Chinese apparel makers eyeing Bangladesh as outsourcing hub
source: CTEI
Bangladesh''s apparel industry is likely to get a big boost as the world''s largest textile producer China has started outsourcing the job to the South Asian country due to the higher labour costs there, officials said Friday.

Local garment manufacturers said China had placed some orders for manufacturing apparel items in Bangladesh as the labour cost is cheaper here than in the world''s fastest growing economy.

Some Chinese apparel makers and top global retailers started shifting their orders to Bangladesh due to the rising labour cost in that country, said Mr. M Fazlul Hoque, former president of Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA).

Vancl, China''s largest online apparel retailer, shifted some orders to the competent Bangladeshi textile makers late last year in an effort to cut the labour cost in the context of China''s rapidly rising production costs, sources said.

Besides, the European popular retailer H&M has also shifted some orders to Bangladesh from China because of the fast rising labour cost there.

The Beijing Business Today, a Chinese daily, reported that the Vancl would continue shifting orders to the manufacturers in Bangladesh.

Liu Hao, production manager at Vancl, confirmed that the company had placed orders last autumn for manufacturing shirts in Bangladesh.

This year also, the Vancl would shift a portion of its orders for casual pants to Bangladesh and it would begin experimenting with foreign production of sweaters and down-jackets by 2013, said the Chinese daily quoting Liu Hao.

The Chinese daily did not give the exact figures about of products manufactured in Bangladesh. However, it has been predicted that Bangladesh will become a big player in the manufacturing and production industry in near future.

"The monthly salary of a Bangladeshi worker would be Rmb500 to Rmb600 ($80 to $95), while one Chinese worker now is paid at least Rmb 2,000 per month," an official of the company said.

Even after payment of higher transport and other costs, the Vancl could save five to 10 per cent of the total costs by outsourcing the job, he noted.

Last year China raised its minimum labour cost by 23 per cent putting the local and foreign garment manufacturers under pressure and forcing them to focus on the countries like Vietnam, Cambodia, Sri Lanka and Bangladesh, where the labour costs are low.

The minimum wage in Shenzhen, an export hub next to Hong Kong, is $207 a month. When it comes to payment based on hours, Beijing workers are best paid, with the floor set at $2.05 an hour, the London-based Financial Times has recently reported.

The FT said cheaper cost countries in Asia, especially Vietnam and Bangladesh, have been the main beneficiaries, taking a good part of China''s market share.

Former president of Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Mr. Salam Murshedy, said, "It is a piece of good news for Bangladesh. If the Chinese companies come here, it will open a new window of opportunity."

He said the government and private sector should jointly work to explore the Chinese market, which had the largest consumer-base in the globe.

"Since China is switching over to the higher segment of the market and also the hi-tech industry, the country will need to import garment products. We should seize the opportunity to export our goods there," he said.

Bangladesh is said to be a popular destination for outsourcing because of its relatively cheap labour cost and an expanding modern textile industry that offers superior quality and materials, costing around 30 per cent less than it involves in China, the Chinese industry insiders observe.

Still, more and more Chinese brands will outsource the job in this way, as their domestic labour costs continue to soar, said Shao Ligang at the Beijing-based apparel consultancy firm Jiupai Yixian.

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