Countries like Bangladesh have become a major competition in the textile market and act as major exporters behind China even though the overall size and development of the countries might not be on a similar level.
Bangladesh was the leading manufacturer and exporter of textile and garments in 2019, but the pandemic has acted to the advantage of Vietnam. Bangladesh was heavily affected by the coronavirus while Vietnam was able to have complete control over the number of cases and treatment. Global companies and countries have reduced their investment in China and consecutively reduced the dependency on the country for textiles and clothes. Both China and Bangladesh had to face heavy losses in the international market due to the pandemic and its long-term effects.
The output produced by Bangladesh decreased and this led to the cancellation of orders and delayed payments. Looking at different years, we see that in 2015, Bangladesh had to work towards the restoration of retailers' confidence in regards to the safety of the work environment and integrity of electrical equipment and infrastructure. The time after the occurrence of the incident observed heavy investment in regards to this concern and the country was able to restore the conference of retailers by working towards the improvement of safe conduct and standards.
In consecutive years, in 2016, the country's main focus was to increase capital and revenue through improvements in efficiency, productivity, and inducing modern technology.
China has had an upper hand when it comes to foreign direct investment. Private company owners and clothing manufacturers in China seek foreign direct investment to get away with hindrances caused by the Chinese financial system. These are concerning capital allocations that profit the less efficient Government and state-owned companies as compared to the privately owned firms. This has led to an increase in labor-intensive foreign direct investment such as the Chinese textile industry.
Textile and garment manufacturing and exporting depend upon labor costs.
Looking at the labor cost of the country we can make out that China's well-developed economy provides its labor force with a good wage of around 100 to 200 US dollars varying based on the city and locality. This does not refer to a luxurious and great standard of living but it is a great number as compared to the labor cost in Bangladesh which is 38 US Dollars each month.
The average working hours in both countries are similar at around 48 hours per week, however, both countries tend to ignore these laws and try to differentiate between the actual hours worked and the ones mentioned as per the Government regulations.
Apparel manufacturers in Vietnam are observing higher foreign investment from the past two years during the pandemic. Clothing manufacturers in China selling small quantities or owning retail stores are also facing losses due to the disruption of the coronavirus.
Bangladesh needs to work towards taking initiative in development to result in a transition in regards to the quality of products and shorter time for supply. Female employees have been a major part of the workforce of women clothing manufacturers in Vietnam and fashion clothing manufacturers in China for many years but it is still difficult for them to acquire higher positions in the industry. In recent years, the scope for women in textiles has increased.
Bangladesh is a great alternative for demand in textiles because of businesses in high volume and potential development in the future. Though China is recovering from the coronavirus outbreak and has worked towards making up for the losses that occurred during the past two years, it is expected to see a downfall in its textile industry on account of the problems that occurred during the period. This allowed other global countries to focus on clothing manufacturing companies in Vietnam and Bangladesh and make use of their potential labor force by increasing investment in their economy.
Infrastructure plays a major role in bringing in foreign direct investment and the development of the textile industry. China has always given importance to technological investments and investment in infrastructure; it continues to make massive allocations for this development. Bangladesh cannot compete against China concerning this factor. China boasts great overall progress in transportation whereas this is a weaker point in the case of Bangladesh.
Bangladesh was incapable of producing a more diverse range as compared to Vietnam as the country was also able to grab orders that were shifting from China to other potential countries. Bangladesh's overall export profit in the textile and fabric industry is 12.32 billion dollars, accounting for a difference of 864 million dollars as compared to Vietnam's profits of 13.18 billion dollars in the previous year.
Bangladesh employs around 4 million people in the textile industry and 45% of the industrial employment is a result of this sector. It exports apparels worth almost 5 billion dollars each year to countries such as Canada, the United States of America, and other nations.
China acquires a major advantage as compared to other nations due to the abundant supply of unskilled labor. The textile industry of Bangladesh contributes about 20% to the GDP growth of the country and the readymade garments sector contributes 80% to the net exports of Bangladesh. Bangladesh has used its status as a least developed country to avail duty-free access in 50 international markets.
Another point that has led to the success of the garments and textile industry in Bangladesh is the willingness to adapt to changes and frequent transitions in demand.
As countries like Vietnam observed great progress in their economy during the pandemic, Bangladesh in comparison, had to face industrial interruption due to the nationwide lockdown which resulted in an abrupt reduction of export revenues in April. Be sure to seek assistance from professional firms such as Oxymcraft to avail more knowledge about this topic.