What the Crisis in Bangladesh Means for Fashion’s Supply Chain

On Monday Bangladesh’s long-standing prime minister Sheikh Hasina resigned and fled the country in a dramatic culmination to weeks of increasingly violent protests that have roiled the world’s second-largest garment exporter.

The country is a critical supplier to some of the world’s biggest fashion companies, including H&M Group, Zara-owner Inditex and Walmart. Curfews and communication blackouts imposed as part of a harsh crackdown on dissenters have added to economic and geopolitical pressures already weighing on the local garment manufacturing sector.

Hasina has ruled the South Asian nation for more than 15 years, but faced growing calls to resign after moves to quash student protests this summer escalated into deadly violence.

What caused the protests?

The unrest began in late June, when students took to the streets calling to end a quota system that reserved a large number of government jobs for the families of war heroes from the country’s war of independence with Pakistan in 1971. The protests were met with a violent crackdown that stoked simmering anger over broader issues, including steep inflation, high youth unemployment and an increasingly authoritarian government.

Hasina secured a fourth term in office in January in an election boycotted by the main opposition parties. Political manoeuvring spilled over into the garment sector, which accounts for more than 80 percent of the country’s export earnings, as mass protests over minimum wages in the run up to the election were met with forceful repression.

At least 300 people have been killed in the violence over the last month and 11,000 have been arrested in recent weeks.

How has the situation affected the fashion industry?

The instability has dealt a blow to the country’s garment sector, with communications blackouts making it impossible to receive or process orders for days at a time and curfews halting work. Several factories were torched as unrest escalated over the weekend, according to the police.

Last month, the country’s premier trade group, the Bangladesh Garment Manufacturers and Exporters Association, said that the disruptions were costing the sector $150 million a day, according to media reports. The BGMEA did not respond to requests for comment.

The response from brands has been mixed. Clothing manufacturer Hula Global, which serves major US store chains, told Reuters it had redirected orders from Bangladesh to India to avoid disruptions. Meanwhile, sportswear giant Puma said it’s made no adjustments. “We have not stopped sourcing from Bangladesh … [and] we have not re-allocated or changed course,” the company said in an emailed statement.

The disruptions also place new pressure on the sector’s workers, who have been struggling with high inflation and reduced earning capacity as the industry’s broader downturn has weakened orders and overtime prospects. Many are still under threat of arrest as a result of criminal cases filed in the wake of last year’s wage protests, according to unions.

What happens next?

Army chief Waker-Uz-Zaman has stepped in to form an interim government, promising an investigation into the crackdown against protests.

Still, the country remains in disarray after weeks of turmoil. Protests continued after Hasina’s resignation on Monday, with crowds looting the prime minister’s official residence.

The question now is whether stability can be restored swiftly. The country’s manufacturing sector is adept at navigating upheavals, but the political crisis comes at a critical time with Christmas orders coming through and the threat of further disruption could prompt brands to shift sourcing elsewhere.

Meanwhile, labour groups say they are hopeful that the political upheaval could result in progress on long-fought issues around freedom of association and other labour rights.

“This is like our country becoming independent,” said Nazma Akter, founder and executive director of labour advocacy group Awaj Foundation. “The first time was in 1971, and now again in 2024.”