Some Chinese garment makers want to set up factories under joint venture in Bangladesh as they see the country as a competitive destination to relocate plants amid a raging US-China trade war and rising costs in the world’s second largest economy.
Chinese textile and garment industry owners have invested heavily in neighbouring Vietnam and Cambodia in the last two decades, but now they are focusing to shift their factories to Myanmar and Bangladesh.
The reasons for the change in focus include a lack of skilled workforce in the Chinese textile and garment industry, rising production costs, a shifting industrial base to industries such as IT and over-investment in Vietnam and Cambodia, where labour costs are lower.
“Now they are trying to shift the sunset industries to Myanmar and Bangladesh,” said Faisal Samad, vice-president of the Bangladesh Garment Manufacturers and Exporters Association.
The sunset industry refers to an industry that has existed for a long time and that is less successful and making less profit than previously.
Samad met with some entrepreneurs of Hong Kong-based Chinese Manufacturers’ Association during their visit to Dhaka from May 22 to May 26.
The entrepreneurs came to Bangladesh to explore investment opportunities.
“Bangladesh is still a competitive place compared to China, Vietnam and Cambodia for setting up industries because of lower cost of production, and trade privileges granted in major markets such as the EU and China,” he said.
“They are interested to set up factories in fabrics, garment, printing and dyeing,” Samad said.
So far, Bangladesh hasn’t allowed foreign investment in basic apparels, limiting their presence to high-end and value-added textile and garment items.
A Chinese garment manufacturer, Robert Lok, managing director of Merit Tat International Ltd, said he was looking for potential business partners in Bangladesh to make fresh orders for his brand. He was part of the Hong Kong delegation.
“I have seen a very young and energetic labour force in Bangladesh in the readymade garment sector. Their skill and the quality of work is really world class,” he told the Daily Star.
He believes that his business will be viable if he manufactures in Bangladesh to export to the US and other countries.
“If I manufacture here, the price will be cheaper than in China,” he said, adding that the Chinese garment industry might be affected by the ongoing trade war.
Lok plans to make fresh orders with potential garment manufacturers in Bangladesh before deciding to relocate his factory.
“Of course, I will tie up in joint venture with Bangladeshi partners in the future,” the manufacturer said, adding that some local garment giants have shown interest to team up with him to set up factories.
According to Lok, Merit Tat International has offices and owns outlets in New York and Western Europe.
Lok said there is a huge population in Bangladesh and it is advantageous for the sector to manage workers.
Moreover, the wage of the workers is lower compared to Vietnam and Cambodia.
Another Hong Kong-based Chinese garment maker, Francis Man Piu Cheng, said he was impressed with Bangladesh’s garment factories as they have skilled workers and mature management, which will be helpful to relocate his manufacturing plant to Bangladesh.
“I have already made some investment in the garment sector in Cambodia, but there is a lack of mature management there. So, I am thinking of establishing a manufacturing plant in Bangladesh with potential partners.”
Cheng, also the chairman of fashion apparel group Wing Tai Asia, talked to three garment manufacturers in Bangladesh and his Bangladeshi counterparts have also shown interest.
He expressed concern, however, about the higher lead time in the garment sector in Bangladesh.
Most garment manufacturers in China are worried about the ongoing US-China trade war, he said. THE DAILY STAR/ASIA NEWS NETWORK