The outbreak of the deadly Coronavirus in China, which has already claimed 425 lives and infected around 20,438 persons in the country till the time of writing this piece, seems to be loaded with ramifications for Bangladesh, especially the readymade garment sector! However, experts are yet to figure out the quantum of it.
To put things in perspective, Bangladesh is highly dependent on China for its industrial raw materials and finished goods with nearly 28 per cent of the country’s imports coming in from China, and India standing at a distant second with just 14 per cent share. China supplies mostly fabrics and garment accessories to local manufacturers, with more than 40 per cent of its textile and textile-related goods and nearly 30 per cent machinery coming in from there, according to the Bangladesh Bank.
What’s more, China is also strongly emerging as an apparel export destination for Bangladesh. The country exported garments worth US $ 506 million to China in last fiscal year.
One can thus very well imagine, what could be the impact of it if supply chain is disrupted, which, Coronavirus has all the potential to cause. As per industry insiders, any critical situation in the Coronavirus-affected Chinese cities might drag down the supply of raw materials, which would be no good news for Bangladesh’s export-oriented garment sector, which is struggling in the export front lately.
“We’re really worried, as the country is highly dependent on China. We’re so far ok. But after the vacation (Chinese New Year), supply of goods and raw materials from China may be trimmed,” maintained a worried Anwar ul Islam Chowdhury, President of the Bangladesh Chamber of Industries (BCI) and Chairman of Evince Group (a leading apparel manufacturer) speaking to the media, adding, “To my mind, local woven sector may be the worst victim, as it is highly dependent on imports from China.”
Echoing the worries of Chowdhury, a former leader of the Dhaka Chamber of Commerce and Industry (DCCI) Abul Kasem Khan stated: “We don’t have any alternative to China. If the epidemic lasts longer and spreads to other nations, it could affect not only Bangladesh but also the whole world,” adding, “Clothing factories normally have very small inventories. If the outbreak continues for a month or so, it might impact the country’s trade and economy in a negative way.”
It may be mentioned here that China is currently observing New Year owing to which most of the businesses are closed and the actual impact of the Coronavirus outbreak will be felt after the end of New Year vacation. Further, as per Chinese media reports, more than a dozen Chinese provinces announced an extension of the current Lunar New Year holiday by more than a week as the nation attempts to halt the spread of the disease further.
“Sales of big retailers are falling due to closures of stores in mainland China. Sales are expected to drop further and therefore sourcing of products from Bangladesh may also decrease,” expressed apprehensions, Dr. Rubana Huq, President of Bangladesh Garment Manufacturing and Exporters Association (BGMEA).
However, there’s also certain section that feels that the outbreak of Coronavirus in China could benefit Bangladesh as it might cause shift of orders by the western brands from China to the latter.
“Trade may be diversified, and Bangladesh may be benefitted,” observed Dr. Ahsan H. Mansur, Executive Director of the Policy Research Institute of Bangladesh (PRI), adding that there is an opportunity for Bangladesh to grab a share of Chinese clothing market, as many foreign buyers will search for alternative sourcing of their products.
Meanwhile, the Chittagong Port Authority (CPA) has taken an initiative for screening of goods at the port to stop spreading of Cornovirus through goods and traffic in Bangladesh even as reports emerging of Coronavirus spreading in 12 new countries including India, US, Japan, Thailand, Hong Kong and Britain.