Bangladesh produces garments at lower cost than China

20 Aug '12

2 min read

The garment sector is the pillar of Bangladesh economy, which enjoys advantage of relatively low-cost labour, in addition to duty-free and quota-free exports to the countries of the European Union, Asean, Canada, China, Japan and South Korea.

The cost of production of basic apparels such as shirts, slacks and sweaters is about 30 percent lower in Bangladesh compared to China, according to estimates.

Earlier, sweaters were usually made by hand or by using semi-automatic production techniques in China. At that time, China had advantage owing to good quality of its hand-knitted sweaters and lower price.

However, now the wage growth in China has surpassed the productivity growth rate. At present, the average wage of garment workers in China is about US$ 2 per hour and the wages are continuing to rise.

In comparison, the daily wage of garment workers in Bangladesh is about US$ 1.5, even after a substantial 3,000 taka per month (about US$ 43) increase in the minimum wage of garment workers in 2010.

Besides wages, the costs of almost all raw materials of garment industry have risen in China. The prices of acrylic and threads used by the Chinese apparel industry have increased by nearly 50 percent in recent period.

In view of the current scenario, it is expected that both Chinese as well as US-based companies may relocate their factories from China to other lower cost countries, mainly in Southeast Asia, in the future.

These companies will, however, face some problems while shifting their garment enterprises from China to Bangladesh or Southeast Asian countries.

Lack of infrastructure, ensuring product quality, shortening production cycles, dealing with logistics like transportation of fabrics, accessories and apparels are some of the problems that the garment companies planning to relocate would have to address.

Fibre2fashion News Desk - China

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