It’s only been a week since former prime minister of Bangladesh, Sheikh Hasina, escaped Dhaka in a helicopter as protests and violence broke out across the country.
Throughout this time, private conversations among manufacturers in Bangladesh and other sourcing nations have been focused on the future of business.
“Earlier there was China-plus-one after the pandemic, but now in addition to that there may well be a Bangladesh-plus-one situation,” a manufacturer in Dhaka told Sourcing Journal on condition of anonymity.
He cited the fact that there was a degree of uncertainty about the way the government would be positioned; the level of religious fervor and economic incentives are yet unknown. Meanwhile, the uprising led by the youth in the country has shown a degree of volatility that might not be easily subdued.
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Although a new interim government led by noble laureate Muhammad Yunus was quickly initiated on Thursday, analysts noted that the surprise July protests led by students, which broke more than 15 years of leadership from the Awami League party, could possibly shift the balance of power in the country.
Manufacturers in Bangladesh have been working hard to reassure their customers that factories are back to work, and that the news about safety concerns on the streets was no longer impacting labor. There have been a flurry of reassuring calls to brands and retailers about the state of the industry in Bangladesh.
But the million-dollar question is whether — or how much — business could shift to other countries in the wake of the turmoil.
Many manufacturers in neighboring locales, including India and Sri Lanka, gave an official and humanitarian-leaning answer to WWD sister publication Sourcing Journal: “Why would we look to benefit from another neighboring country’s misfortune?”
However, others indicated that opportunities are likely on the rise as brands and retailers look to ensure their production and delivery timelines. A report released Thursday by leading Indian ratings agency CareEdge estimated $200 million to $250 million in monthly business could shift to India in the near future. The report described the current situation in Bangladesh as a “golden chance for the Indian apparel sector to expand its footprint both in the short and medium term.”
“Large-scale readymade garment manufacturers with operational efficiency and backward integration are expected to be the biggest winners as global brands seek reliable and efficient suppliers,” the report noted, adding that “if the unrest in Bangladesh persists for an extended period, it could result in a significant shift in export orders toward India.” Other analysts projected an even higher figure of $350 million a month.
“Many of the brands and retailers who manufacture in Bangladesh also have production in Tirupur and other parts of India,” explained Raja Shanmugham, former president of Tiruppur Exporters Association. “Many brands who work with Bangladesh also work in Tiruppur, and it is easy to wait and watch and make their decisions as things pan out. The priority for many of the brands has been Bangladesh, followed by India, so there is no need for any special initiation from the side of our manufacturers to reach out to brands. They will make their own decisions,” he said.
“As such, it could just be a temporary disturbance, but it’s hard to say,” he added. “Any government will make it a priority to bring stability. But when the situation is volatile, unexpected disturbances can erupt at any time, and it’s difficult for a new government to have control over the masses. Any vested interest can easily distort things for their own benefit, which would make brands more cautious in placing orders. The apparel industry is seasonally driven, and there can be no delays in shipments.
“It is unfortunate, when competition comes how everyone works on others’ weaknesses,” he said, noting that it also happened over time with China. “Many brands took a conscious call to pull out of China in a phased manner — that has been happening. It didn’t happen overnight, and not likely to in this case either, but perhaps more strategic decisions to spread out to the best of possibilities,” Sahnmugham said.
India hasn’t benefited greatly from the China-plus-one strategy. “India’s disorganization can be an advantage to another, but we have to get geared up to see if we are up to the mark. The preparedness is missing, the uptake planning may not be in place, but it can definitely be corrected. It is a good time to change the way it works here,” he observed, even while noting that Tiruppur has been known for its efficiency and capacity for growth. In May, exports from the Southern India knitwear hub reached $360 million, up from $323 million from May 2023. The region also accounts for 55 percent of India’s knitwear exports.
Manufacturers in Sri Lanka, meanwhile, had similar reactions. While they looked at the possible windows for business, their reactions were mixed with sympathy — and, in some cases, a sense of déjà vu.
“We know how tough this is,” Joint Apparel Association Forum secretary general Yohan Lawrence said. “We went through something similar two years back, and we wish them well to come out of it.”
Bandula Fernando, chairman of the Sri Lanka Chamber of Garment Exporters, which represents small and medium enterprises sector within JAAF, observed: “At the end of the day it is a critical situation — and we are happy to do anything we can do to support and help them get back on their feet. It’s not about trying to see what you can take in someone else’s crisis.”
But he also believed that there would be a change, and a shift toward Sri Lanka — a topic that is being discussed extensively by manufacturers and exporters among themselves.
“Brands can’t easily move orders immediately — the fabric, the accessories, everything is already at the factories assigned,” he said. “But in the short term, I think 5 percent to 10 percent of orders will come to Sri Lanka. We can’t do it at their price, but if they need it urgently, brands will be willing to pay more.”
Other, smaller manufacturers had a different mindset, observing that Bangladesh did not hesitate to take their orders or show any sympathy for manufacturers in Sri Lanka when they were going through a crisis in 2022, and “it was a chance to flip that coin.”
A local newspaper in Colombo, Sri Lanka, was quick to point out this week that the country was poised to benefit from some apparel orders in the short term, citing JAAF. “Given Sri Lanka’s proven ability to adapt and our available capacity, we expect some foreign buyers to turn to Sri Lanka until the situation in Bangladesh stabilizes,” the paper quoted Lawrence as saying, while noting that “Sri Lanka had agility and sophisticated production capabilities, and spare capacity to fill in the gaps.”
Manufacturers in Bangladesh, meanwhile, are struggling to get back on their feet.
Adding to the escalating tensions and changing situations within the country is the fallout within the
Bangladesh Garment Manufacturers and Exporters Association (BGMEA), the trade association known for its strength in bringing exporters together, perhaps more than in any other country. However, its leadership is known to have strong political associations, and the infighting within was par for the course, along with the fall of the government.
Mostafiz Uddin, managing director of Denim Expert Ltd. and founder and chief executive officer of Bangladesh Denim Expo and Bangladesh Apparel Exchange (BAE), said that from a political perspective it would appear that Muhammad Yunus “is the perfect candidate to restore peace and order to Bangladesh.” He stressed the fact that brands and associations from across the world were showing support for the industry. “Petty squabbles and video footage of violence among trade body members will only tarnish our reputation. It is time to put all our differences aside,” he said.
Other manufacturers have similar concerns. “I am afraid of the bad branding of Bangladesh to the rest of the world,” said Munzarin Zaman, director of Fakir Apparels. “We have worked really hard over the years to recover from Rana Plaza, and the stereotypes about Bangladesh. We are sad to think it may effect the industry again because of politics. All our workers are local residents, so it’s been safe. When there was violence, we had kept our factories closed to safeguard them. Right now, things are better,” she added.
However, smaller factory owners said that the struggle continues as worker safety and uncertainty on the streets continues to cause delays and closures. They noted that the political climate is still unsteady.
“We will just have to wait and watch,” one noted.
Just like the rest of the world.