Three Question About Investment Cost Of Bangladesh'S Textile And Garment Industry

Three question about investment cost of Bangladesh textile and clothing industry

1. Bangladesh

The textile and garment industry plays an important role in Bangladesh's economy. Clothing exports account for 80% of Bangladesh's total merchandise exports, with over 5 million employment, of which 70% are women.

According to Bangladesh official statistics, Bangladesh currently has more than 2000 textile factories, and more than 6000 garment processing plants, employing more than 4 million 800 thousand, becoming the world's second largest textile exporter after China.

In the 2012~2013 fiscal year, the total export volume of Bangladesh's textile and garment industry amounted to US $21 billion 510 million, accounting for 80% of the total export volume of Bangladesh.

Among them, the garment manufacturing industry is developing rapidly, with an average annual growth rate of over 16%.

The garment industry in Bangladesh has been developing steadily since its start in 1978. In 2005, the total export volume exceeded the US $5 billion mark, reaching US $6 billion 400 million. In 2010, it reached US $12 billion 500 million and reached US $24 billion 800 million in 2014.

It is predicted that Bangladesh's export volume will reach US $50 billion in 2021, and we can achieve the goals of safe working environment, sustainable environmental protection and diversified products.

The textile and garment industry is the main source of Bangladesh's banking, insurance and shipping industry. It also promotes pportation, hotel, hairdressing, cosmetics and other related industries. It provides about 800 thousand jobs for the textile and garment and machinery parts industry, and the resource recovery industry has about 200 thousand job opportunities.

Nearly half of Bangladesh's textile and clothing exports to Europe, the main export market for garments is the European Union and the United States, of which France accounts for 22% of exports and Germany accounts for 17%.

The EU is the largest trading partner, and Bangladesh's textile and clothing exports to the EU are showing steady growth momentum. Global demand continues to pick up and further boost Bangladesh's clothing exports.

Due to geographical advantages, China, India, South Korea and Indonesia will become the fastest growing export destination market in Bangladesh.

Nevertheless, with the rising demand in western countries, the United States, Germany and the United Kingdom remain the largest export markets in Bangladesh and will remain unchanged by 2030.

The proportion of clothing exports to total exports in Bangladesh increased from 6% in 80s to 80% now, making it the most important source of foreign exchange earnings in the country.

Therefore, the rise and fall of the garment industry has a direct impact on the economic development and livelihood of Bangladesh, which can be said to be the lifeblood of Bangladesh's economy.

In the development and production system of the textile and garment industry in Bangladesh, it belongs to the middle and upper reaches of the spinning industry.

The weaker link of dyeing and finishing is not as important as the value of clothing and employment.

According to statistics, Bangladesh now has more than 200 spinning factories.

About 40% of the 200 spinning mills are backward in technology, and the equipment is very old. It is necessary to replace the equipment immediately and upgrade the production technology level.

Bangladesh has more than 350 large and medium-sized woven fabric factories and more than 1000 small weaving factories, with more than 40 thousand looms, but only about 1/4 of looms are shuttleless looms.

In addition, Bangladesh has more than 500 knitted fabric dyeing and finishing plants and more than 300 machine loom dyeing and finishing plants, with an annual processing capacity of about 2 billion 500 million meters.

2. is labor cheap and inefficient?

In Bangladesh, only about 140000 square kilometres of land have bred 166 million of the huge population (2013 data). In the survey, the official agencies said that the actual population was around 200 million.

According to the world population programme, the country has the largest population density in the world.

Due to the long influence of British colonial rule, English in the country is more popular.

Bangladesh is the eighth largest population in the world, with a population growth rate of 1.58% and a population density of 1051 persons per square kilometer with an average life expectancy of 67.2 years.

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Before leaving, there were entrepreneurs who once said that the prices of local workers in Bangladesh were cheap but inefficient. The efficiency of a Chinese worker is equal to 3~5 workers in Bangladesh, and the price of labor is not cheap.

It is understood that Bangladesh over 15 years of age, under 65 years of age of 104 million labor force, including 49 million 460 thousand men and 54 million 500 thousand women.

