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Sears Not Sweating Bangladesh Political Turmoil

Importers of apparel made in Bangladesh may be justifiably worried about that country’s ongoing political turmoil, but one U.S.-based retailer is boosting its purchases by 25 percent.

In an interview with The Daily Star, Jay Burdett, vice president and managing director of Sears Holdings Global Sourcing, said the giant retailer’s apparel purchases from Bangladesh will hit $375 million in 2013.  Labor and production costs in Bangladesh are lower than those of China’s and the country has attracted U.S. buyers alert for a bargain.

After a five-day visit to Bangladesh, Burdett announced Sears’ anticipated increase in buying despite riots, strikes, shutdowns and apparel factory fires that killed a total of 119 workers.

“I came to Bangladesh to see whether our suppliers are on track to deliver our goods on time,” Burdett said. “I’m happy to see that the factories are operating in full swing even on the [strike] days.”

Despite this vote of confidence in the ability of Bangladesh factories to deliver the goods, Burdett nevertheless believes shutdowns and the resulting press coverage will have a major negative impact on the country’s apparel industry.

Other retailers are not as optimistic about Bangladesh.

Tesco Corp., the world’s third biggest retailer, is rethinking its production commitments in Bangladesh, for example.

“We were overloaded in Bangladesh,” said Christophe Roussel, chief executive for global non-food sourcing and logistics for Tesco. “It’s not about the conditions in the factory; it’s the country itself.”

“Bangladesh was a good place to do business,” Roussel said. “But you have to read the political trends in the world.”

Although China is still Tesco’s biggest supplier, the firm has cut its Chinese factory commitments from 80 percent to 60 percent. Tesco is reportedly on the lookout for sources closer to its major markets in Europe.

If Bangladesh does not soon resolve its political problems, more large firms whose goods are produced there will likely look elsewhere for sourcing, causing the country’s one-time boom to go bust.