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In early July, demonstrations broke out at Dhaka University, a well-known university in Bangladesh, to protest against the reservation of some civil service positions for relatives of veterans, which gradually turned into violent conflicts across the country.
In August, Bangladesh Prime Minister Hasina resigned and fled to India, and the military announced the formation of an interim government.At present, the situation in the country has stabilized, but the impact of this turmoil on Bangladesh's manufacturing industry and foreign trade is huge.
As the world's second largest clothing exporter, Bangladesh has taken orders from international clothing brands including H&M, Zara, Uniqlo, VF Corp, Levi Strauss, Target and other international clothing brands.From mid-July to early August, all garment factories in Bangladesh were shut down. Only recently have they gradually resumed operations, which has had a huge impact on these brands.
The Bangladesh Garment Manufacturers and Exporters Association stated that the industry lost approximately US0 million this time, and related supply chains were disrupted and severely affected corporate production and sales plans.
Well-known brands' direct-operated clothing factories or supplier factory data sheets in Bangladesh
via: Bangladesh Garment Manufacturers and Exporters Association
Currently, Bangladesh is the second largest apparel exporter in the world after China.In 2023, Bangladesh's garment exports will be strong and outperform many other countries. The Bangladesh Garment Manufacturers and Exporters Association said that in the 2023 fiscal year (July 2022-June 2023), clothing will account for more than 80% of Bangladesh's exports, reaching About billion, more than double what it was a decade ago and exceeding the previous year's all-time high.
Judging from Bangladesh's textile and clothing export data, export sales rebound from a low level around September every year, reach a peak at the end of the year, and gradually fall back in the first quarter of the following year. This is a critical period when Bangladesh's garment exports are beginning to gain momentum.
Some reports indicate that factories in the country's garment and textile industry are resuming operations. Although factories are reopening, Bangladesh's garment exports are likely to remain affected for some time. "Hula Global", an Indian clothing manufacturer that serves Western customers, has said,Production for the rest of the year will be shifted from Bangladesh to India to avoid risks.
So will the current situation in Bangladesh affect China's garment export industry or textile industry orders?After all, the development of Bangladesh's garment and textile industry has, to a certain extent, taken over production capacity from China and other places.
First of all, due to the turmoil in Bangladesh, there will indeed be a return of some orders. Indian textile stocks surged as buyers began shifting orders to other countries such as India and China to avoid the risk of delivery delays.
But we must also note thatBuyers are more likely to give priority to countries such as Vietnam, Cambodia, India, Indonesia, and Pakistan as alternatives. The main reason is to avoid the tariffs imposed by the United States on China and the stringent traceability requirements.
Secondly, Bangladesh’s infrastructure is weak and many raw materials rely on imports. 95% of the cotton used in the textile industry, 80% of the yarn used for weaving and more than 70% of the gray fabrics used for printing and dyeing need to be imported. China is its main source of imports. Now their clothing factories are shutting down on a large scale,As a result, China's exports of cotton yarn, gray fabrics, fabrics, down and feathers to Bangladesh have been greatly affected, and some contracts have been forced to be postponed or cancelled.
According to a recent report by the British market research company "Transport Intelligence" website, the superposition of political and economic crises in Bangladesh has had a significant impact on a series of supply chains, especially causing supply chain chaos related to the garment industry.Our foreign traders exporting to Bangladesh also need to pay attention to the trade risks caused by the unstable situation and economic downturn in Bangladesh.
