Bangladesh is unable to take advantage of shifting work orders from China. China’s market share in the global apparel trade has been declining over the last few years because of a dearth of skilled workers and the manufacturing shift towards high-end and technological products. Its market share last year was 36.7 per cent, down eight per cent year-on-year.
Some of these shifted orders were received by some other countries like Vietnam, Myanmar and Cambodia. Bangladesh is the second largest apparel supplier worldwide after China. One reason it could not take advantage of the shift in work orders is a shortage of capacity. While the number of garment factories was supposed to increase due to abundant work orders from western world, China, Japan and some other emerging markets, it did not pan out that way.
After the Rana Plaza building collapse in April 2013, the garment sector has not witnessed any major domestic investment except for the expansion of existing units by big garment companies. Also, more than 1,000 small factories faced closure due to strict inspection and remediation by Accord and Alliance. As a result, a capacity shortage has been created.
Bangladesh is therefore receiving a small quantity of work orders that are being diverted from China but the country is hopeful volume of such work orders will rise in the near future.