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Bangladesh, With Low Pay, Moves In On China

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GAZIPUR, Bangladesh — The eight-lane highway leading from the Bangladeshi capital, Dhaka, narrows repeatedly as it approaches this town about 30 miles north, eventually depositing cars onto a muddy, potholed lane bordered by mangroves and small shops.

But this is no mere rural backwater. It is the sort of place to which foreign manufacturers may increasingly turn, if the rising wage demands of factory workers in China prompt companies to seek new pools of cheap labor elsewhere.

Already, in factories behind steel gates and tall concrete walls, tens of thousands of workers, most of them women, spend their days stitching T-shirts, pants and sweaters for Wal-Mart, H&M, Zara and other Western retailers and brands.

One of the Bangladeshi companies here, the DBL Group, employs 9,000 people making T-shirts and other knitwear. Business has been so good that the company is finishing a new 10-story building with open floors the size of soccer fields, planted with row after row of sewing machines.

“Our family needed the money, so we came here,” said Maasuda Akthar, a 21-year-old sewing machine operator for DBL.

As costs have risen in China, long the world’s shop floor, it is slowly losing work to countries like Bangladesh, Vietnam and Cambodia — at least for cheaper, labor-intensive goods like casual clothes, toys and simple electronics that do not necessarily require literate workers and can tolerate unreliable transportation systems and electrical grids.

Li & Fung, a Hong Kong company that handles sourcing and apparel manufacturing for companies like Wal-Mart and Liz Claiborne, reported that its production in Bangladesh jumped 20 percent last year, while China, its biggest supplier, slid 5 percent.

“Bangladesh is getting very competitive,” William Fung, Li & Fung’s group managing director, told analysts in March.

The flow of jobs to poorer countries like Bangladesh started even before recent labor unrest in China led to big pay raises for many factory workers there — and before changes in Beijing’s currency policy that could also raise the costs of Chinese exports. Now, though, economists expect the migration of China’s low-paying jobs to accelerate.

And while workers in Bangladesh and other developing countries are demanding higher pay, too — leading to a clash between police and protesters earlier this week in a garment hub outside Dhaka — they still earn much less than Chinese factory workers.

Bangladesh, for instance, has the lowest garment wages in the world, according to labor rights advocates. Ms. Akthar, who is relatively well paid by local standards, earns about $64 a month. That compares to minimum wages in China’s coastal industrial provinces ranging from $117 to $147 a month.

The race to the bottom continues.

If there is a big decamp from China I wonder if the Chinese can sustain there economic miracle.

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The race to the bottom continues.

If there is a big decamp from China I wonder if the Chinese can sustain there economic miracle.

Of course all the new countries are much smaller than China, so don't expect the reserve of cheap labour to last more than about 2 years in each case.

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I saw a documentry on BBC couple of yrs back (may be longer) when Indian businessmen were complaining that they can compete with China due to cheap productivity cost, the actual figure given was that what it cost to make here for a $ china can do the same for 20 cents. Now thanks to globalisation, we got even dirt cheap labour ( my god what are they paid, a loaf of bread for the day's work, actually I don't want to know). But looking at western situation would it last? unless they find clients in Asia, they're finished.

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