5:16 pm - Tuesday May 24, 4546

Supply chain futures: Turning a tech eye on Bangladesh

While India and China still rise to the top when it comes to luring start-up companies and their investors, some venture capitalists are beginning to scan opportunities popping in neighboring Bangladesh.

Like other parts of Asia, Bangladesh’s inklings of IT and technology appeal has more to do with its longer-term potential, than the current challenges it faces as a emerging country in the vital Asian economy. Vetted out through some recent statistics, one could see why technology entrepreneurs and funders may want to start setting up shop there. One striking number is that 70% of the country’s population is under the age of 35, and its mobile-first adoption approach has resulted in more than 125 million mobile subscribers and 24.5% Internet penetration, according to this GeekTime report.

bangladesh-flag“Bangladesh has a lower median age than most Asian countries, except Pakistan. Hence, surprisingly, the country presents a hotbed of young talent that is hungry to innovate and solve local problems,” the report added.

Sure, the combination of a young, digitally native population ready to show the world their talent and investors who want to expand beyond the typical technology start-up pockets could mean good things for Bangladesh. But, these kinds of dynamics raise other questions that more directly impact the electronics supply chain space. One question I’ll throw out there is: Could Bangladesh, in a few years, be another Thailand, Indonesia, or Vietnam when it comes to offering technology manufacturing and supply chain opportunities?

If you filter this through the historic patterns we tend to see in emerging markets and the high-tech’s love affair with finding lower-cost places to run factories, it may not be too far-fetched of an idea. Here are a few reasons why I think Bangladesh might show up on people’s radar screens in the near future.

Location. It’s near the big Indian and Southeast Asian consumer markets. In the same way, that Romania and Bulgaria serve Europe, the Middle East, and Africa and Mexico serves North America, Bangladesh could be that kind of hub for India, as that country becomes more developed and more expensive to do business in.

A large number of young, digital natives need jobs. These young people are connected to the world with their mobile devices, and many of them will not be satisfied working in rural, agricultural settings, at construction sites or in garment factories. We’re already seeing big leaps into entrepreneurial, tech-related businesses and more young people pursuing IT-related degrees throughout much of Asia, and other up-and-coming places such as Ghana and Kenya.

Manufacturing evolution. Developing countries tend to move themselves out of poverty usually by engaging in manufacturing activities as a way to get people working. As countries becomes richer, they move up the manufacturing value chain, shifting their focus from providing comparative cost advantages to developing higher-value capabilities, as these UN and World Economic Forum reports suggest. This is happening now in Thailand and Vietnam, which EBN has reported on. In the not-too-distant future, it’s possible such a transition could happen in Bangladesh, too, especially if Africa, as suggested by this article, is able to lure garment and apparel-making business away from the country, forcing Bangladesh to develop alternative manufacturing options.

There are less appealing factors that can’t be ignored and also belong in this conversation. Obviously, Bangladesh has much work to do in improving its labor conditions and infrastructure, vulnerable points that made international headlines when the Rana Plaza factory collapsed in 2013 and killed about 1,100 workers. Supply chain transparency and social responsibility are still areas that need attention, too.

However, it’s at least worth starting the conversation and seeing where it leads. Are you doing any work in Bangladesh? What do you think about it’s potential for manufacturing growth?

By Jennifer Baljko, ebnonline