Garment exporters in Bangladesh frequently have to accept prices below their production costs. They feel they have to do this if they want to maintain business relations with their retailers. They fear losing out on work orders. Another fear they have is that if they do not accept prices below their production costs, they will lose everything and will not be able to pay workers at the end of the month. Another reason for accepting lower prices is the hope of price hike and profit in future.
Bangladesh garment suppliers are being driven down on price by apparel brands and retailers. While the unit price is going down by the season, prices of all materials and operation costs are going up. Very few buyers offer better prices. The relationship between suppliers and brands is essentially unequal. If ever there were a buyers’ market, this is it. So, the manufacturer may be asked to change the styling, add trims or change wash method of a garment but the buying team never wants to pay for these changes. Bangladesh is the world’s second largest garment exporter. If the country wants to race ahead, it needs more specialisation, more added value, and more innovation which will lead to greater bargaining power with brands.