Fraser Live: The mating call of Bangladesh

Even though the duty rate on clothing will drop to 10 per cent next year, thus giving some comparative advantage to China – currently on a rate of 17.5 per cent – customers who have nurtured Bangladesh are unlikely to  go running back to the chinese juggernaut, according to my sources.

For Australia, China remains the mainstream supplier and will be for some time to come, but the duty-free status of Bangladesh and its extremely low labour rate have attracted a number of Australian importers who are now over the establishment pains and are operating within stable, if uncomfortable, parameters.

One such company is Sydney-based Trackmaster, a supplier of keenly priced but well conceived womenswear to volume retailers. Trackmaster’s director, Finlay Crawford, ventured to Bangladesh two years ago when China was showing signs of upping its prices – although the economic downturn has put a temporary hold on that.

The amiable Crawford began his search for suitable factories with the Australian and Bangladesh trade commissioners. Once in Dhaka with a list of contacts in his hand, the jungle drums got going and factories popped out of the steamy shrubbery, each guaranteeing better prices and better quality than anybody else. He then went into sort mode and now has a network of reliable suppliers.

There are many similarities between Bangladesh and other Asian countries that have levered themselves up from farming subsistence into clothing production. Bangladesh is the most densely populated country in the world: it supports 161 million people who live between rivers that drain the Indian subcontinent into the Bay of Bengal. Floods are the order of the day. Cities are choked with impossible traffic jams, although pollution has improved since the vast majority of transport motors now run on local natural gas.

During the monsoon season bead curtains of rain bring floods which threaten to get worse with climate change. And Bangladesh won’t do too well when the sea level rises either, because it is so low.
Given all its problems, it is surprising that 75 per cent of Bangladesh’s exports now come from textiles and garments.

Australian buyers contemplating using Bangladeshi factories will be faced with similar problems to those who pioneered trade with China more than 30 years ago. They will have to sort through a lot of pretenders to find reliability of quality and delivery. Not only that, but they will have to stay on the case.

Finlay Crawford, or one of his managers, continually visit Bangladesh to shepherd through production. They find that quality checking is essential and, on price, you largely get what you pay for. Minimums are similar to China and textile prices can vary greatly, depending on whether the yarn has to be imported or not. Local cotton spun into simple yarns offers the best deal.

Another Australian buying organisation, much larger than Trackmaster, did all the preliminary work to make Bangladesh a supplier and appointed a local agent to check quality and price. After more than a year of successful transactions, the quality and delivery wheels came off and the organisation decided the struggle wasn’t worth it and abandoned Bangladesh. This indicates that you dare not leave the watchdog functions to anybody but your own Australian staff – either stationed in Dhaka or visiting often.

Crawford says the best place to stay is the Radisson Hotel, which is 15 minutes from the airport. There are cheaper places but they may sap your confidence to go forth and multiply your orders. He also notes that there is one doctor to every 10,000 patients and each of those doctors has half a nurse. Now there’s an interesting thought. But the message is, don’t get sick. If you’re feeling off-colour, head for the airport.

On the plus side is that Bangladesh is a democracy, has some semblance of British law and English is widely spoken. If you wander around enough you might bump into Stephen Brender, who has set up his knitting plant there – now assisted by the mercurial Des Picthall. I’d guess that these two would know the ropes better than most, and are probably making good fabrics as well. Before Australia ran out of gas for him, Brender was turning out some of the best knitted fabrics I’d seen.

Another Australian operating an office in Bangladesh is James Horsefield, the managing director of Qualspec, a garment inspection service. His company carries out export garment inspections in virtually all the Asian countries supplying Australia.

Horsefield sees the Bangladeshi garment evolution as being in a similar position to that of China about 10 years ago. Although Bangladesh prices are very attractive, quality is on a learning curve, with exporters being educated the hard way every time goods are rejected before they leave the country.

Horsefield makes the point that Australian importers have become “Chinacentric”, showing a reluctance to explore other Asian suppliers like Bangladesh, Vietnam and India. Perhaps they might think again.