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The Financial Express

OPINION

UK retailers failed to honour contractual obligation


The clothing tag on a boy's shirt which is made in Bangladesh is shown at a market in a Western country -Reuters file photo The clothing tag on a boy's shirt which is made in Bangladesh is shown at a market in a Western country -Reuters file photo

A recent survey conducted by the University of Aberdeen and Transform Trade, "a trade justice charity", on some 1,000 manufacturers in Bangladesh, over the period from March 2000 to December 2021 has been published. Titled 'Impact of Global Clothing Retailers' Unfair Practices on Bangladesh Suppliers During Covid 19' brings to light the less than favourable situation for apparel manufacturers in the country, which are catering to the UK market. Some of the biggest names in the fashion industry have been named for engaging in discriminating practices that include amongst others, unfair purchasing practices, "including cancellations, failure to pay, delays in payment and discount demands, with knock-on effects including forced overtime and harassment".

Interestingly, it is the larger brands that had resorted to such malpractices more than smaller brands. Not all the brands resorted to all the malpractices at a time. This would partially explain why the Bangladeshi apparel industry almost invariably finds itself in the red whenever an economic crisis hits. According to government data, the RMG (readymade garments) sector earned US$4.49 billion from the UK market during FY 2021-22) and hence the UK market's importance cannot be understated. The study that is based on a survey on more than 1,000 Bangladeshi factories / suppliers is an eye-opener.

Precisely, why have some buyers resorted to these strong-arm tactics with the 2nd largest manufacturer of RMG in the world? They have because they can. For too long, a section of buyers/brands have been doing this, despite the fact that the RMG sector has spent a huge sum to make factories safe by international standards and is in the process of implementing a minimum wage rate. All these investments are being made to meet the demands of Alliance and Accord, and yet, the well-known brands are not going by the best international business practices.

The study states that during Covid lockdown, one out of four (25 per cent) factories received delayed payments (more than three months following delivery of goods); one out of five (20 per cent) factories had a tough time paying wages; 51 per cent had supply chain issues related to sourcing raw materials (cloth, wool, thread); 70 per cent faced cost escalations due to increase in price of raw materials.

The pandemic took its toll on workers too, where about a tenth of the workforce could not work properly. These factors (and others) combined to make it more and more difficult for factories in the country to meet shipping deadlines. Of the 1,138 brands/retailers named, nearly 40 per cent are deemed to have engaged in unfair practices. The study states that 25 per cent buyers either cancelled or partially cancelled orders whereas 19 per cent "reduced the payment compared with the one in the contract." It would be impossible to detail everything that is stated in the study but surely it demands a thorough analysis by the policymakers here in order to find ways out of this mess.

While the government has been forthcoming with financial aid for the bulk of the surveyed factories, this is hardly a conducive practice because RMG wasn't the only sector to be adversely affected by Covid 19. Of all the respondents to the survey, surprisingly not a single supplier has taken its brand/retail customer to court for reparations. Now what does this say for the RMG sector as a whole? It would appear that fear of losing customers is greater than sustaining serious financial loss. Time has surely arrived when a workable cross-border mechanism can be advanced for discussion and agreed upon by the government and the suppliers' associations like BGMEA and BKMEA to put a stop to these purchasing malpractices by international brands and / or retailers.

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