Bangladesh again emerged as the fifth sourcing destination for US-based apparel and fashion companies in 2018 mainly because of the 'most competitive price' it offers, according to a study.
The study also ranked the US's protectionist trade policy as the top sourcing concern for American firms.
The '2018 Fashion Industry Benchmarking Study' still found Bangladesh risky for trade in terms of compliance issues.
The results of the study, conducted jointly by the United States Fashion Industry Association (USFIA) and the University of Delaware, were released on July 18.
It surveyed executives from nearly 30 US-based leading fashion brands, retailers, importers and wholesalers between April and May 2018.
This year, Bangladesh remains as the fifth sourcing destination, with 75 per cent of respondents sourcing there, moving up from the seventh (61 per cent) position in 2017, the report revealed.
Bangladesh was also the fifth sourcing hotspot in 2016.
"'Made in Bangladesh' enjoys a prominent price advantage over many other Asian suppliers," it said.
In terms of sourcing cost, China scored 3.0 points, Vietnam 4.0 and Bangladesh 4.5.
However, the respondents still regard the "risk of compliance" as a notable weakness.
The respondents expressed more interest in expanding sourcing from Bangladesh in the next two years, as companies are actively seeking alternatives to China and Vietnam products.
Nearly half of the respondents expect to somewhat increase sourcing from Bangladesh through 2020, up from 32 per cent in 2017, according to the report.
Another 7.0 per cent expect to strongly increase sourcing from Bangladesh, a record high since 2015.
The respondents said sourcing in Bangladesh is still in risk since compliance is so important to companies, it said.
This risk level could be holding them back from increasing the sourcing of fashion garments.
Other than Vietnam and Bangladesh, respondents also plan to somewhat increase sourcing from India, members of CAFTA-DR, Indonesia, Cambodia and members of the African Growth and Opportunity Act, said the study.
"Labour cost remains the top factor driving up sourcing cost in 2018, with 93 per cent of respondents expecting an increase," it said.
The wage levels continue to rise quickly in many Asian countries where US fashion companies primarily source, including China, Vietnam, Cambodia, Sri Lanka and Bangladesh.
About 90 per cent of responded said that raw materials cost would increase this year.
Some 80 per cent respondents said that trade barriers as well as compliance with factory, social, and environmental standards are driving up their sourcing cost this year.
This is a reminder that more needs to be done to eliminate trade and regulatory barriers to help companies manage and reduce cost.
When asked, vice president of the Exporters Association of Bangladesh Mohammad Hatem strongly disputed the risk factors with regard to compliance issues.
"Bangladesh's garment factories are the safest compared to other apparel-producing countries in the world, as western retailers' platforms and the government are carrying out safety work," he claimed.
"The RMG industry of Bangladesh has transformed over the last five years. It has now become one of the safest for workers in the world," said Sean Cady, vice president, global supply chain and responsible sourcing of US-based VF Corporation.
The global apparel brands and retailers are placing higher volume of work orders to the compliant-factories in Bangladesh, he said at a press conference in the city on Sunday .
Bangladesh's overall apparel exports to the US rose by 3.76 per cent to $2.22 billion during January to May 2018, up from $2.14 billion in the corresponding period of 2017, according to data from the Office of Textiles and Apparel (OTEXA) affiliated with the US Department of Commerce.
Vietnam's apparel export grew by 6.11 per cent to $4.74 billion during the first five months of the current calendar year, it showed.
On the other hand, China's garment export fell by 2.41 per cent to $9.07 billion during the period, the data showed.
