The global outbreak of Covid-19 has shaken global apparel supply chains. In the wake of the pandemic, orders placed with different manufacturers in Bangladesh worth more than $3 billion have been cancelled or put on hold by brands/retailers/importers. At the same time, some Western clothing brands that agreed not to cancel orders due to the coronavirus epidemic are demanding price cuts of up to 50%. Some of the manufacturers are forced to accept such discounts too.
What are the ways to come out of this unethical purchasing practice? Is it possible to solve this problem in the existing capitalist economy?
Abbas Malik FCMA, CEO, Patriot Group
Purchasers always take unethical benefits where suppliers cannot deal with their business as par level. Understanding will be much clear if we read mentioned trading terms in sales contract/purchase orders/letter of credit. We know, no party puts any terms and conditions regarding this COVID-19 pandemic in the recent business orders.
Therefore, purchasers can neither do cancellation of orders nor discount on prices for this situation. But corrupt customers can send undue claims referring to the LC clauses.
Firstly, government and associations can form a joint expert taskforce who can logically negotiate with the respective customers to solve every critical issue nicely.
Secondly, the capabilities of the apparel industry have to be improved. As a result, every business dealing between both parties are made at par level.
Finally, time is now to direct sales of our designed products in new apparel markets which will enhance our industry’s capabilities.
Abrar Alam Khan, Director of Operations, Asrotex Group
If we look behind, from the very beginning of the apparel industry in Bangladesh, we have played a fantastic role in partnership. We have supported our buyers in every situation, fulfilling their requirements/demands.
Which is why we still hold a big piece of cake in global apparel exporting market. For this some of our buyers like Inditex, H&M, Target, etc. have shown true partnership in this COVID-19 pandemic. However, many buyers are either canceling goods or asking for huge discounts.
It is really sad that communicating in a soft voice and asking for help to stay afloat in the business is not working anymore. BGMEA has already asked us to submit the name of the buyers who are canceling orders or asking for huge discounts.
Authorities are negotiating with buyers but still, we cannot see anything remarkable. I think if we truly want to stop unethical purchasing practices, all the manufacturers have to be united, be on the same page and raise their voice to be heard globally.
Mirza Shams Shakti, CEO, SM Sourcing
The civil society organizations have to continue to press reputational sensitive brands to honor commitments to suppliers and ensure that workers are paid. ReMake, Clean Clothes Campaign, Worker Rights Consortium, global unions and others have to step up the pressure on high profile brands to pay for work in progress and canceled orders in full.
Global standards for responsible purchasing practices with clearly defined metrics for success must be established and followed. The current crisis has exposed the flaws in the system that puts a great risk on suppliers. An excellent starting point for devising new standards is the Better Buying’s Guidelines for Better Purchasing Practices, which was based on a survey of 294 suppliers in March.
Akbor Haider Munna, Deputy Managing Director, Youth Group
As we are one of the strongest supply chain in the apparel market we have to sustain with utmost negotiation and give assurance that they will get the reputation in returns. Also, our trade bodies need to be allied to fight and make a harmonious bridge amongst us.
BGMEA President Dr. Rubana Haq trying her best to make things better with Brands. I am also trying to convince my regular buyers to make a mutual understanding and win-win situation for both.
We have to be hopeful that this Coronavirus pandemic will pass. But this pandemic teaches us the cruelty of the current economy. In this global crisis, we have to be empathetic vice versa to come across all sustainability and to accord with the ultimate global goal against hunger and poverty to achieve the SDG.
Jannatul Ferdous, GM (Marketing), Simco spinning and Textile LTD
The canceled orders were placed some 3-6 months back, are already produced and made ready for shipment. Manufacturers have already paid costs for sourced raw materials.
Governments around the world are proposing trillion-dollar stimulus packages. Certainly, the RMG industry is qualified to get a place in the government’s top priority list at this time of great peril.
Industry insiders have proposed solutions such as support from disaster assistance fund, credit guarantee schemes from the central bank to encourage commercial banks’ continued support and amendment in the rules of the back-to-back letters of credit (LCs) to combat the current situation.