Last Friday’s shootings at the Holey Artisan Bakery café in Dhaka left 28 people dead and the Bangladeshi garment industry reeling.
The attack, for which the so-called IS – also known as Daesh – has claimed responsibility, took place in the diplomatic area of the Bangladeshi capital. The bakery was known to be popular with foreign nationals and among the dead were nine Italians, all of whom worked in the textile industry, and seven Japanese citizens.
“This attack is very much against foreign interests,” says UK Fashion and Textile Association director Paul Alger. “Clearly Daesh is trying to disrupt trade in Bangladesh.”
That trade is heavily skewed towards the fashion industry – over 80% of Bangladesh’s exports are clothing and the sector is worth $26bn. Retailers ranging from Uniqlo and H&M to Asda, Marks & Spencer and Primark all source from the country.
The country is the second-biggest exporter of garments after China but is much cheaper: Chinese labour costs have risen in recent years, and cheaper Bangladeshi labour has benefited from international retailers wanting to keep costs down.
But the attack last week has damaged international confidence.
“These horrific incidents have shaken the confidence of multinational operations,” says Verdict Retail analyst Andrew Hall. “Many UK retailers will be taking the opportunity to review international operations, especially in the wake of Brexit.”
“Bangladesh has made massive deal about its textile industry in recent times and the government, along with investment from retailers, will need to improve security”
Andrew Hall, Verdict Retail
Uniqlo owner Fast Retailing has already said it will suspend all but critical travel to Bangladesh and tell staff to stay indoors.
“Uniqlo have major activity in the region,” says Alger. “But we know that the US and Japan are always the first companies to pull out of territories in these situations, for insurance reasons. The same happened at the Paris Men’s Fashion Week after those attacks.”
Another international fashion giant, H&M, has taken a different tack, and says: “We are deeply saddened by the attack in Dhaka, Bangladesh. There are no plans to change our current sourcing arrangements. We have strict safety routines to assure our co-workers’ safety on-site.”
“Confidence has been damaged,” says Hall. “And this is in the wider context of Bangladesh making a recovery from the Rena Plaza disaster. Bangladesh has made massive deal about its textile industry in recent times and the government, along with investment from retailers, will need to improve security.”
“Some Bangladeshi factories are anticipating that they [Daesh] might go after factories,” says Alger.
Likely to stay
Despite this, retailers are unlikely to withdraw operations from Bangladesh – at least for the immediate future.
“Bangladesh has the talent, expertise and infrastructure in place,” says Hall. “And it is always easier for retailers to stay put.”
“It is perfectly possible that UK businesses can work with Bangladesh while cutting down on travel or pulling foreigners out”
Paul Alger, UK Fashion and Textile Association
Alger says that while retailers might diversify their sourcing models, as many did when Chinese labour costs rose, they may now consider further sourcing from countries such as Vietnam and Cambodia.
But Alger warns: “For us to abandon Bangladesh would be a disaster for the government and would play into Daesh’s hands. It is perfectly possible that UK businesses can work with Bangladesh while cutting down on travel or pulling foreigners out.
“The international community must support Bangladesh and not stop trading with it – we need to work with it in innovative ways.”