The distribution of labor force accounts for 47% of agriculture, 13% of industry and 40% of service industry. However, the number of skilled workers is short, the quality of ordinary labor is poor, and the efficiency is not high.

Under the pressure of life, about 8 million people in Bangladesh have gone abroad and exported to other countries in the world.

According to Bangladesh official statistics, the efficiency of Bangladesh workers is 77% of that of Chinese workers.

The monthly salary level of senior managers in Bangladesh is between 1000 US dollars and 2500 dollars, and the middle managers are between 400 US dollars and 500 dollars, the technicians are about 100 dollars, and the general managers are about 70 dollars.

The government of Bangladesh stipulates that the minimum monthly wage should be no less than 5300 Taka (about 70 US dollars), of which the basic wage is 3000 Taka, and 1280 Taka's housing subsidies, 320 Taka medical subsidies, 200 Taka pportation subsidies and 500 Taka food subsidies.

Bangladesh has plenty of surplus labor resources with English communication skills.

Bangladesh has a relatively low level of economic development and a relatively low labour force price, which is one of the key factors that attract a large number of foreign investment in the Bangladesh market.

3. cheap land and high construction cost?

In the survey, local entrepreneurs in Bangladesh say Bangladesh's land prices are not cheap now.

Wang Guocan, a Chinese entrepreneur who invested in dyeing plants in Bangladesh, said: "Bangladesh's land prices are rising rapidly now."

Take the Asholia Tong area about 30 kilometers away from Dhaka as an example, the land price near the main road is 200 thousand US dollars / mu, and the land price far away from the main road is about 60 thousand US dollars / mu. The land lease price is about 300 US dollars to 400 US dollars per mu per year. The commercial land in the downtown area of Dhaka banani and Guishan is about 3000 US dollars to 5400 US dollars per square meter.

Bangladesh is seriously lacking in stone, so Bangladesh has relatively high construction costs.

Market structure and development potential

First, Bangladesh's clothing export preferential policies.

Japan, Australia, Canada and other countries and regions offer preferential treatment to Bangladesh as follows: 1. according to the EU's "GSP" and "EBA" system (all goods except weapons), Bangladesh enjoys quota free and preferential tariff treatment in the EU market. Even in the "post quota era", these preferential treatment will be retained. This is the main advantage of Bangladesh's textile industry than other competitors. 2. Bangladesh textiles received tariff free and quota free market access preferential treatment in Canada and Norway, Japan, New Zealand and Australia in 2004 and before. 3. in the US market, Bangladesh has 30 categories of clothing products subject to quota restrictions, much less than China's restricted products. Its export destination is the European Union and the United States.

In recent years, the Bangladesh government has been actively lobbying the United States to grant zero tariff entry to Bangladesh clothing (like the other 33 sub Saharan countries and the least developed countries in the Caribbean).

Two, the European Union and the United States are the major export markets of Bangladesh.

About 44% of Bangladesh woven garments are exported to the European Union, about 49% of which are exported to the United States, and the rest are mainly exported to Japan, Canada and Australia. The rest of the world accounts for only about 1.6% of its total exports. About 59% of its exported knitted garments are exported to the European Union, about 34% to the United States, and the rest are mainly exported to Japan, Canada and Australia, and the rest of the world accounts for only about 1.8% of its total exports.

Three, the domestic market of Bangladesh has great demand for textile raw materials and textile machinery, and China Textile machinery has a bright future in the Meng market.

China's textile machinery industry has developed very rapidly in recent years, not only the spinning frame, but also other equipment such as blowing carding unit, comber, drawing frame, roving machine, Winder, and some chemical fiber equipment, etc., can meet the needs of Bangladesh customers in terms of product quality and reliability.

At present, many textile factories in Bangladesh use equipment from Germany, Japan and other countries.

Although the performance is superior, but the price is high.

As China's textile machinery has absolute competitive advantage in price, its share in the textile machinery market in Bangladesh is expected to grow.

Four, the huge gap between Bangladesh's textile equipment and yarns and fabrics has brought opportunities to Chinese enterprises. Bangladesh's domestic raw materials such as cloth and yarn are not enough, and China's dyeing and finishing industry has a bright prospect in the Meng market.

