China is the global manufacturing capital, and when it comes to apparels, its manufacturing might is comparable to none! However, the outbreak of COVID-19 has brought the entire world into a standstill and claimed lives of tens and thousands of people across geographical locations, which could very well change the equations going forward, believe many.
“I feel a lot of customers now want to move investments out of China, and Bangladesh definitely stands a good chance to get additional orders. But considering the situation at hand in Bangladesh right now, it would be a bit premature to make any assessment,” said Manu Uttam, Director, Intimate Apparels.
Intimate Apparels is a leading brassieres and lingerie manufacturer with facilities in Bangladesh, with a production capacity of 2.5 million pieces a month and over 3,200 workers and staff. The company is the preferred supplier to leading global brands including C&A, FTL, George, Hanes, H&M, Kappahl, Wonderbra, Next, Carrefour and JCPenney.
Fazlul Hoque, Managing Director, Plummy Fashions Limited, too agreed that multiple-shoring is a strong possibility post the pandemic. And if that happens, it might augur well for Bangladesh. After all, it is next only to China in terms of apparel manufacturing and exports globally.
China losing out a part of its business is definitely an opportunity for Bangladesh, claimed CFO of American & Efird (Bangladesh) Ltd., Abu Md. Jakir Hossain, who believes the country is in for decent orders and good business from August onwards.
A&E is one of the world’s foremost manufacturers of industrial sewing threads and has a very strong presence in Bangladesh.
Syed Shams Alam, Director of Youngones Bangladesh, is not sure though who would benefit from the arising situation, but he is of the opinion that Bangladesh is not there among them.
“As far as what I have got to know, the Japanese Government has taken a decision to move businesses out of China and set up their manufacturing concerns in countries like India and Vietnam and make huge investments there. Bangladesh is not on the list of the countries right now though, while other countries have not shared any plans,” Syed underlined.
Starting its journey in 1980 with designing, manufacturing and production at the core, Youngones Bangladesh Limited is one of the leading suppliers of multi product clothing to leading global brands.
Japan has earmarked 220 billion Yen to encourage companies to shift production away from China, and that many manufacturing destinations are cosying up to the idea of accommodating businesses moving out of China is getting evident by the day.
Recently, Indian Prime Minister Narendra Modi, while interacting with the Chief Ministers of different States, suggested that States should explore the possibility of attracting investments in view of the likelihood of many companies exiting from Chinese cities in the wake of the COVID-19 virus emerging from Wuhan.
Hong Kong-headquartered garment manufacturing multinational conglomerate Epic Group has already entered the Indian market and plans to set up its first manufacturing unit in Ranchi (in the State of Jharkhand) at a massive investment of US $ 20 million, and so is the South Korean powerhouse Youngone Corporation, which has signed an agreement to set up a unit at Kakatiya Mega Textile Park (KMTP) of Warangal district, in the State of Telangana. And now with the prospects of many other companies investing in India getting bright, the Government is leaving no stone unturned.
However, given Bangladesh’s capacities, manpower availability, lower wage, and above all, its manufacturing prowess and pro-business Government, the country cannot be overlooked in terms of attracting new investments in apparel and textiles.
Even as other nations vie to attract new investments, Vietnam seems to be making a decent progress towards becoming the preferred destination of companies wanting to reduce their dependence on China. It is already working hard on courting foreign companies, giving manufacturers access to ASEAN free trade area and preferential trade pacts with countries throughout Asia and the EU, which gives Vietnam a definite edge, feel many.
Also, being a part of China-plus-one strategy for long could further work in its favour. But some experts are of the opinion that there’s no alternative to China; however, they also do not rule out the theory that the new world order that would emerge once the pandemic is over could witness buyers lessening their dependence on China.
China, for past many years, had been able to maintain its stranglehold on the two major export destinations with 30 per cent market share in the USA, while Vietnam held 16 per cent and Bangladesh 7 per cent market share in 2019, whereas in the EU, China had a 15 per cent share followed by Bangladesh 10 per cent and Vietnam 2 per cent, in the same period.
The trade war of early 2019 with the USA, though, made some dents on China’s overall exports to the former after many American brands and retailers moved some business out of China to avoid being caught in the imbroglio, post COVID-19 whether it would be Vietnam, Bangladesh or India that would emerge as the new preferred destination and what would be the volume of business shift, if at all, is something no one is sure about.