How much do international buyers in the garment industry use their market power to squeeze the mark-ups of Bangladeshi garment suppliers?
As the second largest exporter of garments worldwide, with garments accounting for over 80% of export earnings, the garment industry is at the heart of the Bangladeshi economy. But are the profit margins of Bangladeshi garment suppliers squeezed by large international buyers? In this VoxDev talk, Dr Rocco Macchiavello, discusses new research that shows that the procurement processes of buyers are crucial in explaining the mark-ups that Bangladeshi suppliers receive. When buyers source garments using an auction-based, more short-term system, the mark-up for Bangladeshi garment suppliers is lower compared to when the buyer-supplier relationship is longer-term and based on trust.