Japanese apparel makers will continue doing business in Bangladesh

Amid rising labor costs, Japanese garment industry is shifting production from China to Bangladesh and other Asian countries. Japanese clothing makers will continue doing business in Bangladesh, as it remains important both in terms of sales and production, although they will boost security after last Friday’s terrorist attack in Dhaka.

Fast Retailing, the operator of the Uniqlo casualwear chain, is one of the major Japanese companies that are doing business in Bangladesh. The Japanese company established a joint venture with Grameen Bank’s local unit to operate stores and set up a production office to supervise factories.
Fast Retailing has been boosting production in Bangladesh, alongside Sweden’s H&M Hennes & Mauritz and Inditex, the Spanish owner of Zara. These so-called “fast-fashion” brands are supported by their Bangladesh operations.

According to the Japan Textiles Importers Association, Japan imported 65% of its textile products from China in 2015. China at one time accounted for nearly 80% 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.

Although Bangladesh only accounts for 2.3% of total imports, it grows at an annual pace of about 20-40%.

Some Japanese companies that have client plants in Bangladesh, such as casual clothing retailer Adastria and men’s clothing store Aoki, said that they will keep their policies unchanged.

Fiber maker Toray Industries is also operating its joint venture plant in the north as usual. Toray representative said that they are not considering scaling back operations immediately, given its favorable environment for exporting to Western markets. He further added that Bangladesh is one of their important production bases.

Bangladesh has seen its exports grow rapidly in recent years as a production base for Japanese and Western companies.