Competitivenessin the Garment and Textiles Industry: Creating a supportive environment (ACase Study of Bangladesh)
Executive Summary
In the near term, policies to promote competitiveness incountries that depend on apparel export should focus on two key objectives:reducing turnaround time, which is increasingly important to buyersand reducingother costs of doing business. But cutting costs should not mean just squeezingwages. Success in this market depends on finding ways to improve productivity,which should have positive spillovers for other sectors as well.
The latest figures on the state of the world economy remaingrim. The garment industry, among many others, is a particular victim of thisglobal financial and economic crisis. With rising unemployment in the E.U. andthe U.S., consumers have reined in spending. This dropping demand in the U.S. and Europe is adversely affecting an industry that has been a key export sector and a mainsource of employment and foreign exchange for the last 25 years. In Bangladesh alone, the garment sector employs more than 3 million workers, of which 85percent are women. In late 2008 and early 2009, U.S. and E.U. retailers reportedmargin losses as high as 30 percent. By adapting their purchasing habits-postponingpurchases, buying smaller volumes and driving harder bargains-internationalbuyers have raised the pressure on suppliers. With capacity in developingcountries almost twice as high as demand, a veritable battle for orders isgoing on. More than ever before, the garments market has become a buyer'smarket.
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About the Authors
Dr.Sanchita Banerjee Saxena is the Associate Director of Center for South Asia Studies, University of California, Berkeley and Vronique Salze-Lozach is the Regional Directorfor Economic Programs at The Asia Foundation.
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