Apparel exporters can now breathe freely as 14 major fashion brands told them that they will take delivery of items – worth more than $1 billion – they had ordered earlier. Yet buyers have not specified any particular time when the products will be taken as the coronavirus pandemic has affected the entire supply chain.
The move has been described by Bangladeshi apparel makers as positive for industry.
“We are hopeful that our partners in these difficult times will not desert us for a long time,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
The brands and retailers who have agreed to take deliveries of their previous orders include H&M, INDITEX, PVH Corp, TARGET, KIABI, KappAhl, Benetton, Decathlon, M&S, C&A, Puma, Kontoor, Primark and Tesco, according to the BGMEA and individual apparel manufacturers.
These brands come from the European Union, United Kingdom, North America and.
Of these, Swedish fashion company H&M, which accounts for the highest quantity of garments among all Bangladesh consumers, has told exporters that it has already ordered products to be shipped.The company also said that they would pay according to their earlier terms and conditions of payment, and will not ask for any discount.
BGMEA sources said KappAhl, Benetton and Decathlon have all sent letters expressing solidarity with and support for their suppliers in Bangladesh.
“KappAhl has said they will take everything they booked and Decathlon has just said they’re by the side of Bangladesh,” said Rubana.
She said M&S is also positive but it is seeking some changes in the payment mode.
“Primark has not done any messaging so far. I am sure they will respond and they are a great partner of Bangladesh,” said the BGMEA president. American fashion brand PVH Corp has also deferred and C&A will be speaking to exporters next Tuesday as a follow-up call, she said.
Sterling Group Chairman Siddiqur Rahman said many brands are communicating with him to take their products, but the payment methods are challenging to us. “Some of them want to take 90 to 120 days to make payments,” said Rahman.
Asif Ashraf, managing director of Urmi Group, said the British brand Marks & Spencer’s country head has confirmed to them that they will take all goods produced for them or are in the process of manufacturing. “Confirmation from the brand’s headquarters is expected by the end of this week about the payment mechanism of the goods already being held,” he said.
Another British brand Tesco has assured Evince Group of taking delivery of the garments they ordered. “Tesco will immediately receive some 70 percent of the goods they ordered,” said Ashraf Hossain Mirdha, executive director of Evince.He mentioned that they have strategic partnership with a US brand and as per the agreement, no parties involved can cancel any order in any situation.
Green factory Plummy Fashions also got assurance from its two buyers, according to Fazlul Hoque, its managing director.”INDITEX and KappAhl have announced that they will take delivery of their products, it’s a positive development,” he said.
Miran Ali, managing director of Bitopi Group, said Italy-based brand Benetton has confirmed that they will receive all products ordered from Bangladesh. Annually, the Benetton sources over $400 million worth of apparels from Bangladesh.
DBL Group, a leading garment exporter whose biggest buyers include H&M and Puma, has been assured by the two international retailers that they will not cancel work orders placed earlier, said DBL’s Managing Director MA Jabbar.”I hope the rest of my buyers will contact me next week. We are positive that the buyers will stand by us in this critical time,” Jabbar told The Daily Star over phone.
“At least six of my long-term buyers contacted me to receive the orders,” said Mahmud Hasan Khan Babu, managing director of Rising Group, a leading garment exporter.”I am trying to continue production in the factories, but the situation is not good. Moreover, most Western buyers have already shut down their stores,” he said, adding that the buyers’ response at this critical moment is definitely a positive sign.For instance, French buyer Kiabi told Rising Group during a video conference last week that it would take previously placed orders worth nearly $14 million. Rising Group has been supplying knitwear items like T-shirts to Kiabi for more than nine years. The French company purchases nearly $120 million worth of garment items from the Bangladeshi manufacturer every year.Kiabi has been annually sourcing various Bangladeshi garment items worth $700 million for the past 20 years, Babu said.
As of yesterday, export orders amounting to $3.02 billion have been cancelled by international retailers, according to data compiled by the BGMEA.About 1,104 garment factories have reported a combined loss of 946.90 million units of work orders. This will affect 2.19 million workers in the country.Very few factories were in operation yesterday even in production dense areas like Ashulia, Savar, Gazipur, Chattogram, Tongi, Maona, Narayanganj and Narsingdi.
Garment export fell by 26.70 per cent year-on-year to $1,972.24 million in March this year, according to BGMEA data.The countries worst hit by coronavirus, such as Italy, the UK, the US, France, Spain and Germany are prime destinations for Bangladeshi garment exports.The US alone is the single largest export destination for Bangladeshi garments, importing about $6 billion worth of apparel items each year.Germany is close behind with slightly less imports.Bangladesh exports nearly $3 billion worth of garment items to Italy and more than $2.5 billion to Spain and France each year and over $3 billion to the UK.
After the outbreak of coronavirus began, several Western apparel retailers — who had been buying Bangladesh goods for decades — sent letters to local manufacturers requesting cancelation of current and upcoming job orders. This is because their shops are closed and demand has plummeted in the midst of national lockdowns to prevent the spread of the deadly virus. Around the same time, many retailers and brands stood by producers of garments which were negatively impacted by cancelations of orders and delayed shipments.
“We welcome their decision to support us and hope that payment terms will remain unaffected in order to ensure liquidity flow for the factories,” said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), in a WhatsApp message last week.