Overview of Bangladesh Garment Industry

Agriculture, as the case in India, has been the backbone of the economy and chief source of income for Bangladesh’s people, a country made of villages. The government wants to decrease poverty by getting the highest productivity from agriculture and achieve self-reliance in food production. Apart from agriculture, the country is much concerned about the growth of the export division. Bangladesh has accelerated and changed its exports substantially from time to time. After Bangladesh came into being, jute and tea were the most export-oriented industries. But with the continual perils of flood, failing jute fiber prices, and a considerable decline in world demand, the jute sector’s role in the country’s economy has deteriorated (Spinanger, 1986). After that, the focus has been shifted to the production sector’s function, especially in the garment industry. My Amend

Overview of Bangladesh Garment Industry 1

Bangladesh’s garment industry has been the key export division and the main source of foreign exchange for the last 25 years. At present, the country generates about $5 billion worth of products each year by exporting garments. The industry employs about 3 million workers, of whom 90% are women. Two non-market elements have performed a vital function in confirming the garment industry’s continual success; these elements are (a) quotas under Multi- Fibre Arrangement1 (MFA) in the North American market and (b) special market entry to European markets. The whole procedure is strongly related with the trend of relocation of production.

Displacement of Production in the Garment Industry

The global economy is now controlled by the transfer of production where developed countries’ firms swing their attention to developing countries. The new representation is centered on a core-periphery production system, with a comparatively small center of permanent employees dealing with finance, research and development, technological institution, and modernization, and a periphery containing dependent elements of the production procedure. Reducing costs and increasing output are the main causes for this disposition. They have discovered that the simplest way to undercharge is to move production to a country where labor and production costs are lower. Since developing nations provide areas that do not impose environmental degradation costs, this practice protects the developed countries against environmental and law issues. The transfer of production to the Third World has helped expand these nations’ economies and speed up the economy of the developed nations.

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The transfer of production controls the garment industry. The globalisation of garment production started earlier and has expanded more than that of any other factory. The companies have transferred their blue-collar production activities from high-wage areas to low-cost manufacturing regions in industrialising countries. The enhancement of communication system and networking has played a key role in this development. Export-oriented manufacturing has brought some good returns to the industrializing nations of Asia and Latin America since the 1960s.

The first relocation of garment manufacturing took place from North America and Western Europe to Japan in the 1950s and the early 1960s. But between 1965 and 1983, Japan changed its attention to more lucrative products like cars, stereos, and computers, and therefore, 400,000 workers were dismissed by the Japanese textile and clothing industry. The second stock transfer of garment manufacturing was from Japan to the Asian Tigers – South Korea, Taiwan, Hong Kong, and Singapore in the 1970s.

But the tendency of transfer of manufacturing did not remain there. The rise in labor charge and activeness of trade unions were in proportion to the enhancement in economies of the Asian Tigers. The industry witnessed a third transfer of manufacturing from the 1980s to the 1990s, from the Asian Tigers to other developing countries – Philippines, Malaysia, Thailand, Indonesia, and China. The 1990s have been led by the final group of exporters, including Bangladesh, Srilanka, Pakistan, and Vietnam. But China was a leader in the current of the relocation as in less than ten years (after the 1980s), China emerged from nowhere to become the world’s major manufacturer and exporter of clothing.

Bangladesh Garment Sector and Global Chain

The cause of this transfer can be clarified by the salary structure in the garment industry all over the world. The apparel labor charge per hour (wages and fringe benefits, US$) in the USA is 10.12, but it is only 0.30 in Bangladesh. This difference accelerated the world apparel exports from $3 billion in 1965, with developing nations making up just 14 percent of the total, to $119 billion in 1991, with developing nations contributing 59 percent. In 1991 the number of workers in the ready-made garment industry of Bangladesh was 582,000, and it grew up to 1,404,000 in 1998. In the USA, however, the 1991-figure showed 1,106.0 thousand workers in the apparel sector, and in 1998 it turned down to 765. 8 thousand.

The presented information reveals that low labor charges are the key reason for garment manufacturing in Bangladesh. The practice was initiated in the late 1970s when the Asian Tiger nations were in quest of tactics to avoid Western countries’ export quotas. The garment units of Bangladesh are mainly relying on the ‘tiger’ nations for raw materials.

Mediators in Asian Tiger nations build an intermediary between the textile units in their home countries, where the spinning and weaving going on, and the Bangladeshi units where the cloth is cut, sewn, ironed, and packed into cartons for export. The same representatives of tiger nations discover the market for Bangladesh in several nations of the North. Large retail trading companies in the United States and Western Europe give most Bangladeshi garment products orders. Companies like Marks and Spencers (UK) and C&A (the Netherlands) control capital funds, in proportion to which Bangladeshi owners’ capital is patient. Shirts manufactured in Bangladesh are sold in developed nations for five to ten times their imported price.