Competing in the garment industry

Bangladeh raked in $21 billion from textile exports, in contrast, Pakistan’s earnings stood at a mere $2.6 billion.

The wheels of Bangladesh’s garment industry keep turning without a stop even when the much-too-common strikes called by Dhaka’s cantankerous politicians bring life to a standstill there. That is one of the secrets of Bangladeh’s booming apparel industry which last year raked in $21 billion from exports. In sharp contrast, Pakistan’s earnings from this sector stood at a mere $2.6 billion. This yawning gap is all the more pronounced when one considers how the two competitors ran neck-and-neck in the year 2002, with export revenues pegged at $2.5 billion for each country. But last year’s export figures amply illustrate just how far behind Bangladesh has left us in the race, much to our chagrin. A 2011 Deloitte-Touche study predicts that Bangladesh’s garment industry shall rise to $40 billion by 2018.

An entrepreneur with experience of working in Bangladesh’s garment industry has, in a write-up in this paper, chronicled Bangladesh’s success story and how it stands to gain from China’s likely shrinking share in this segment because of the latter’s rising labour costs. He informs us that out of the $200 billion the West spent on sourcing cheap garments, China holds a share of $80 billion while the next two contenders Turkey and Bangladesh hold $30 and $21 billion apiece while India, Vietnam, Indonesia, Philippines, Sri Lanka and Pakistan jointly account for another $50 billion. China’s wage rates have crossed $1/hour and are climbing. Consequently, manufacturing garments at this wage rate is untenable. Its $80-billion slice is up for grabs. Can Pakistan rise to the occasion and profit from this window of opportunity? The entrepreneur thinks the only hindrance in its path is the country’s chronic security situation, which has kept most western visitors out of our country. Without their prolonged interactions with our factories to develop products, there is little hope that we would touch anything beyond a couple of billions of dollars. This is a truly dire prognosis, especially because on all other factors of production we hold a clear competitive advantage over Bangladesh.

Published in The Express Tribune, June 4^th, 2014.

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