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SJ Special Bulletin: What Every Sourcing Executive Needs to Know to Conduct Business in Bangladesh

The political mayhem that has besieged Bangladesh in recent weeks has begun to generate economic uncertainty, as  sourcing executives are unsure both about their safety and about the options for business still available to them. But while much of Bangladesh seems consumed by conflict, especially factory-rich Gazipur, commerce still continues briskly. Nevertheless, there are some basic facts and guidelines of which every businessperson in Bangladesh should be aware.

First, despite the familiar media narrative that Bangladesh has devolved into total chaos, the vast majority of the protests are densely concentrated in one area of Dhaka where piece rate workers are jostling for wage increases consistent with the recommendations made by the Wage Board. Many industry insiders anticipate a resolution of these persistent conflicts by around December 10th, as the economic dependence of the country on garment manufacturing makes the current unrest unsustainable.

Most of the factories in Bangladesh are still fully operational; keep in mind that the country houses more than 5,000 of them. The strikes will likely cause some delays in the transfer of goods to ports and airports. It’s important that executives establish open lines of communication with their contacts on the ground in order to remain informed of foreseeable delays.

Also, many have expressed astonishment at the fire that has engulfed the Standard Group factory in Gazipur, one of the largest and most reputable of its kind in the country. However, a coordinated attack of this kind is without historical precedent, and the entire manufacturing community, including the government, has unequivocally condemned this act of arson in the strongest possible language. It should be interpreted as an aberration rather than a harbinger of Bangladesh’s future.

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While much has been made of the decision by the Spanish retailer, JHK Trader SRL, to pull its orders after an attack on a car shuttling three of its executives through Dhaka, there is no evidence that buyers have stopped visiting Bangladesh. For the most part, Bangladesh is still generally considered safe for travel and foreign businessmen to roam about without fear of violence.

Buyers are still moving forward with the placement of orders for the Fall and Winter of 2014 but it’s likely the typically high production volume of the past will diminish somewhat. Increasingly, Western companies are starting to reconsider the long-term strategic viability of Bangladesh as a sourcing destination.

It’s advisable that executives contracting business in Bangladesh proactively keep abreast of the situation on the ground as it unfolds. It’s always possible to call one’s agent, office, factory, or representative in Dhaka for timely updates, especially regarding the impact worker demonstrations might have on delivery times. There is no substitute for boots on the ground, of course, but the next best alternative is a constant communication with those in the mix.