In FY 2023-24, Bangladesh received ~USD 1 billion from leather and leather goods exports, of which ~11 percent is contributed by leather. While the leather export receipt is majorly contributed by tanned or crust leather, the market for finished leather is gradually recovering from the effects of the global supply chain disruptions due to the pandemic and the Russia-Ukraine war.

Figure 1 Total and finished leather export receipts of Bangladesh (USD in millions)

Leadership of Neighbors in Destination Portfolio

The tanned or crust leather prepared at domestic tanneries in Bangladesh is further processed as finished leather, which has a growing demand in the global value chain, especially by leading leather and leather goods manufacturers, including China, Italy, France, Viet Nam, India, and Indonesia.

With a gradually increasing pattern, the Bangladeshi finished leather export receipts stood at around USD 18 million in FY 2023-241. While the overall finished leather exports have increased, the export trend for the top destinations reveals interesting insights, with China and India, the two peer economies, showing a significant rise in their finished leather imports from Bangladesh over the past 5 years, in contrast to the recovering import state in the other top destination countries. This has also led to a change in the market share of the top importers of Bangladeshi finished leather.

In FY 2023-24, the top 10 destinations for finished leather have cumulatively gained more market share (around 96 percent from 92). India, the second-largest importer, gained a significant rise to 20 percent of the exports, compared to the 3 percent share in FY 2019-20, whereas the recovering markets in Hong Kong, Japan, Italy, and Viet Nam led to a decreased market share. This strategic shift in demand for Bangladeshi leather in China and India is driven by the countries’ successful efforts in:

• Transformation of low-value imported processed leather into high-value-added leather and leather goods for the growing domestic market and re-export market.
• Integration of advanced processing technologies and automation in tanneries and leather processing factories.
• Upgradation of tanneries and processing factories to meet the global production and quality standards.

Dynamic Market Portfolio Leading towards Growth

In FY 2023-24, Bangladesh exported finished leather to 27 countries, where the top destinations were dominated by Asian countries. Assessing the changing dynamics in the export portfolio, the destinations of Bangladeshi finished leather, other than the top importers discussed earlier, can be categorized as follows:

• Emerging importers: Comparatively new markets or reemerging markets in the past 5 years, including Greece, Mexico, the United Kingdom, the United States of America, Singapore, Cambodia, Australia, and Belgium. 
• Fading importers: Experienced a decline or discontinuation of finished leather exports in the past few years in a few markets, including the Philippines, Poland, Romania, Bulgaria, Uzbekistan, and Albania. While the overall market is still going through the recovery phase, these fading markets hold the potential to be revived with quality exports, leveraging the existing networks and relationships built in these markets.

Figure 5 Notable destinations for finished leather from Bangladesh

Bangladesh has been experiencing rapid growth in tanned or crust leather exports, indicating the potential of the country to strengthen its backward linkage connectivity in the global value chain. This potential can be further explored by exploring the potential of the country in the finished leather market and accelerating its growth by producing quality leather for both domestic and foreign markets. 

The article was authored by Ainan Tajrian, Business Consultant at LightCastle Partners. For further clarification, please contact here: ainan.tajrian@lightcastlepartners.com