Although the output of cloth products in Bangladesh has an annual growth rate of two digits, it can only meet 50% of the demand because of the exuberant market demand.

In order to narrow the gap between supply and demand, Bangladesh needs to invest or attract foreign capital to build a series of spinning and weaving factories in the future, which will undoubtedly bring huge investment opportunities to China's spinning enterprises.

Bangladesh's wide range of fabrics and knitwear have a serious shortage of production capacity and dyeing and finishing capabilities.

The contradiction between the abnormal development of cotton, cotton yarn and weaving capacity has not been alleviated. The contradiction between a large number of urgently needed grey fabrics and the serious shortage of dyeing and finishing ability has become increasingly prominent.

It is embarrassing that in Bangladesh, the garment processing enterprises in Bangladesh have to use more than 70% of the local raw materials for obtaining the certificate of origin. Due to the lack of proper processing and processing of large quantities of grey cloth processed or imported in Bangladesh, the garment processing enterprises often postpone delivery.

According to Bangladesh garment manufacturers and Exporters Association, Bangladesh still has more than 2 billion square meters of dyeing and finishing gap to be filled, which left a big room for development for China's dyeing and finishing enterprises.

What are the unfavorable factors of investment cooperation?

First, Bangladesh relies on imports of textile raw materials.

Bangladesh has a large population, and farmers are reluctant to grow cotton in limited land, resulting in serious dependence on imports of raw materials. This is the biggest problem for the development of textile industry in Bangladesh.

According to statistics, 95% of the textile industry in the Bangladesh textile industry, 80% of the yarn used for weaving and 70% of the grey fabrics for printing and dyeing, all need to be imported.

Therefore, Bangladesh's textile raw material supply is heavily dependent on the import market. If the supply of cotton yarn is tight in the international market, it will inevitably lead to a tight supply of local cloth in Bangladesh. The garment investment enterprises in Bangladesh will inevitably have to import large quantities of cloth so that it is difficult to obtain the certificate of origin.

Two, Bangladesh's infrastructure is seriously lagging behind.

Bangladesh's water, electricity and gas supply, as well as pportation, ports and other infrastructure are weak.

The Asian Development Bank called Chittagong "a deadlock in the supply chain".

The average time for a container in port is 15 days. If there is a port congestion or a worker strike, it may not be possible to ship or pick up goods for more than 30 days.

In order to abide by the contract and deliver the goods on time, the exporters sometimes have to choose air pportation, which often causes great losses to the export enterprises.

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Electricity supply is scarce, and production activities are often cut off due to power failure.

Once the dyeing and finishing equipment is shut down, it will cause uneven dyeing.

In order to solve the power supply problem, almost all textile enterprises in Bangladesh independently use natural gas to generate electricity.

Natural gas power generation is cheap, and it has solved the power supply problem at present, but this is far from a permanent solution. Bangladesh's natural gas supply is tight. If we do not know and exploit new gas fields, Bangladesh's natural gas supply will almost run out.

Three, Bangladesh workers strike frequently.

Bangladesh has made frequent strikes in recent years, especially in the export processing area.

The reasons for the strike are manifold, sometimes because the workers ask for a raise, sometimes the employee is abused or unreasonable.

According to UN estimates, Bangladesh's annual losses due to strikes account for 4% of GDP.

Four, Bangladesh officials are sometimes inefficient.

Government officials in Bangladesh once suffered from corruption. Although a strong anti-corruption storm was implemented after the current administration of the provisional government, there may be residual corruption in some places or departments.

Starting a business in Bangladesh requires contacts with government officials at different levels, such as land purchase, telephone opening, business license and work permit for foreign employees. These procedures can hardly be completed for more than half a year.

Five, financial services need to be improved.

The amount of investment in overseas factories is relatively large, and its own strength is limited, so it is necessary to make loans to the banks. Although the Chinese government has discount interest support, the loan conditions for domestic banks to invest in enterprises for a long time are still harsh, and it does not really reflect the preferential financing arrangements for "going out" enterprises.

If enterprises are required to have financing guarantee and capital verification certificate, they do not recognize loans for overseas investment in new assets, and the repayment period of long term loans is too short. Some enterprises can not get effective financing support.