Why Global Conglomerate Walmart’s thriving partnership with Bangladesh matters

On February 15, Prime Minister’s Private Industries and Investment Advisor Salman F. Rahman announced that Walmart expressed its willingness to increase sourcing from Bangladesh.

On February 15, Prime Minister’s Private Industries and Investment Advisor Salman F. Rahman announced that Walmart expressed its willingness to increase sourcing from Bangladesh. This news comes as a breath of fresh air as the country has been vying for export basket diversification for a while now. Walmart’s engagement in Bangladesh is not new; in fact, Walmart is the second–largest international buyer after Swedish retail giant H&M. The global conglomerate sources nearly $4 billion worth of goods, which accounts for an estimated 7.5% of the country’s total exports. Hence, Walmart’s willingness to invest more opens up new doors for opportunities in our export portfolio. While the Western society is currently experiencing a shift in consumer behavior due to heightened awareness about environment and the impact of over consumption, Bangladesh offers the perfect alternative with abundance of raw materials and processed goods replacing the industrial produces. Walmart’s announcement to increase sourcing would mean exploring the untapped potential of Bangladesh’s thrust as well as already established sectors.

Agriculture and Agri Goods

Bangladesh is predominantly an agrarian country. The tropical climate, along with fertile land, yields approximately 70 million metric tons of output annually. With the agro-food industry bursting into the scene as a burgeoning economic sector- currently sitting over 700 primary and processed food items; Walmart has an impressive array of catalogs to choose from. As Western consumers are increasingly becoming health and environment-conscious, organic and eco-friendly products sustainably sourced from Bangladesh offer a lucrative opportunity for Walmart. The agricultural production process in Bangladesh is not dependent upon industrial farming or the overt use of pesticides. In addition, the country has witnessed an impressive upgrade in the road and transportation sector. So, establishing a backward linkage would be comparatively more straightforward for Walmart in order to comply with the ethical sourcing guide.

Pharmaceutical industry

With the current export destination of 150 countries, the pharmaceutical industry is now competing in the global market. The pharma industry has proved its onus as it fulfills 98% of the local domestic demand. A report forecasts that the country’s pharmaceutical sector is expected to rake in over $1.5 billion in export earnings per year by 2030. Pharma industry’s overall success was achieved by the supportive policies adopted by government in the last dour decades. State-owned pharmaceutical company, The Essential Drug Company has already partnered with Walmart. As the global giant has announced to increase sourcing this could mean that more private owned companies will partner with the brand increase the presence of Bangladeshi pharma industry in the U.S. Moreover, Walmart can exercise its low-tariff advantage propelled by Bangladesh’s duty-free access to the EU, Canada, Australia, and Japan. As the pharma industry is about to embark on a trillion-dollar journey, investing in this sector will prove to be profitable for Walmart.

Garments industry

Walmart can avail competitive advantage by leveraging Bangladesh’s cost-effective production and favorable trade policies. Statistics conducted by the World Bank show that the minimum wage for garment workers in Bangladesh is $95 per month, lower than that of China, India, Vietnam, and Cambodia. As the country is about to enter its nuclear energy era, low-emission could become a competitive advantage for Bangladesh. Bangladesh is currently standing at 200 LEED certified factories provided by the U.S. Green Building Council’s (USGBC). LEED which stands for Leadership in Energy and Environmental Design, stands for its internationally recognized symbol of sustainable building practices and adhere to stringent standards, demonstrating a harmonious blend of cutting-edge technologies and eco-conscious practices that prioritize resource efficiency, environmental conservation, and worker well-being. Walmart’s increasing sourcing would mean that home-grown textile industries will integrate into the greater RMG market. This in turn will implicate backward linkage in production process.

Jute as a sustainable alternative

Bangladesh offers a unique and much-needed alternative to plastic in the form of jute-based products. As studies show that it may take as long as 2000 years for plastics to decompose, Bangladesh’s abundant raw materials could become the primary source of sustainable consumer goods. Jute industry although slowed down for a few decades has again reinvigorated with the help of technology and awareness facilitated by the government’s initiative to revamp the once glorious cash-crop dubbed as the golden fiber. With over 240 types of jute products to choose from, Walmart has an impressive portfolio on its plate. Jute in addition to being biodegradable, also has diverse use. According to the IMARC Group, the market size of jute bags is anticipated to reach $3.84 billion in 2027. Hence, jute could be the next “it” product for it’s a carbon-neutral crop, and cultivation is likely pest-free which could green light its popularity to a mass consumer base in the Western society.

Walmart and Bangladesh’s engagement goes beyond just business deals, in fact Walmart provided $50 billion dollars after the tragedy of Rana Plaza. Walmart was one of the corporations of the time which pushed for improved factory safety. Bangladesh has since drafted labor law keeping up with international norms and has amended the act as recently as in 2022. Walmart and Bangladesh’s engagement is a win-win partnership for both parties involved. For Walmart, Bangladesh is a lucrative primary market, given the current trends in international trade. As for Bangladesh, the increased partnership opens up new opportunities for export diversification and leverages Walmart’s global platform.

Syeda Noshin Sharmily
Syeda Noshin Sharmily
Syeda Noshin Sharmily is pursuing her bachelor’s in International Relations at University of Dhaka. Her field of interest includes international politics, political economy, international regime. She can be reached at @noshin.sharmily07[at]gmail.com