Textile News, Apparel News, RMG News, Fashion Trends
News & Analysis

There is no ending of brands squeezing prices on suppliers’ end

The calendar 2020 almost comes to an end with the whole year’s devastating impacts by COVID-19. And like many other industries, the fashion apparel industry has been one of the hardest hits. Impacting from the top to bottom of the apparel supply chain, and mainly the apparel manufacturers.

As the 2nd largest readymade garment or RMG producing country, Bangladesh’s RMG industry has been suffering a lot from the initial shockwave of losing out billions of dollars in cancellations and delay of orders from at least 1,931 global brands/buyers.

squeezing-RMG-price-brands
Figure: It is high time to ask brands to honor their commitments to their suppliers, rather than use the brands’ financial stress in the pandemic as a trading influence to further squeeze them on price.

Though some big brands have agreed and paid dues but not before tens of thousands of RMG workers were laid off and terminated at the height of the pandemic. However, a new report by the Center for Global Workers’ Rights (CGWR), published in association with the Worker Rights Consortium (WRC), cautions that the worst is far from over, as apparel brands and retailers are continuing to apply undue pressure on apparel manufacturers as they place new orders during the continued COVID-19 pandemic.

A survey of 75 suppliers from 15 countries between July 5 and August 21, 2020, shows that in 65 percent of cases, buyers demanded price cuts on new orders and on average, buyers told suppliers they must cut prices by 12 percent, relative to last year’s price for the same product.

Furthermore, suppliers surveyed said they have to wait 77 days after they complete and ship customers’ new orders to receive payment, as opposed to 43 days before the pandemic.

Majority of RMG suppliers told that currently, they have less than 50% of the order volume now compared to the same period last year and on top of it, they sacked at least 10% of their workers. And most worryingly RMG manufacturers are expecting to reduce another 35% if the current trends of order decline continue.

And the majority of RMG suppliers told that currently, they have less than 50% of the order volume now compared to the same period last year and on top of it, they sacked at least 10% of their workers. And most worryingly RMG manufacturers are expecting to reduce another 35% if the current trends of order decline continue.

Sad but true that the global apparel supply chain is fundamentally unequal, where large brands/buyers exercise great power to negotiate terms that serve their interests at the price of suppliers — which, in the end, falls on RMG workers.

The COVID-19 pandemic has deeply exposed how little brands and buyers, who publicly make impressive statements about protecting worker rights, in real care little about the helplessness of workers in their supply chain.

So far, some brands, like H&M, have signed a Call to Action which commits fashion brands to work with governments and financial institutions to rally adequate funding to keep RMG manufacturers in business with payment of wages, as well as income-support and job-retention schemes to address the impact of the crisis.

Though, it does not force the signatory brands to obligate to any payment themselves.

It is high time to ask brands to honor their commitments to their suppliers, rather than use the brands’ financial stress in the pandemic as a trading influence to further squeeze them on price.

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

Related posts

65% factories want to run production: BGMEA President

Textile Today

RMG factories to be resumed gradually from tomorrow

Textile Today

BGMEA, BKMEA, BTMA, BUTEX recognized for apparel sector development

Textile Today

Latest Publications

View All