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Analysis: The risk to Bangladesh's textile industry

Suppliers and industry experts have spoken out in support of manufacturing in Bangladesh, saying UK retailers have a “responsibility” to continue to source from the country despite concerns over recent terror attacks.

Terrorists stormed a cafe in the Gulshan area of the Bangladeshi capital Dhaka on July 2, killing more than 20 people. Seven of the victims were Japanese and nine were Italian. Many worked in the textiles industry.

It was a shock for international retailers that manufacture their products in the city. Japanese firm Uniqlo suspended non-emergency travel to Bangladesh and advised staff there to stay at home.

Marks & Spencer said it was monitoring the situation: “We have a really good view of what’s happening in Bangladesh and we continue to review travel arrangements for our staff to all destinations. We’re keeping a close eye on it.”

One retail source said: “It is very worrying that atrocities are being committed in the ‘safe’ zone of Gulshan. To be honest, when I was last in Bangladesh I did not feel particularly safe. I would not consider travel to Dhaka as being safe for my team.”

The UK government says “there remains a high threat from terrorism in Bangladesh” and advises avoiding places where travellers are known to congregate. But experts have urged retailers not to pull out of Bangladesh altogether in the wake of the attacks and wider security concerns, pointing out that the country is still reeling from the Rana Plaza factory disaster three years ago.

H&M, which said it has “strict safety routines” to ensure the security of its workers in Bangladesh, has emphasised that is has no plans to change its current sourcing arrangements.

“The industry has a responsibility to hold its nerve and support Bangladesh through this”, says Paul Alger, director of international affairs at the UK Fashion & Textile Association.

“A lot of firms are telling workers to be careful, but they are still working. We are expecting most retailers to pull out or restrict key people from going to the area as a precautionary measure, but the manufacturing won’t stop.”

He adds: “No one wants to make an overnight decision and that’s a good thing. The industry wants to support Bangladesh, make the place safe and carry on trading there. Retailers have invested very heavily in Bangladesh following Rana Plaza to make the working conditions safer. The economy there very much depends on manufacturing. If retailers were to pull out, it would be very damaging to Bangladesh.”

Retail analyst Richard Hyman agrees that too much investment had been made in Bangladesh for retailers to leave suddenly.

“The factories have long-term structural trading agreements with retailers. It’s not a tap you can turn off. It’s mainly at the volume end of the market so even if you could pull out there aren’t any countries with factories big enough and available for them all to move to. It’s not possible.” He adds: “There have been decades of investment in Bangladesh, so suppliers can’t just shut the factories down and most major retailers have regional offices out there. Most suppliers will be hoping it has been a wakeup call to the government about the need to tighten security.”

One supplier to high street multiples says the dangers in Bangladesh are very “real”, but work must continue: “It is awful. There are a lot of buying offices in the area, ours included, but this was not an isolated incident. Someone from our UK office goes over once a month, but if they are uncomfortable with that we will have to respect their wishes as Bangladesh is a dangerous place”.

“There’s a real risk as these kinds of attacks are happening more and more, but the industry needs to support Bangladesh. A lot of investment has gone on since Rana Plaza. All factories used by the west have to be Accord [on Fire and Building Safety in Bangladesh] approved and a lot of work goes into getting them to that point.”

He added that, with the weakening of sterling following the UK’s vote to leave the European Union, more retailers will be looking to Bangladesh for manufacturing in the coming months and years. 

“The pound is dropping so it will be even more expensive to manufacture in China. Bangladesh is a lot cheaper so firms will continue to move their manufacturing there and we will rely on Bangladesh even more moving forward – so we need to support its infrastructure.” 

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