Japanese companies are looking for cheaper production bases elsewhere in Asia with wage rise in China. And Bangladesh is optimistic investment would increase from Japan, and give boost to the country’s economy. Among rising labor costs, Japan’s garment industry is shifting production from China to Bangladesh and other Asian countries, however, to catch the opportunity is not so easy for Bangladeshi businessman, though, Japanese businesses have shown keen interest in investing in Bangladesh as they have got rid of the fear in the wake of terrorist attack on Holey Artisan Bakery in 2016. Bangladeshi garment manufacturers have been enjoying zero-duty benefit on apparel exports to Japan even if the raw materials were imported

As per Japan External Trade Organization, the number of Japanese companies operating in Bangladesh has more than tripled since 2008, reaching 253 as of May 2017.That’s still far fewer than the number in China or Thailand but their presence in Bangladesh is increasing at a much faster pace. Garment shipments to Japan from Bangladesh began after the adoption of ‘China Plus One’ policy by the Japanese government in 2008 to reduce overdependence on China for goods like apparel, electronic gadgets and home appliances. The ‘China plus One’ policy was supplemented by the relaxation of Rules of Origin by Japanese government for least-developed countries, which worked in Bangladesh’s favor.

Japan Textiles Importers Association says, although Bangladesh only accounts for 2.3 per cent of total imports, its average grows at an annual pace of about 20-40 per cent. Japan imported 65 per cent of its textile products from China in 2015. China at one time accounted for nearly 80 per cent of textile imports but the percentage has been declining gradually due to rising labor costs, among other reasons. Now imports from countries like Vietnam and Indonesia are rising.