-300x119.png\" alt=\"Capture 2\" width=\"673\" height=\"267\" srcset=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-2-300x119.png 300w, https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-2.png 725w\" sizes=\"(max-width: 673px) 100vw, 673px\" \/><\/a><\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">This decline in demand has been reflected in a fall in global hide prices, prompting local buyers being less likely to buy the raw hides as well. As a result, 40% of the hides bought by tannery warehouses since last Eid-ul-Adha is still unsold.<\/span><br \/>\n<span style=\"font-family: Arial, Helvetica, sans-serif;\">If this global demand deficit persists, then there is an opportunity for the rawhide sellers to shift their focus to local footwear manufacturers, provided that the expanding footwear industry also has matching demand for their excess hide supply.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #808080; font-family: Arial, Helvetica, sans-serif;\">The Emergence of Non-Leather Footwear as an Export Sector<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">The crackdown on compliance in the leather industry, especially the insistence on shifting tanneries from Hazaribagh to Savar, has prompted many footwear manufacturers to try their hand in the non- leather footwear sub-sector, which, at the moment, is free from such regulation.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">Over the years, Bangladesh has emerged as a leading exporter of quality, low price non-leather footwear to key global retailers such as H&#038;M, Decathlon, Kappa, Sketchers, Fila, and Puma. Exports from this sector stood at 171.57 million USD in FY 13-14.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">This shift is also driven by the comparatively low input costs of non-leather footwear. While a leather shoe costs $9 to make, a pair of non-leather shoes can cost as low as $3.2. Depending on what the shoes are made out of will determine the price. <a href=\"https:\/\/vessifootwear.com\/\" alt=\"\" title=\"\">Vessi shoes<\/a> are amazing &#8211; they are 100% waterproof!<br \/>\n <\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #808080; font-family: Arial, Helvetica, sans-serif;\">Opportunities for Growth in Asian Markets<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">The growing middle class segments in key Asian markets such as China and India means that products such as footwear are going to be increasingly seen as more brand and status-driven instead of being necessities. This will create the opportunity to market higher value products to these regions.<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">In fact, there is good potential for growth in Bangladesh\u2019s domestic market as well. Rising per capita income, along with the growing MAC segment, shows encouraging signs for both entry level and higher value products in the future.<\/span><\/p>\n<h2 style=\"text-align: justify;\"><span style=\"color: #808080; font-family: Arial, Helvetica, sans-serif;\">Targeting the Top Export Destinations<\/span><\/h2>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\"><a href=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-3.png\" rel=\"attachment wp-att-3922\"><img loading=\"lazy\" decoding=\"async\" class=\" wp-image-3922 aligncenter\" src=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-3-300x122.png\" alt=\"Capture 3\" width=\"674\" height=\"274\" srcset=\"https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-3-300x122.png 300w, https:\/\/bbf.digital\/new\/wp-content\/uploads\/2016\/04\/Capture-3.png 668w\" sizes=\"(max-width: 674px) 100vw, 674px\" \/><\/a><\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">A good strategy for footwear manufacturers would be shift their focus to the top export destinations in the long run. At the moment, the EU is the largest export destination of Bangladesh\u2019s footwear industry. However, even in 2013 only 4 EU countries (Germany, France, United Kingdom, Italy) feature in the top 10 global footwear markets (source: Euromonitor).<\/span><\/p>\n<p style=\"text-align: justify;\"><span style=\"font-family: Arial, Helvetica, sans-serif;\">To gain a greater share of the pie, Bangladeshi footwear manufacturers should target both established top markets such as USA, China and Japan and also emerging markets such as Mexico, which will be thriving by 2018.<\/span><\/p>\n<p style=\"text-align: justify;\">[spacer color=&#8221;8BC234&#8243; icon=&#8221;Select a Icon&#8221; style=&#8221;1&#8243;]<\/p>\n\n    <div class=\"xs_social_share_widget xs_share_url after_content \t\tmain_content  wslu-style-1 wslu-share-box-shaped wslu-fill-colored wslu-none wslu-share-horizontal wslu-theme-font-no wslu-main_content\">\n\n\t\t\n        <ul>\n\t\t\t        <\/ul>\n    <\/div> \n","protected":false},"excerpt":{"rendered":"<p>Although RMG provides 80% of Bangladesh\u2019s total exports, several sectors have popped up over the last decade which represent potential for greater export diversification. Footwear is one such sector. Footwear exports have grown almost 10 times over the last decade, from 68 million USD in 2004 to 673 million USD in 2015. With eyes set [&hellip;]<\/p>\n","protected":false},"author":12,"featured_media":4438,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[40,34,3],"tags":[],"class_list":["post-3917","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-analysis","category-insights","category-special-features"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v24.7 (Yoast SEO v25.1) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Is Footwear Bangladesh\u2019 s Next Export Tiger?<\/title>\n<meta name=\"description\" content=\"Although RMG provides 80% of Bangladesh\u2019s total exports, several sectors have popped up over the last decade which represent potential for greater export diversification. 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