The coronavirus conundrum for Bangladesh apparel industry

Image collected
The corona-virus, which includes already killed hundreds of men and women in China and is currently making its way across the globe, will inevitably cause significant disruption to apparel supply chains during 2020. The question is, from what extent, for how long, and how will Bangladesh be impacted?

Already, we are since the virus is impacting China's polyester and textile supply chains. With Central China at a virtual standstill, and the transport system not operating, it really is claimed by some that passing through the Yangtze river-stretching from one end of China to the other-has become impossible. With land transport limited, if the virus spreads further, more elements of China could visit a similar lockdown, creating a logistical nightmare and huge disruption to the textile industry.

Leading global apparel brands already are going for a significant hit because of store closures in China as a result of the coronavirus outbreak. H&M has announced that around 45 store closures hurt sales in January while other brands have also noted major disruption within their Chinese operations. Gap, Uniqlo, Hugo Boss, Ralph Lauren, Nike, Levi Strauss and Adidas have all gone public with the announcement of store closures in central China as the impact of the virus continues to leave large places on lockdown.

I point all of this out because there are major implications for Bangladesh here. This is a story our whole industry will be watching closely.

I understand from conversations I have had that the coronavirus has already caused business disruption to garment suppliers in Bangladesh. The reason behind that is that, for recycleables such as fabrics and yarns along with other inputs such as for example trims, labels etc., we remain heavily reliant on China. In fact, a lot more than 50 percent of Bangladesh's textile and textile-related goods, including garment accessories, are imported from China. In addition, about 40 percent of capital machinery and spare parts for the textile and garment industry result from the country.

For all your strides created by our RMG sector in recent years, this insufficient vertical integration-the fact that people only carry out one area of the supply chain process-remains a major source of vulnerability. It really is an Achilles Heel for our industry.

The coronavirus, then, can be viewed as a wake-up demand the Bangladeshi RMG industry and in addition for the apparel industry globally. This heavy reliance on China is unhealthy in many ways as the disruption to provide chains by an epidemic including the coronavirus could be devastating; you will find a real risk that some businesses may never get over the issues this causes.

To fulfil orders, many Bangladeshi factories now face having to look beyond China for raw materials and other product intermediaries. This will never be an easy task and, with way to obtain such materials being squeezed globally, prices will likely be higher in exactly what is a seller's market. This may potentially improve the cost of apparel being made by Bangladesh (although whether brands encourage this increase is another question).

For the present time, our industry will have to deal with the task at hand, but we should learn from it and never again leave ourselves subjected to supply chain disruptions.

The lessons listed below are simple and obvious. Our RMG industry in the long-term must are more self-sufficient and less reliant on imports. There is no reason why much of what we import from China should not be produced within Bangladesh, creating extra jobs and adding to gross domestic product in the process. But we are able to only do this if we develop our industry upwards together with sideways.

Developing our own supply chains for recycleables and fabrics is crucial for Bangladesh, regardless if this means incentivising foreign investors to partner in the building of the mandatory infrastructure. I believe several fabric mill investors already are eyeing Bangladesh so we need to provide them with the push they need to choose us rather than a competitor.

The thing is, we can do vertical integration. To provide one example, the vertical manufacture for T-shirts has added a lot of value to the Bangladesh proposition already.

But other products need to now follow.

We also need proper research to find data on the gap between demand and supply of each raw material. For example, just how much cotton fabrics do we are looking for for the total annual production of cotton-based apparel? Just how much man-made fibre or yarn do we are looking for? How much accessories such as for example metal button or zipper do we import every year and just how much are we making locally?

We are looking for better industry infrastructure, and more investment into supply chains, in order to become more self-sufficient and better positioned to defend myself against large and complex orders. The whole apparel industry has been caught out by the coronavirus, but we cannot say we weren't warned and we must all now recognise that we have become dangerously reliant on China. Such a scenario can't ever be permitted to happen again. 
Source: https://www.thedailystar.net

Tags :

Share this news on:

Previous Story

Trending Topics

Archive