Bangladesh's Leather Exports Rebounded, Reaching US$100 Million In Nine Months

According to the Bangladesh Export Promotion Board (EPB), between July 2023 and March 2024, Bangladesh earned $100.4 million in revenue from the sale of semi-finished raw materials, and leather exports have begun to recover.

Compared to the same period last year, exports increased by 9.8%. The surge in China's imports of semi-finished leather to Bangladesh is one of the important factors in the growth of its exports.

In order to reduce production costs and remain competitive in the U.S. market, China has begun importing large quantities of semi-finished leather from Bangladesh, according to industry insiders and exporters.

Diponkar Tripura, Head of Life & Race Bangladesh, a manufacturer and exporter of leather and leather products, said: "In the past three or four months, there has been a significant increase in semi-finished leather export orders from China. ”

The trade dispute between China and the United States has had a positive impact on Bangladesh's leather exports. In addition, rising labor costs in China in recent years have pushed up production costs, prompting manufacturers in the world's second-largest economy to source raw materials from South Asian countries.

"Chinese companies import semi-finished leather from Bangladesh, process it in China, and then manufacture the finished leather in Vietnam and Cambodia and sell it to the U.S. market," Tripura said. If Chinese companies export products from China to the United States, U.S. importers will have to pay higher tariffs than those in Vietnam and Cambodia. ”

In addition, Chinese companies use imported raw materials to meet the needs of their domestic leather goods market, which has reached a market value of $22 billion in 2022.

Bangladesh has 161 tanneries that process hides and skins into finished leather. However, Tripura said that 98 per cent of the tanneries did not meet global standards, forcing local suppliers to sell only semi-finished leather.

Arifur Rahman Chowdhury, General Manager of ABC Footwear Ltd., said, "China is phasing out industries that are harmful to the environment, such as the primary processing of hides and skins. Also, the price of semi-finished leather in Bangladesh is low, so they import semi-finished leather from Bangladesh. ”

Although exports of semi-finished leather are increasing and generating foreign exchange for Bangladesh, in reality, Bangladesh is at a disadvantage because Bangladesh could have earned more if it had been able to export finished leather directly and finished products produced with local leather.

In order to achieve this, Bangladeshi tanneries must be certified by the British Leather Certification Working Group (LWG).

Bangladeshi companies that process world-class finished leather will not sell in the local market because they do not receive cash incentives from the government, according to an exporter of leather products. The Bangladesh government offers a cash incentive of 12% of the amount of freight receipts for the export of semi-finished leather. 70% of the semi-finished leather produced in the country is exported, mainly to China.

A senior official from the Bangladesh Leather Products and Footwear Manufacturers and Exporters Association (LFMEAB) said that "the global economy has started to recover, which will increase the demand for luxury goods such as leather goods." As a result, leather orders from Bangladesh will increase in the coming months and we will also get better prices. ”

According to LFMEAB, finished leather exports are worth less than a third of the value of footwear exports, and a square foot of leather sells for just $0.60.

If the central sewage treatment plant in the Savar tannery area is able to treat all the toxic chemicals discharged, the price of leather per square foot in Bangladesh will reach at least $1.50, said MA Awal, vice president of the Bangladesh Association of Exporters of Finished Leather, Leather Products and Footwear.

According to industry insiders, Bangladesh produces 400 million square feet of leather every year. The country is home to 165 footwear and leather goods factories.