Feedback Here

fbook  tweeter  linkin  google
Global contents also translated in Chinese

Countries vie to be the next apparel manufacturing destination after China

"With both Bangladesh and Vietnam registering steady export growth, competition between the two countries to become the next manufacturing destination alongside China is becoming intense. Statistics reveal, Bangladesh is the second largest and Vietnam the third largest apparel exporter in the world. While Bangladesh is known for its ability to manufacture low-end items at the cheapest rate with acceptable quality, Vietnam is more value-oriented with strong backward linkage and more educated workforce."

 

Countries vie to be the next apparel manufacturing destination after ChinaWith both Bangladesh and Vietnam registering steady export growth, competition between the two countries to become the next manufacturing destination alongside China is becoming intense. Statistics reveal, Bangladesh is the second largest and Vietnam the third largest apparel exporter in the world. While Bangladesh is known for its ability to manufacture low-end items at the cheapest rate with acceptable quality, Vietnam is more value-oriented with strong backward linkage and more educated workforce.

Investments in the energy sectors trigger price war One of the major factors driving growth of industries inCountries vie to be the next apparel manufacturing Bangladesh is the availability and price of its electricity. Most industries in Bangladesh produce their own energy through captive power plants. Though the sector is currently suffering due to a shortage of gas supply, it is soon set to revive as huge projects including 2.4-gigawatt (GW) Rooppur Nuclear Power Plant are being developed by the government. These power plants will increase the generation capacity of the country significantly which is at approximate 16,000 MW now.

Just like Bangladesh, Vietnam government is also investing billions in its energy sector has set out $148 billion worth of investments to increase power generation and develop electricity network, with $40 billion to be spent in the period 2016-2020, of which 75 percent is to be directed to power sources and 25 percent to grid development.

These initiatives have also triggered a price war between them. While Vietnam offers the lowest gas price compared to other garments manufacturing countries, Bangladesh has regulated its gas price three times in the last decade as a result the utility cost of the industries rose higher than Vietnam by some margin.

Bangladesh offers low cost; Vietnam shorter lead times

Statistics from McKinsey apparel CPO survey 2017, reveal, Bangladesh is likely to be the top country over the next five years in garments export. The market is expected to grow annually at 7.0 per cent (CAGR 2019-2023). Vietnam market is expected to grow annually by 8.8 per cent (CAGR 2019-2023). CPOs mainly preferred Bangladesh due to its ability to produce bulk amounts at a cheap rate. However, as the wages increased in the last five years now.

One of the key factors that buyers are concerned about is the shipping time. Although the shipping time of these two countries are almost similar, Vietnam is quicker than Bangladesh which still has to depend on imported cotton, yarn and fabrics (specially woven) which adds to its lead time. The average lead time from Bangladesh to EU and USA ranges from 90 to 120 days whereas from Vietnam it is 50 to 60 days which clearly puts Vietnam ahead.

Sustainability Issues

As stakeholders are increasingly emphasising on sustainable practices, sustainability is becoming a major concern as an exporting industry. Though there have been some major accidents in Bangladesh like the Rana Plaza fire disaster, the country has improved significantly in the last five years and now leads green factory industry in the world. On the contrary, Vietnam doesn’t have many green factories. Its carbon dioxide emission ton per capita was 2.29 compared to Bangladesh 0.59 in 2017.

Hence, while Bangladesh scores on some parameters, Vietnam scores on others. Therefore, it is difficult to decide the next manufacturing partner of China. Not only are both developing at a rapid pace but also they have taken consolidated steps to incorporate sustainability in operations. Now, the only challenge that they need to deal with is increasing costs of business practices and other sustainability issues.

 
LATEST TOP NEWS
 
 
MOST POPULAR NEWS