Bangladesh’s RMG Sector: Chinese Investment gains momentum

Staff Reporter :

Amid escalating US tariffs and soaring production costs, Chinese investment in Bangladesh has accelerated notably in recent months, marking a strategic shift that challenges China’s long-standing supremacy in global garment exports.

Industry insiders say Chinese firms are increasingly drawn to Bangladesh’s lower production costs, abundant labour, and duty-free access to European markets — advantages that now outweigh the steep tariffs Chinese products face in key markets like the United States.

Currently, Bangladeshi apparel exports face an average tariff of 36percent in the US, compared with around 50percent for Chinese goods, a rate that could increase further. Over the past decade, China’s garment exports to the US have steadily declined, while Bangladesh and Vietnam have captured a growing share of the market.

In response, Chinese investors are setting up new factories in Bangladesh or taking over struggling ones to start production quickly. Several major Chinese brands and buying houses have also opened liaison offices in Dhaka.

“In the past year, more than 20 apparel factories in Bangladesh have received Chinese investment, including new ventures and leased operations,” said Inamul Haq Khan, senior vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).

He added that more firms are exploring similar opportunities, especially through leased facilities.
According to Bangladesh Bank, Chinese investment exceeded $53 million between April and June 2025, with the textile sector receiving the largest share of $30.38 million.

Mahmud Group recently leased a dormant factory to a Chinese investor that has already resumed operations. BGMEA sources also said a Chinese company is negotiating to acquire three factories from financially troubled Mascot Group.

Khorshed Alam, president of the Bangladesh China Chamber of Commerce and Industry (BCCCI), said at least three Chinese textile firms are conducting feasibility studies for woollen and man-made fibre spinning mills. “Bangladesh offers lower costs and abundant manpower compared to China,” he noted.

During an event in Dhaka on 8 September, Chinese Ambassador Yao Wen announced that new Chinese firms had pledged nearly $800 million in investment, expected to significantly boost Bangladesh’s apparel exports.

Among them, SOHO Fashion Group — a major Chinese fashion conglomerate — opened its Dhaka office on 16 September, describing Bangladesh as a “vibrant and fast-growing” market.
According to Bepza and BCCCI, 18 Chinese garment, textile, and accessories companies have started operations or signed land lease agreements in Bangladesh.

These include Home Joy Socks, Chick Wings Intimates, Kaixi Garments, and others. Hong Kong-based Handa Industries has also pledged $250 million in textile investments.

The Bangladesh Investment Development Authority (Bida) reported that China accounted for about 20percent of Bangladesh’s $650 million in foreign investment proposals during the first eight months of 2025.

Economists see this growing interest as a vote of confidence in Bangladesh’s competitiveness. Former Tariff Commission member Mostafa Abid Khan said, “As Vietnam’s capacity tightens, Bangladesh is emerging as a natural alternative for Chinese apparel makers.”

However, local entrepreneurs urge investors to move beyond basic garments toward backward linkage and high-value sectors.

BCCCI’s Khorshed Alam also warned that gas shortages could limit new textile projects, suggesting joint ventures in idle factories as a more practical approach for Chinese investors.