The first Chinese companies arrived in Bangladesh in 1997, and now number around 400. China has contributed to the booming garment industry whose aim is to reach US$ 50 billion by 2021. Bangladesh, which has the lowest wages in the region, has sought a plurality of foreign partners to avoid the China "debt trap".
Dhaka (AsiaNews/Agencies) – Chinese companies have shifted production to Bangladesh because of low wages, low import and export duties, almost no insurance coverage for employees, and no unions.
Such conditions have brought in foreign investors and boosted local production and economic growth, which will reach 8.13 per cent this year.
Chinese business executives began coming to Bangladesh just over 20 years ago. One of the first to land in Dhaka in 1997 was Leo Zhuang Lifeng, now 51, managing director of the LDC Group, which today employs 20,000 workers across the country.
When he arrived, there were 30 Chinese companies; now there are around 400. Another Chinese business expat is Felix Chang Yoe-chong, from Hong Kong, chairman of Evergreen Products Group, one of the largest wig manufacturers in the world.
About 10 years ago, Chang decided to transfer production from Shenzhen, Guangzhou, Kunming and Henan. Today 93 per cent of his production is made in the Utara Export Processing Zone, one of eight industrial zones in Bangladesh.
According to the two executives, the "Made in China" has moved to Bangladesh due to rising costs and wages at home. Before Chang opened in the Uttara area, he paid his Chinese workers 2,000 yuan a month (US$ 289); at that time, the minimum wage in Bangladesh was 170 yuan a month (US$ 25).
The minimum wage in Bangladesh currently stands at US$ 95 a month, which is still lower than in other Asian countries: US$ 182 a month in Cambodia; US$ 180 a month in Hanoi and Ho Chi Minh City, lower in other Vietnamese cities; US$ 3.60 a day in Mynamar.
Chinese companies have contributed to huge growth of Bangladesh’ garment sector, a US$ 30 billion industry that wants to reach US$ 50 billion by 2021. The country already is the second-largest exporter of clothing after China.
Garment manufacturers employ 3.5 million people making clothing for local and international brands such as Uniqlo, Zara and H&M as well as high-end brands like Michael Kors and Calvin Klein.
Manufacturing plants are however known for their poor safety standards, with frequent accidents and fires. In January of this year, workers went on strike to demand higher wages in the Dhaka-Savar-Gazipur triangle. The labour action resulted in one protester killed and little change to working conditions in Bangladeshi plants.
Massive foreign investments (US$ 506 million from China in fiscal 2017-2018) saw Bangladesh graduate from "least developed country" to "developing country".
According to economists, the Bangladeshi government has been smart enough to recognise the dangers of the "Chinese debt trap" and diversified sources of loans; India first, then Japan and South Korea.
By contrast, they are critical of the country’s obsolete transportation network and the inadequacy of its ports to handle containers.