A model at a fashion show in Dhaka. (AP)

Gazipur (Bangladesh), July 17: The eight-lane highway leading from Dhaka narrows repeatedly as it approaches this town about 48km north, eventually depositing cars onto a muddy, potholed lane bordered by mangroves and small shops.

But this is no mere rural backwater. It is the sort of place to which foreign manufacturers may increasingly turn, if the rising wage demands of factory workers in China prompt companies to seek new pools of cheap labour elsewhere.

Already, in factories behind steel gates and tall concrete walls, tens of thousands of workers, most of them women, spend their days stitching T-shirts, pants and sweaters for Wal-Mart, H&M, Zara and other western retailers and brands. One of the Bangladeshi companies here, the DBL Group, employs 9,000 people making T-shirts and other knitwear.

Business has been so good that the company is finishing a new 10-storey building with open floors the size of soccer fields, planted with row after row of sewing machines. “Our family needed the money, so we came here,” said Maasuda Akthar, a 21-year-old sewing machine operator for DBL.

As costs have risen in China, long the world’s shop floor, it is slowly losing work to countries like Bangladesh, Vietnam and Cambodia — at least for cheaper, labour-intensive goods like casual clothes, toys and simple electronics that do not necessarily require literate workers and can tolerate unreliable transportation systems and electrical grids.

Li & Fung, a Hong Kong company that handles sourcing and apparel manufacturing for companies like Wal-Mart and Liz Claiborne, reported that its production in Bangladesh jumped 20 per cent last year, while China, its biggest supplier, slid 5 per cent. “Bangladesh is getting very competitive,” William Fung, Li & Fung’s group managing director, told analysts in March.

The flow of jobs to poorer countries like Bangladesh started even before recent labour unrest in China led to big pay raises for many factory workers there — and before changes in Beijing’s currency policy that could also raise the costs of Chinese exports. Now, though, economists expect the migration of China’s low-paying jobs to accelerate.

And while workers in Bangladesh and other developing countries are demanding higher pay, too — leading to a clash between police and protesters earlier this week in a garment hub outside Dhaka — they still earn much less than Chinese factory workers.

Bangladesh, for instance, has the lowest garment wages in the world, according to labour rights advocates. Akthar, who is relatively well paid by local standards, earns about $64 a month. That compares to minimum wages in China’s coastal industrial provinces ranging from $117 to $147 a month.

But Bangladesh has its own challenges to overcome.

China’s combination of a vast population of migrant workers, many with at least elementary school educations, along with modern roads, railways and power grids in its industrial provinces, has bestowed it with manufacturing capabilities that countries like Bangladesh cannot offer.

Most of Bangladesh, meanwhile, suffers blackouts six to seven hours a day because it has not invested enough in power plants and natural gas fields — deficiencies that the government is working on but that will not be eliminated quickly.