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Cost pressures force Chinese to relocate factories to Bangladesh

China is losing market share in global textiles mainly due to higher costs of production and shortage of a skilled workforce. The minimum wage of textile workers in China is growing 10 per cent every year that makes it rather expensive for production compared to some South Asian competitors. With average wage of the 23 million textile workers in China reaching $600 a month, garment factory owners are starting to face great pressure.

As an alternative some Chinese textile manufacturers have started moving to Africa and Southeast Asian countries. They feel they can benefit in terms of costs and market access. Apart from sub Saharan Africa, North Africa is seen as another important destination. In North Africa there is already a developed textile industry, e.g. in Egypt and Morocco.

Of the important textile manufacturing nations, Bangladesh, Pakistan, Vietnam and Indonesia have costs which are significantly lower than those in China. The Chinese are also planning to relocate a number of their industries, particularly garments and textiles, to Bangladesh by setting up factories in a special economic zone. China itself could play a major role in making Bangladesh the number one readymade garment exporter in the world.

However, Bangladesh needs to be smooth in project implementation and remove roadblocks and mistrust that exist with China.