Key highlights:
- Andrea Albright including Vice President for Global Affairs and Business Diplomacy, Paul Dyke, expressed eagerness to explore diversified products from Bangladesh.
- Bangladesh, known for its agrarian landscape and tropical climate, boasts a vigorous agricultural sector yielding approximately 70 million metric tons of output annually.
- Walmart’s interest in buying new products can help Bangladesh diversify its export basket and reduce its dependence on the RMG sector, which accounts for 84% of the total exports.
Walmart Inc., the renowned US-based global retail giant, operates a vast network of hypermarkets, discount department stores, and grocery outlets across the United States. Headquartered in Bentonville, Arkansas, Walmart also oversees Sam’s Club, a chain of warehouse clubs. The company stands as the second-largest international purchaser of garments from Bangladesh, with annual purchases nearly reaching $4 billion, following H&M, which sources over $4 billion worth of clothing items from the country each year.
Salman F. Rahman, the Prime Minister’s Private Industries and Investment Adviser, announced on Thursday, February 15th, that Walmart expressed interest in deepening its partnership with Bangladesh. He highlighted the rapid recovery of the country’s garment and other industries from the adverse effects of the Covid-19 pandemic and the Russia-Ukraine conflict.
Rahman made these statements following a meeting with Walmart’s Executive Vice President, Andrea Albright, at his office in Gulshan, Dhaka. The Walmart delegation, including Vice President for Global Affairs and Business Diplomacy, Paul Dyke, expressed eagerness to explore diversified products from Bangladesh.
Adviser Salman F. Rahman proposed collaboration opportunities between Walmart and Bangladeshi businesses to include new products such as processed agro-food, electronics, pharmaceuticals, packed spices, jute-based products, and man-made fiber-based Ready-Made Garments (RMG).
“Bangladesh’s RMG has a worldwide reputation. Walmart has been buying clothing from this country for a long time. Although the purchase order dropped a little during the corona epidemic and Ukraine-Russia war, I hope it will increase now and will be buying few new products as discussed.”
– Andrea Albright, Executive Vice President of Walmart.
A Win-Win Partnership for Cost, Quality, and Sustainability for Walmart
Walmart’s interest in sourcing from Bangladesh is driven by several factors, notably the cost advantage. Bangladesh offers a competitive price for its products, especially in the garment sector, due to its abundant and low-cost labor force, favorable trade policies, and efficient infrastructure. According to the World Bank, Bangladesh’s minimum wage for garment workers is $95 per month, which is lower than that of China, India, Vietnam, and Cambodia.
The tariff charges for Walmart are reduced by the duty-free access that Bangladesh has to the European Union, Canada, Australia, and Japan. Moreover, Bangladesh has upgraded its transportation, communication, and energy systems, which fosters the smooth flow of goods and services.
Bangladesh, known for its agrarian landscape and tropical climate, boasts a vigorous agricultural sector yielding approximately 70 million metric tons of output annually. Rice, potato, and sugar crops dominate the scene, constituting nearly 80% of the agricultural production, while fruits, vegetables, and spices contribute 17%. Simultaneously, the agro-food processing industry is burgeoning, churning out over 700 basic and processed food items, ranging from pickles to noodles.
Walmart stands to gain significantly by sourcing processed agro-food products from Bangladesh. With a diverse array of offerings, the country can cater to varied consumer preferences while championing organic and eco-friendly goods. Leveraging Bangladesh’s cost-effective production, abundant raw materials, and favorable trade policies, Walmart can secure a competitive advantage in the market.
Beyond agriculture, Bangladesh hosts a burgeoning electronics industry that manufactures and exports a plethora of gadgets and appliances, from televisions to mobile phones. This industry growth aligns with Walmart’s mission to provide quality products at accessible prices, particularly in the realm of smart devices and appliances.
The pharmaceutical sector in Bangladesh shines as one of the most developed in the developing world. With an impressive array of medicines catering to human and animal health, the industry fulfills nearly 98% of the domestic demand and exports to approximately 150 countries, including the US and EU. From traditional tablets to cutting-edge biotechnology, Bangladesh’s pharmaceutical prowess positions it as a global player in healthcare.
Walmart’s foray into sourcing pharmaceuticals from Bangladesh holds promise on multiple fronts. By offering affordable yet high-quality medications, the retail giant can address diverse healthcare needs while contributing to global public health initiatives.
How Bangladesh can benefit from Walmart’s partnership?
In 2020, Walmart sourced $3.5 billion worth of goods from Bangladesh, accounting for 7.5% of the country’s total exports. If Walmart increases its sourcing from Bangladesh and adds new products to its basket, it can boost the country’s export earnings and help achieve the target of $50 billion by 2024.
Bangladesh is largely dependent on the EU and the US markets for its exports, which makes it vulnerable to external shocks and fluctuations. Walmart’s partnership can help Bangladesh diversify its export markets and reduce its reliance on a few destinations. Moreover, Walmart’s interest in buying new products can help the country diversify its export basket and reduce its dependence on the RMG sector, which accounts for 84% of the total exports.
Furthermore, Walmart can also facilitate technology transfer and skill development for Bangladeshi producers, as the company can provide technical assistance, training, quality control, and market access.
Since November 2005, Walmart aimed to achieve several key objectives, such as investing $500 million annually to enhance fuel efficiency in Walmart’s truck fleet by 25% within three years, aiming to double it within a decade. Additionally, they sought to diminish greenhouse gas emissions by 20% within seven years, decrease energy consumption at stores by 30%, and reduce solid waste from U.S. stores and Sam’s Clubs by 25% within three years.
So, the partnership can encourage Bangladeshi producers to adopt social and environmental responsibility, as the company has a strict code of conduct and compliance requirements for its suppliers.
To sum up, the growing collaboration between Walmart and Bangladesh is a mutually beneficial one, creating a win-win situation for both sides. By taking advantage of Bangladesh’s strengths in cost, quality, and sustainability, Walmart can diversify its sourcing and offer value to its customers around the world. Bangladesh, meanwhile, can use Walmart’s global presence and know-how to increase its export income, expand its markets, and promote socio-economic development.
