A merchant sells clothes in Bangladesh. (Photo/Xinhua)
More clothing manufacturers in China are setting up factories in Bangladesh, where exporters enjoy lower labor costs and attractive government incentives, the Chinese-language Global Entrepreneur reports.
Tang Quan, a Jiangsu businessman said at a recent textile industry fair in Shanghai that his company offered quotes for producing an OEM shirt at a price 30% lower than competitors.
"The quality will be absolutely guaranteed," said Tang, the owner of an apparel factory in Nantong, Jiangsu, which has an annual turnover of 200 million yuan (US$32 million). Tang also owns a factory in Bangladesh with an annual turnover of 30 million yuan (US$4.8 million).
"The prices for 'Made in Bangladesh' goods will be 30% lower than those tagged 'Made in China'," Tang said, adding that prices could only be quoted for products produced by its Bangladesh factory, which began operating three years ago.
In 2011, Bangladesh surpassed India to become the world's second-largest textile exporter behind China.
Figures show that between July l 2010 and June 30 2011, the country's textile exports grew by 46% to US$9.5 billion. Meanwhile, Bangladesh's clothing exports jumped by 43% to reach US$18 billion.
The scale of Bangladesh's OEM clothing sector is expected to approach China's in a few years. The country's orders are equivalent to 10% of China's, while its geographical area is only about 1.5% the size of China's.
In 2011, China's apparel exports grew by 20%, while Bangladesh's exports grew by double this amount.
The report added that Chinese OEM clothing manufacturers have been losing out on orders. A recent high-profile case was that of sportswear giant Adidas which shut down its only in-house factory in China, relocating the facility's operations to Southeast Asia. Four Adidas contract factories in China were also told that their contracts had been terminated.
Chinese clothing brand Vancl is now also placing more orders with factories in Bangladesh.
As one of the first Chinese businesspeople to invest in factories in Bangladesh, Tang told the newspaper that in the beginning his choice to operate in the country was based on the fact that some of his customers were located there. Swedish brand H&M is one such client placing orders with his factory.
Following two years of appraisal, Tang signed a contract with Bangladesh's government to invest US$23 million to set up a textile company in an export processing zone in the country, whose annual production is in the range of US$5-6 million.
The Bangladeshi government has offered many sweeteners to Tang, including stationing special police and armed forces in the zone and prioritizing supply of various resources such as water, electricity and natural gas to his factory. The country's labor costs are also only a mere 20% of China's.