The unprecedented effects of Covid-19 have shaken worldwide economies and supply chains. Bangladesh, India, Pakistan, Cambodia, Vietnam, Indonesia, Myanmar and the Philippines – all key textile-garment producing nations faced supply chain disruptions, factory closures, order cancellation/suspension and export losses. Bangladesh as a major player in the garments sector has been severely affected by the pandemic.
2020’s apparel industry at a glance
Primarily, the supply of raw materials to local garment factories was disrupted when China—Bangladesh’s main source for raw materials —paused all shipments between March and April due to the coronavirus outbreak.
Though, garment factories were allowed to continue operations if they had enough work orders from global buyers or if they wanted to produce Personal Protective Equipment (PPE).
But the sector met great trouble when several international buyers offered lower prices and deferred their payments at a time when restrictions on movement caused delays in shipment. These factors led to job losses for many workers as the millers were forced to close their factories following a drastic fall in production.
According to BGMEA, exporters received 30 percent fewer work orders for the next season (December to March) compared to the pre-pandemic levels.
On the other hand, backward linkages—to whom the apparel sector is highly dependent— supply myriad items to the apparel sector, to name just a few noteworthy ones, textiles, dyeing, packaging, trim and accessories, apparel labels, and services such as washing, printing and embroidery. As some of the Readymade garments (RMG) factories could not pay the outstanding invoices to the backward linkage factories, which put drastic impact or even damage some of the businesses of the backward linkage.
Mynul Hasan–Field Coordinator, Mapped in Bangladesh (MiB), Centre for Entrepreneurship Development (CED), Brac University; and Shamim E. Haque– Assistant Professor, Brac Business School & Senior Research Fellow, CED, Brac University—claimed in their recent article that there seems to be no provision in the government’s incentive and/or other alternatives for the backward linkage players to survive during the crisis.
Most factories were underutilized or about to be shut down, especially as there are limited or no orders during this crisis period. Unemployment and non-paid workers are crucial for the sector now. No mechanism or government incentives have been declared targeting these small factory workers of the backward linkages.
Though backward linkage should get more and more attention from the government and apparel millers to make the RMG industry more independent and strong.
What to look forward to in 2021
Amidst so many unknowns and uncertainty, the RMG industry eyes to a new year. Leaving the sufferings behind, industry people would like to think of 2021 as a new beginning, to do things in a better way ahead with the arrival of a Covid-19 vaccine that would save both lives and businesses.
Besides, 2021 is going to be a significant year for Bangladesh as it will celebrate its 50th year of independence and graduate from a least developed country (LDC). 2021 should be a year where promoting the country’s export competitiveness will be a top priority.
Industry people are hoping that business will be more stable by mid or end of 2021 if no major side effects of the vaccine and new COVID wave are exposed. Demand for more sustainable products, value-added products will be accelerated as well as functional products will lead to future business. More than ever, consumers will favor products/brands with a purpose/ function and sustainability.
According to BGMEA data, more than 33 companies are making and preparing PPE for export, where the largest shipment was by the Beximco Group which exported 6.5 million medical gowns to US brand Hanes. More millers should come forward to catch the protective clothing market.
On the other hand, Bangladesh is still stuck with cotton-based textile production, whereas the entire world has gone the other way. The rest of the world is now focused on man-made fiber-based textiles. And this is important for Bangladesh to realize, said some industry experts.
Digital platforms have emerged as very effective tools to marketing. some Bangladeshi apparel millers are taking this advantage, also they are becoming more aware on using latest technologies to cope with the recent trends and challenges. The apparel industry, as a whole, should come up to utilize such digital platform and latest technologies.
Finally, the industry needs to remember that several risk factors may hit the industry as risk is a part of business. So it’s crucially important to be continually alert in how the crisis is affecting, and how brands are behaving and maintaining legitimacy in these uncertain times.
An organization where leadership, management and workforce are not prepare for the extraordinary risk will eventually suffer the consequences. RMG units should have effective practices for risk management.