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Dec 14, 2011

Setting Up a Manufacturing/Textile Plant in Bangladesh Through a Joint Venture: Top Ten Things to do Before You Go

Bangladesh is one of the world's largest exporters of textile/garments, rice, jute, potato, pineapple, mango, onion, banana, tea and tropical fruit. The nation, also, has a growing middle-class with an increasing appetite for western products.  The nation is, also, a oil and natural gas producing nation with the resources, mainly, being developed by foreign companies.

To date, most foreign companies operating in Bangladesh are from other South Asian countries and India, but more Western companies are finding the growing middle-class a great market and the low-cost and highly-skilled labor an opportunity for companies that are being squeezed for margins because of the increased labor costs in China, Vietnam, India and Thailand.

The IPG assists mainly American, Australian, British, Canadian, Korean and Chinese companies to enter the Bangladesh market either through JVs, OEM agreements or as 100% foreign-invested enterprise. The following advise is related, solely, to manufacturing in Bangladesh as a JV.  Please take the list as the beginning of your due diligence on doing business in Bangladesh.

Top Ten Musts Before Starting a Manufacturing/Garment Industry in Bangladesh:
  • Register all intellectual property including your trademarks and patents in Bangladesh.   Your E.U., U.S., Indian, Japanese etc. registrations are not enough to protect your IP in Bangladesh;
  • Due Diligence, Due Diligence, and More Due Diligence. Read our many posts on this issue;
  • Put systems in place to protect trade secrets;
  • Complete a decent feasibility study. This does not mean simply running a cost estimate;
  • Consult a technical adviser;
  • Checkout and go through IPG's Stock Purchase/JV Due Diligence Check List;
  • Meet the anticipated JV partner many times and learn about the partner. A discussion on the phone is not enough either is a meeting over dinner. Have a local help with feeling the person out;
  • Execute a Non-Disclosure Agreement (NDA).  Have this done by someone who does business in Bangladesh not you lawyer in Hong Kong, the states or the U.K.; and
  • Execute OEM, Manufacturing, JV, Supplier, Shareholder Agreements as the case may be.  Don’t get them drafted by hacks or those who don't have experience in Bangladesh. No, the lawyer you use in NY is not good enough.
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SeanHayes@ipglegal.com
IPG is engaged in projects for companies and entrepreneurs doing business in Bangladesh, Cambodia, China, Korea, Laos, Myanmar, Vietnam and the U.S.  www.ipglegal.com