In recent years, Bangladesh’s export landscape has undergone a remarkable transformation, propelled by strategic initiatives to diversify trade destinations and leverage emerging opportunities. Among these burgeoning markets, South Korea has emerged as a beacon of promise, with exports from Bangladesh experiencing a phenomenal surge, tripling in the span of just five years. This seismic shift has been attributed to a confluence of factors, including duty-free benefits, concerted efforts by exporters, and a proactive approach to penetrate the dynamic South Korean market.
A testament to this exponential growth, annual exports from Bangladesh to South Korea, which once oscillated between $200 million and $300 million, witnessed a substantial upswing in fiscal year 2017-18, crossing the half-a-billion-dollar milestone and reaching a decade-high by FY22. Buoyed by this momentum, exports soared further in FY23, surging by 18 percent year-on-year to an impressive $624 million. This upward trajectory has persisted into the current fiscal year, with exports in the first half registering a 7 percent increase, exceeding $330 million, according to data from the Export Promotion Bureau (EPB).
This surge in exports to South Korea marks a significant departure from Bangladesh’s traditional reliance on a handful of markets, predominantly Europe and North America. With nine Western markets, including the US, UK, and Germany, commanding a substantial share of Bangladesh’s apparel exports, efforts to diversify trade have gained renewed impetus. As per data from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), exports to non-traditional markets have been steadily growing, underscoring the success of endeavors to broaden the country’s export base.
Central to this remarkable growth trajectory is the preferential treatment accorded to Bangladeshi products by South Korea, which commenced in January, offering duty-free and quota-free entry for most goods. This pivotal development has been a catalyst in stimulating exports, providing a competitive edge to Bangladeshi exporters in the South Korean market. Mohammad Hatem, Executive President of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), lauded this initiative, emphasizing its role in reducing dependence on traditional markets and fostering a more diversified export portfolio.
Moreover, government policies, including a 4 percent cash incentive on exports to new markets until December 2023, further incentivized manufacturers to explore and capitalize on emerging opportunities. While the incentive rate was subsequently reduced to 3 percent in January 2024, its initial impact has been instrumental in galvanizing export activities. Hatem highlighted the growing traction in exports to Japan as well, attributing it to similar dynamics driving exports to South Korea.
The shifting landscape of global trade dynamics has also played a pivotal role in propelling Bangladesh’s exports to South Korea. With buyers in Japan and South Korea seeking alternatives to China amidst escalating labor costs, Bangladesh has emerged as an attractive near-shore destination for garment manufacturing. This trend has been particularly pronounced in light of Bangladesh’s ability to meet the stringent quality requirements of these discerning markets.
T-shirts, polos, jackets, and knitwear constitute the cornerstone of Bangladesh’s export basket to South Korea, catering to the discerning preferences of consumers in the East Asian nation. Faruque Hassan, President of BGMEA, emphasized the importance of market exploration and quality compliance in consolidating Bangladesh’s position in the South Korean market. With meticulous assessment of market demand and a commitment to uphold quality standards, Bangladesh is poised to further capitalize on the growth potential offered by South Korea.
Echoing this sentiment, Fazlul Hoque, Managing Director of Plummy Fashions Ltd., underscored the immense potential of the South Korean market, advocating for sustained efforts to nurture and expand market share. Emphasizing the need for proactive engagement and strategic investments, Hoque affirmed that Bangladesh stands poised to harness the myriad opportunities presented by South Korea’s burgeoning consumer base.
Analysts corroborate this optimistic outlook, asserting that Bangladesh’s exports to South Korea have yet to fully realize their potential. Mehdi Mahbub, a business development analyst specializing in the South Korean market, highlighted the untapped opportunities across various product categories, including sportswear and outerwear. Drawing parallels with Vietnam, Mahbub emphasized the evolving cost dynamics that could potentially tilt the scales in Bangladesh’s favor.
With the South Korean market poised for further expansion, Mahbub projected that exports from Bangladesh could surpass the one billion dollar mark, provided that commitments are upheld and quality standards adhered to. The cultural ethos of South Korea, characterized by a penchant for reliability and quality consciousness, underscores the importance of fostering enduring partnerships and delivering value-added propositions.
Bangladesh’s burgeoning trade relations with South Korea underscore the transformative potential of strategic diversification and proactive market exploration. With duty-free benefits, policy support, and a commitment to quality excellence, Bangladesh is poised to unlock new avenues of growth and emerge as a formidable player in the dynamic landscape of global trade.
This burgeoning partnership between Bangladesh and South Korea exemplifies the power of collaboration and underscores the shared commitment to fostering mutually beneficial trade relations. As Bangladesh continues to chart its trajectory as a burgeoning hub of global trade and commerce, the symbiotic synergy with South Korea heralds a new chapter of prosperity and growth for both nations.
