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Bangladesh

A new way to mitigate buyer risk in apparel

Mark Jones's picture
Bangladesh's share of the apparel market is increasing
The Alliance and Accord have been working over the past three years with more than 1,500 factories to help them meet new fire and building safety standards

The China sourcing conundrum
In conversations with U.S. and European retailers and brands, ELEVATE – a company formed in 2013 to support corporate social responsibility – finds that apparel buyers rate diversifying away from China as one of their top three sourcing goals.

This is not to suggest that there is a desire to exit China – which currently holds by far the largest share of global apparel trade, at 41 percent – but rather a need to significantly reduce dependence on product from China, owing to rising costs, factory closures, unenthusiastic second generation family ownership, new attitudes about working in factories, and a perception that China wants to move to higher-value manufacturing. Sourcing and procurement organizations feel uncertain, and uncertainty is not a friend of supply chains.

The problem is that for all its uncertainty, China still has a huge base of factories, a well-developed transport infrastructure, and a comprehensive eco-system that supplies cut-and-sew operations, and management that has matured with years of experience. Even if a buyer would like to give another country an opportunity, many corporate risk managers view certain countries or regions as quite challenging for doing business.

Stitches to Riches? The Potential of Apparel Manufacturing in South Asia


South Asia could seize this opportunity by better meeting requirements – besides competitive costs – that are vital to global buyers. These include: (i) quality, which is influenced by the raw materials used, skill level of the sewing machine operator, and thoroughness of the quality control team; (ii) lead time and reliability, which are greatly affected by the efficiency and availability of transportation networks and customs procedures; and (iii) social compliance and sustainability, which has become central to buyers’ sourcing decisions in response to pressure from corporate social responsibility campaigns by non-governmental organizations, compliance-conscious consumers, and, more recently, the increased number of safety incidents in apparel factories.

Surveys of global buyers show that East Asian apparel manufacturers rank well above South Asian firms along these key dimensions, as noted in a new World Bank report on apparel, jobs, trade, and economic development in South Asia, Stitches to Riches (see table). So, what can South Asia, which now accounts for only 12 percent of global apparel trade, do to become a bigger player? An encouraging recent development is that buyers have started collaborating to facilitate new sourcing possibilities – as the case of Bangladesh illustrates.

Is South Asia ready for a Regional Motor Vehicles Agreement?

Sanjay Kathuria's picture
Trucks loading goods
Trucks waiting to unload their goods in Bangladesh. Photo By Erik Nora/World Bank

Judging by the number of views of the recent Facebook livestream event on intra-regional trade and investment in South Asia, there is significant interest in this topic. And there should be, given that there remain many important and untapped opportunities to use the power of trade and investment to enhance economic opportunities, including for lesser-skilled people and women in the region.

According to respondents of the Facebook poll conducted during the above event in May 2016, the most important policy to enhance intra-regional trade would be to invest in connectivity and border crossings.  Policy makers seem to realize this as well. Over the last two years, new efforts to deepen South Asian cooperation in trade have focused almost exclusively on trade facilitation issues. Let me elaborate.

How much of China’s apparel production can South Asia capture?

Raymond Robertson's picture
Clothing Manufacturing
Apparel manufactuaring has the potential to provide much needed jobs to women in South Asia
Photo by: Arne Hoel/World Bank

China now dominates the global apparel market – accounting for 41% of the market, compared with 12% for South Asia. But as wages in China continue to rise, its apparel production is expected to shift toward other developing countries, especially in Asia. How much of China’s apparel production can South Asia capture and therefore how much employment could be created? This is important because apparel is a labor intensive industry that historically employs relatively large numbers of female workers. 
 
In our new report, Stiches to Riches?, we estimate that South Asia could create at least 1.5 million jobs, of which half a million would be for women. Moreover, that is a conservative estimate, given that we are assuming no changes in policies to foster growth in apparel and address existing impediments.

How Higher Education in Bangladesh Creates Opportunities

Tashmina Rahman's picture
Students hold a discussion. Improved quality of higher education provides an opportunity for better jobs.

A couple of months ago, I visited a few tertiary colleges affiliated with the National University in Bangladesh while preparing the College Education Development Project which aims to strengthen the strategic planning and management capacity of the college subsector and improve the teaching and learning environment of colleges. Almost two-thirds of all tertiary students in Bangladesh are enrolled in these colleges, making them the largest provider of higher education in the country.

World Bank report on education in Bangladesh

A recent World Bank report estimates that around 1.6 million tertiary students in Bangladesh are enrolled in around 1,700 government and non-government colleges affiliated under the National University. This piece of information underpins a huge economic opportunity in context with Bangladesh’s quest to become a middle-income country over the next few years. There is a strong demand for graduates with higher cognitive and non-cognitive skills and job-specific technical skills in the country. This requires an improvement in the quality and relevance of tertiary education to ensure graduates have more market relevant skills. The National University student enrolment size combined with its sheer number of colleges network all over the country make it the critical subsector for making a qualitative dent in the higher education system.

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