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Fair distribution of orders can help Bangladesh’s RMG to recover smoothly

With the outbreak of the COVID-19 pandemic, the global apparel value chain has experienced an unprecedented disruption.

As the second-largest exporter of clothing products, Bangladesh felt the jerk, which jolted the industry leaving millions of workers in trouble.

Factory owners were in severe crisis as they were not able to run the factory due to lockdown in home and export destinations.

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Figure: Some of the buyers shifted orders to China and other countries, who received more orders than the pre-COVID level.

When the economies of importing countries reopened, the buyers and brands started to take the orders in progress and restored canceled orders.

Later, they also started to place fresh orders but that was not enough to run the factory with full capacity.

Some of the buyers shifted orders to China and other countries, who received more orders than the pre-COVID level.

As a result, countries like Bangladesh faced a downtrend in order, which forced them to run with less capacity.

According to the research of the Center for Policy Dialogue (CPD), the market share of woven products orders of China rose to 45% in post COVID-19 period, which was 39% in the pre-COVID period, while Turkey’s share rose to 4% from 3%.

In the case of China, the share rose to 58% in different products.

Since the problem is associated with the supply and demand of products, a Value Chain based Solution could help the country’s exporters to turnaround.

The outbreak of COVID-19 has negatively impacted the global demand for apparel and the sudden massive fall in the global apparel demand produced a ‘domino effect’.

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So, in the given context, fair distribution of work orders by the global brands, buyers and retailers could help Bangladeshi apparel suppliers to sustain their business and recover from the covid-19 pandemic smoothly.

Countries, which have fiscal constraints like Bangladesh would benefit if the buyers consider it and redistribute work orders.

“The developed and developing countries which received additional orders, are well-positioned to support their industries and workers. In contrast, there are countries in the supply chain which would be benefitted more by getting these additional export orders,” said Khondaker Golam Moazzem, research director of CPD.

“Particularly when these countries face fiscal constraints and weak social support schemes to support their industries and workers.”

The market players of the global apparel value chain should consider a distributive approach.

“This is to ensure the minimum required amount of orders and income of the suppliers where supplying country governments of having the limited financial capacity to handle the challenges of enterprises and workers through the social support scheme and support through public borrowing,” said the economist.

Major brands and buyers through their appliances and forums would take decisions about the distribution of orders to different supplying countries, he added.

Moazzem also said this redistribution would be further extended between suppliers within a targeted country where more vulnerable factories would get a higher share of orders during the crisis period.

Such redistribution would be an effective instrument to keep factories in operation as well as to ensure workers’ well-being for a longer period, he noted.

“Bangladesh needs prolonged support for this period. We need a better distribution of orders and a value chain based redistribution, which is possible”

If we can change the order distribution pattern at least keep the order distribution at a pre-COVID level that could help suppliers. Such redistribution would be an effective instrument to keep factories in operation as well as to ensure workers’ well-being for a longer period, said Moazzem.

If the work orders of China remain at pre-COVID-level, then orders worth about $2 billion could be given to other countries, said Moazzem.

Trade union leaders also called for a buyer-led initiative to recover from the crisis as well as to retain the workers’ employment. They also called not to cut prices of goods.

“In the present context, it is quite possible to overcome the present crisis caused by the covid-19 with homegrown initiatives,” said Amirul Haque Amin, president of the National Garment Workers Federation (NGWF).

With the domestic support, brands and buyers have to come forward and increasing order volume would be a great support for the industry, said Amin.

“Buyers have canceled orders without taking the responsibility. So it is time to rewrite due diligence or laws in the buyer’s country so that they cannot pull out business illegally,” said Kalpona Akter, Executive Director, and Bangladesh Center for Workers Solidarity (BCWS).

“Buyers and brands have to be responsible in every step of the supply chain.”

There can be no such great tool to help the suppliers and workers if the sourcing country or buyers take steps to redistribute orders among the suppliers amid the crisis, she added.

“Government provided all-out support during the crisis, which helped the sector to turn around but the second wave slowed down the speed and deepened the crisis,” said Commerce Minister Tipu Munshi.

We are considering further support to the sector but the buyers should play an active role to help the manufacturers. If they equally treat Bangladesh with the other country, it would be a great support for the sector to recover, said Tipu.

If anyone has any feedback or input regarding the published news, please contact: info@textiletoday.com.bd

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