Chinese firms turn to Bangladesh as US tariffs squeeze homegrown exporters

Illustration: TBS

Chinese investment in Bangladesh has gained fresh momentum across multiple sectors in recent months, with a sharp uptick now focused on the apparel industry as rising US tariffs and production costs erode China's global dominance in garment exports.

Industry insiders say Chinese firms are increasingly drawn to Bangladesh's lower production costs, abundant labour, and duty-free access to the European market — advantages that stand in stark contrast to the steeper tariffs Chinese goods face in key destinations.

Currently, Bangladeshi apparel exports face an average 36% tariff in the US, while Chinese goods are taxed around 50%, a rate that could climb higher. Over the past decade, China's apparel shipments to the US have fallen steadily, while exports from Vietnam and Bangladesh have expanded.

Chinese investors are entering Bangladesh not only by setting up new factories but also by leasing or acquiring struggling ones, allowing them to begin production swiftly without construction delays. Several prominent Chinese brands and buying houses have also opened liaison offices in Dhaka in recent months.

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

"Several more are in talks and submitting investment inquiries, some specifically for leased facilities," he told The Business Standard.

According to Bangladesh Bank, more than $53 million in investment flowed from China to Bangladesh in the April-June 2025 quarter. The textile sector received the largest share, amounting to $30.38 million.

Reviving struggling factories

Mahmud Group, one of Bangladesh's top apparel conglomerates, recently leased out a dormant factory to a Chinese company that resumed operations last month.

A Mahmud Group representative said the investor provided working capital and assumed responsibility for marketing, though declined to disclose the company's name or profit-sharing terms.

Meanwhile, BGMEA sources said three factories owned by leading exporter Mascot Group are in talks to be sold to a Chinese investor.

"We've learned that a major Chinese company is negotiating to buy Mascot's factories, though the final decision hasn't been made," said a BGMEA leader requesting anonymity.

Mascot Group, currently facing severe liquidity stress, has struggled to pay worker wages and is reportedly looking to sell assets to settle dues. Repeated attempts to reach the company's management went unanswered.

Khorshed Alam, president of the Bangladesh China Chamber of Commerce and Industry (BCCCI), said at least three Chinese textile firms had approached him in the past two months about investing in woollen and man-made fibre spinning mills.

"They are now conducting feasibility studies," he said. "Bangladesh offers lower costs and abundant manpower compared with China."

During an event in Dhaka on 8 September, Chinese Ambassador Yao Wen said new Chinese firms had pledged nearly $800 million in investment in Bangladesh. Once implemented, these projects are expected to significantly boost apparel exports.

Among them, SOHO Fashion Group — a major Chinese fashion conglomerate — opened its representative office in Dhaka on 16 September.

"We are excited to expand our presence in Bangladesh, a vibrant and rapidly growing market," said SOHO chairman Li Yanzhou. "Through collaboration and innovation, we aim to grow with our global partners."

Investment in export zones

According to the Bangladesh Export Processing Zones Authority (Bepza) and BCCCI, 18 Chinese garment, textile, and accessories companies have either started operations or signed land lease agreements for new factories.

Bepza data show that between July 2024 and September 2025, 24 Chinese firms signed land lease deals — 10 of them in garments, textiles, or related accessories, including six directly engaged in apparel production.

These include Home Joy Socks Bangladesh Company, Xingchen Textile Company, Chick Wings (BD) Intimates, Bangladesh BaoRui Textile, IN Button, JIDALAI Company, Bangladesh Boyang Textile, Ding Yu (BD) Enterprise, Safety Garments BD, and Kaixi Garments Bangladesh.

Hong Kong-based textile chain Handa Industries has also announced a $250 million investment in Bangladesh.

According to the Bangladesh Investment Development Authority (Bida), Bangladesh received $650 million in foreign investment proposals during the first eight months of 2025. China accounted for the largest share, contributing around 20% of the total.

Investment beyond zones

Outside export zones, eight new Chinese firms have recently invested in apparel and related sectors, according to BCCCI. 

These include Chunyi (BD) Textile, Lotus Commerce, Liaisherui International (Bangladesh), Trisen Sweater, BSN Bangladesh Trading Company, China Best Household Products, Amigo Bangladesh, Big Sunshine (BD) Opc, and Wechemind Limited.

A BCCCI official said the figures might not include Chinese investors operating under lease agreements or those not registered with the chamber. "There may be more investors beyond our record."

Officials at the Registrar of Joint Stock Companies and Firms (RJSC) could not provide additional details when contacted.

Economists optimistic, exporters wary

Economists have welcomed the growing Chinese investment as a positive sign, while some local entrepreneurs remain wary.

Mostafa Abid Khan, international trade expert and former member of the Bangladesh Trade and Tariff Commission, said foreign investment brings both employment and technological transfer. 

"China has been gradually relocating apparel production abroad. Vietnam remains a preferred destination, but opportunities there are narrowing, making Bangladesh a natural alternative," he said.

"With US tariffs averaging 36% on Bangladeshi apparel and around 50% on Chinese goods, Chinese manufacturers are keen to invest here to stay competitive," he added.

However, some Bangladeshi apparel owners have long discouraged foreign investment in basic garment manufacturing, urging instead for investments in backward linkage industries and high value-added segments.

"We want Chinese investors to focus on areas where Bangladesh still lags behind because we are already self-sufficient in basic garments," said BGMEA's Inamul Haq Khan.

Khorshed Alam of BCCCI warned that new textile projects might face hurdles due to the ongoing gas shortage. "Even existing factories struggle to get enough gas supply," he said, adding that joint ventures in idle factories could be a more practical path for Chinese investors.