A Change of Guard

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Thursday, 28 March 2013

Unrest in Bangladesh may push garments to Cambodia

Bangladesh, 28 March 2013 (The Daily Star/ ANN) -- The ongoing political unrest in Bangladesh continues to upset the country's garment sector as buyers are now arranging to meet apparel makers in India or China, to avoid the turbulences in Dhaka.

Many buyers have already suspended trips to Bangladesh, and some have even expressed their intention to purchase garments from other countries at higher prices due to the uncertainties in Bangladesh.

If the situation worsens further, it will be difficult to achieve the export target of US $21.53 bln at the end of the current fiscal year, exporters said.

The sector earned US$13.83 bln in the first eight months of the current fiscal year, which is around 3 per cent higher than the target set for the period.

"Buyers are very cautious now," said a European buyer operating in Dhaka. He had cancelled three trips in the last one month due to shutdowns, he said.

Failing to arrive in Dhaka, the senior officials of the company called the garment makers to meet in India or China, he added.

The buyer has also decided to slash 50 per cent of its orders and shift those to other countries, even at higher prices, to cope with the lead time.


"The European buyers are now waiting and watching the situation, but some US buyers like the retail giant Walmart have already hinted at reduced purchase from Bangladesh," said a German buyer.

In January, Walmart warned its suppliers worldwide of a new "zero-tolerance" policy against unauthorized subcontracting and announced factory health and safety initiatives, Bloomberg said in a report.

The company also has a strategy to reduce its reliance on Bangladesh, it added.

If Walmart did move some of its apparel manufacturing out of Bangladesh, there are at least two other places it might go: Cambodia, where the average wage is 29 cents an hour, and Vietnam, where workers make about 55 cents an hour.

Walmart’s labor costs would go up, but it could benefit from the better infrastructure available in those countries, the Bloomberg report said.

This is the time for Bangladeshi manufacturers to receive orders from buyers for the next winter season, said Bakhtiar Uddin Ahmed, general manager at Fakir Apparels Ltd, a garment maker.

Buyers may opt for other destinations if the situation in Bangladesh does not improve, he said.

1 comment:

Anonymous said...

bangladesh, are poorer than Cambodia, dirty places to stay & to live.,,