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China's stronger supply chain keeps it ahead of Asian rivals

30 Aug 2010

Source: Reuters

A a surging textiles industry in Bangladesh is trying to challenge powerful Chinese clothing makers. Over the past decade, foreign firms - including a number from China - have moved into industrial belts such as Gazipur, on the outskirts of the capital Dhaka, where 800 factories have emerged from rice paddies.

The attactions is wages as low as $24 a month, a fifth of what many Chinese workers get, though in recent months the minimum wage was lifted to $43.

Bangladesh, better known for the monsoon flooding and other natural disasters that plague the low-lying country of 155 million people, is fast becoming a cog in the global supply chain for low-end textiles and clothing. Textiles make up 80 percent of the country's $15.6 billion in annual exports, although its share of global clothing exports is tiny compared to China.

However China continues to hold the upper hand with its stronger supply chain keeping other Asian rivals at bay. In Bangladesh, patchy infrastructure, frequent electricity outages and weak logistical support including slow turnaround times in major ports have hampered export growth. Labor unrest and political instability have exacerbated business risks.

Bangladesh's weaker supply chains have also left it vulnerable to a stronger yuan, because many local industrialists rely heavily on downstream raw materials sourced from China.

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