COMMENT: Bangladesh heading for sourcing history?
Just six months ago the major brand importers and giant transnational factories were rushing to build state-of-the-art operations in Bangladesh, despite the Rana Plaza and Tazreen mishaps. Where are they now? asks David Birnbaum.
Looking at Bangladesh export data is like seeing the end of an old Fellini movie, showing cataclysm in slow motion: The great Bangladesh garment industry ball imploding with an earth-shattering KAPLUMPF, while all around you see these little ant-like foreign buyers running for their lives fearing that they too will be sucked-up into the rapidly forming Bangladesh black hole.
And, as the buyers flee, you can see them turning their heads back and yelling over their shoulders: "Keep up the good work. We support you 100%."
It was only six months ago that major brand importers and giant transnational factories were rushing to build state-of-the-art operations in Bangladesh, despite the Rana Plaza and Tazreen mishaps.
I was in Hong Kong last week. While there, I asked some of the industry leaders involved in last year's large-scale investment strategies: "What about Bangladesh?"
The most common reaction was total bewilderment, with one major investor declaring: "Bangladesh! Bangladesh who? I recall an Oscar Bangladesh, who played shortstop for the Cincinnati Reds, but that was a long time ago, and I think he died."
A year from now, the Bangladesh garment industry will be one more historical episode much like Israel in Egypt or Pompey and Mount Vesuvius.
In the meantime, life must go on. The big question being: Who gets to eat the Bangladesh carcass?
It seems that while everybody is getting a little piece, the big winners appear to be as follows:
Vietnam is of course the big winner with double-digit market share increase in cotton T-shirts, jeans, and underwear, and woven shirt market share up in the high single digits.
After Vietnam, there is not that much left for anyone else.
India shows very good results in all Bangladesh product categories including men's woven shirts, cotton T-shirts and, to a lesser degree, jeans.
Looking at the US market, DR-CAFTA looks like a winner, with Nicaragua leading the way followed by Guatemala and Honduras. Good news after years of decline.
Mexico is also showing some small gains in jeans and woven shirts.
When the time comes to write the textbooks, the experts will tell us:
- Low labour rates are an unimportant factor determining sourcing decisions;
- With zero compliance, Bangladesh's industry was never sustainable;
- Bangladesh's reliance on commodity goods - cotton T-shirts, jeans, woven shirts and underwear - put it in direct competition with anyone entering the industry.
Have you heard about Ethiopia? They say wages are zero and the government will provide factory facilities at no cost . . .
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