Not the next China, but a key sourcing center
Bangladesh is an important emerging production base, especially for low-value basic garments and textiles. The country has a long way to go in terms of infrastructure improvement and safety regulations, but it is one of the few alternatives buyers have as production costs in China continue to rise.
Bellamy notes that even though Bangladesh cannot be the next China in terms of production standards, overall cost, product availability and quality, it is a serious option for lower quality, simple cut-and-sew products.
Dr. Neale O'Connor, creator of the 'China Supplier 1000' project points out that the sourcing industry depends heavily on scale support in the form of logistics and related services which are needed to support the large scale alternatives to China.
"China is a volume business and has the advantage of a more modern logistics support to keep production located there even though costs have risen," he said.
Nonetheless, lower labor costs in Bangladesh are a big attraction for buyers.
Garments made there are cheaper by 20 to 30 percent than those produced in China. While labor expenses now comprise 40 percent of the production cost of a garment made in China, the same is 20 percent in Bangladesh.
According to the China National Textile and Apparel Council, the salary of a garment factory worker in China ranges from $298 to $476 per month, much higher than Bangladesh's average of $126.
Garment industry analyst, Wang Qian Jin believes it is inevitable that some of China's production will transfer to lower-cost hubs such as Bangladesh. China suppliers cannot continue to rely on low value, high volume production, he said.
Ravi from Atlas Global concurs, "Today Bangladesh supplies basic jeans, but for fashion jeans buyers still go to China as not many Bangladesh factories have the facilities for washes and finishes."
"China makers are now emphasizing mid to high-end garments, noted Zhu, General Manager of China garment supplier Jiaxing Mengdi Import & Export Co. Ltd. Almost 80 percent of the company's output is now comprised of smaller quantities of complex designs.
New garment factories like this one can be seen in the suburbs of Dhaka.
Photo courtesy: Ravi Arakon