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COVID-19: BD RMG fresh orders decline by 62% in last three months

Fresh work orders from the global apparel brands and retailers to Bangladesh clothing products suppliers have seen a sharp decline by 62% in the last three months due to slower demands in export destinations and supply chain disruption caused by the COVID-19 pandemic.

 

BD-RMG-decline-2020-MARCH-MAY

According to Bangladesh Garment Manufacturers and Exporters Association (BGMEA) data, during the March-May period of 2020, fresh work orders from the global retailers and brands fell by 62.11% to 172, which were 454 in the same period last year.

On the other hand, global retailers have canceled work orders worth $3.15 billion during the period and are demanding discounts.

However, the trend of placing new work orders geared up in May compared to April.

In March, apparel manufacturers under BGMEA received 87 work orders, which were 138 last year. In April and May, they received 8 and 77 work orders, which was 136 and 180 respectively last year.

“COVID-19 pandemic has cast a devastating impact on the global fashion industry. Sales of clothing items fell sharply at the outlets as these were closed due to lockdown to stop the spread coronavirus in export destinations especially in EU and US markets.”

Faisal Samad, Senior Vice-President, BGMEA

“COVID-19 pandemic has cast a devastating impact on the global fashion industry. Sales of clothing items fell sharply at the outlets as these were closed due to lockdown to stop the spread coronavirus in export destinations especially in EU and US markets,” said BGMEA Senior Vice-President Faisal Samad to Textile Today.

“As the second-largest exporter of clothing goods, Bangladesh saw the worst impact of it.”

As a result, brands and retailers went on conservative mood and almost stopped placing new orders as they feared a sharp fall in consumption in the year, said the business leader.

According to research by Wazir Advisors, an India- based consulting and advisory firm, the consumption in the EU market will fall by 59%, US 63% and Japan 20% in 2020, says the research.

Meanwhile, the imports of clothing goods will decline by $128 billion this year and consumption by $328 billion next year by the EU nations, US and Japan it adds.

However, a  big concern for the exporters is they are experiencing delays in getting payments for shipped goods from buyers, and most of the buyers have deviated from the original contract terms and asking for discounts as high as 20% – 50%, whereas our average value addition in the industry is around 25%, said Faisal.

Turnaround to be delayed

The turnaround in work orders will depend on how fast life gets back to normalcy in the export destinations and the virus comes under control or the vaccine is invented.

“Until there is stability in the health issues in the export destinations, it will be very tough to gear up the work orders from the global buyers. If you look into the trend of opening the economy, it is just to start, while those who opened return due to deterioration of infection,” Sharif ZahirManaging Director, Ananta Denim Technology told Textile Today.

Consumers will remain in panicky situation fearing the second attack of the virus until the invention of vaccine and they won’t buy more rather only a few to survive, said Zahir also a director of BGMEA.

In October, the order flow may increase ahead of Christmas Day to some extent but the third quarter of the year will remain dull, said the business leader.

In returning to the peak as it was in 2019, we might have to wait till 2022, he predicts.

Though there is a ray of hope in health-related textile goods it is very small and we are not ready to capture it because of lack of preparedness to go on the production of personal protective equipment, he added.

On top of that, there is little chance of picking if the ongoing negotiation to reinstate the canceled order is successful.  As per BGMEA data, so far over 1,150 factories have faced export cancellation worth US$3.15 billion.

From the BGMEA there is strong negotiation with the buyers to get back the orders canceled by the buyers, said the business leaders as well as factory owners.

If the buyers ethically respond to our call and follow the best buying practice, it will help the sector to survive manufacturers and help thousands of workers to remain in jobs.

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