Chinese, Indian firms eye Bangladesh to invest in RMG sector

A growing wave of Chinese and Indian companies is eyeing Bangladesh's textile and garment sector as an emerging alternative for relocation, driven by steep US tariffs and rising production costs.

Industry insiders say global buyers, particularly from the United States, have been scouting for new sourcing hubs for years due to the US-China trade war.

The latest tariff hikes have only accelerated that shift, with Bangladesh appearing increasingly on investors' radar.

While many local exporters see this as a chance to benefit from Chinese expertise and technology, others worry that foreign players could intensify competition in areas where Bangladesh already leads.

Yet, with global trade dynamics changing fast, the country's long-standing hesitation toward foreign investment in its garment sector may now be harder to sustain.

Data show that China's share in the US apparel market was 37.7 per cent in 2013, which dropped to 18 per cent by July 2025.

In contrast, Vietnam became the top garment exporter to the US, holding over 20 per cent of the market in July 2025 - up from 10 per cent in 2013.

Bangladesh's share has also grown steadily, reaching 10.11 per cent in July 2025, compared to 6.0 per cent in 2013, according to available data.

Speaking to The Financial Express, Inamul Haq Khan, senior vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), said: "We have information that many Chinese companies are coming here with their expertise to manufacture garments."

He added that a large Indian company has also enquired about available factory space, as it plans to produce its orders in Bangladesh and ship them to the US to avoid high duties.

When contacted, Fazlul Hoque, former president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said Chinese firms have been trying to relocate for some time due to high costs, but the new US tariff structure has accelerated the move.

"Many are exploring opportunities here," he said, adding that the number could rise further in the coming days.

However, Mr Hoque noted that Chinese investment in the garment sector could have both positive and negative consequences.

He explained that Chinese involvement in the production of basic items might increase internal competition, as China possesses greater expertise and higher productivity than local firms.

"At the same time, opening the sector to foreign investment could help attract large-scale projects in backward linkage industries and man-made fibre (MMF)-based garments," he added. Several industry insiders also stressed the need for both local and foreign investment in high value-added products and MMF-based apparel manufacturing to tap into the growing global demand for such items.

Hasnat Md Abu Obida, director of the Leathergoods and Footwear Manufacturers and Exporters Association of Bangladesh (LFMEAB), said sourcing and development houses from China are shifting operations to other destinations, including Bangladesh, to avoid the impact of escalating US tariffs and related uncertainty.

"US buyers are looking for low-cost production hubs as costs in China have already risen, and will continue to do so due to the higher tariffs," he said, explaining that Chinese traders are shifting operations in a dispersed manner.

Bangladesh should aim to attract the full supply chain relocating from China, including investments in backward-linkage industries, said Mr Obida, who is also managing director of Maf Shoes Ltd. According to him, Chinese investment in Bangladesh is largely driven by their own interests rather than any formal invitation from the host country.

Industry insiders believe Bangladesh has significant potential to boost exports to the US and expand its market share while attracting foreign investment, especially from China, if it can address local challenges. The main challenges are: ease of doing business, long lead times, availability of affordable land, investment in backward integration, and supportive fiscal measures like tax holidays.

According to the Bangladesh Export Processing Zones Authority (BEPZA), some 11 Chinese companies signed agreements to invest more than US$380 million in garments and related industries in the fiscal year 2022-23. The number rose to 15 in FY 2023-24, and 22 in FY 2024-25.

In the first quarter of FY 2025-26 alone, eight more Chinese firms signed investment agreements, BEPZA data show.

Officials said these investments include both joint ventures with other countries and projects solely financed by Chinese companies, covering a range of sectors beyond garments.

munni_fe@yahoo.com