Western retailers are reluctant to pay Bangladesh’s garment manufacturers the proper prices. The cost of production increased 30 per cent from 2014 to 2018, but prices of Bangladesh RMG products fell 7.04 per cent during the same period.
Bangladesh’s exporters do not get fair and reasonable prices for their products. Reasons include lack of negotiation skills. Exporters get lower prices for readymade garment products than what Cambodian and Vietnamese exporters get from global buyers. Buyers do not want to pay higher prices, although the cost of production will go up further with wage hike, port congestion and higher transportation cost. Another issue is that of lead time. This would be a matter in readymade garment exports in future as the country might lose the cost advantage in coming days.
Bangladesh’s readymade garment supply chain still suffers from lack of shared responsibility on the part of global buyers. Very few factories, if at all, have received financial assistance from buyers; instead they have seen reduced prices. The fundamental business model of the garment supply chain has not changed. Production remains an industry with high levels of opportunity for countries to connect to global value chains, but that has come at a price for workers.