Global apparel brands and retailers are capitalizing on the coronavirus pandemic by cancelling orders and demanding discounts on finished goods from suppliers, showing a deeply unethical behaviour and shying away from responsibility, said Mostafiz Uddin, managing director of Denim Expert Limited and founder of Bangladesh Apparel Exchange in an exclusive interview with Dhaka Tribune's Ibrahim Hossain Ovi
How can the present crisis regarding the country's RMG sector be resolved?
Partnership and cooperation among the apparel manufacturers, brands, retailers and buyers are strongly needed. This is the time when we need partnership and cooperation to resolve the issues and come out from the crisis as it is a shared responsibility.
What do you think about the ethical buying practices and responsibilities of brands and retailers?
It is high time to show responsibility towards apparel workers as well as manufacturers. Workers are the heart of the industry and they work for the buyers. Due to the shutdown caused by Covid-19 pandemic and orders cancellations by buyers, the makers are in a shortage of cash to pay workers' wages.
Buyers can show their responsibility by paying for the finished products and not cancelling orders, as well as paying forward an amount to pay workers for the time being. They cannot walk away from their responsibility and ignore ethical buying practices by cancelling orders or demanding discounts during such a crisis period.
Is there any legal recourse against discount calls and order cancellations?
There is legal recourse for work-order cancellation. The problem is that contracts have many clauses in them, which generally favours buyers.
In addition, buyers have strong legal teams with huge expertise. They would make a strong case in court, probably using a force majeure clause.
This means that they could argue that Covid-19 was an event beyond their control and which means they would not receive their orders on time. It would be a big financial risk to take a buyer to court.
What is the current situation of the country's RMG industry?
One word sums it up - uncertainty. We just do not know what is happening now. So much is up in the air. When will brands start ordering again? How long will the stores of buyers remain closed? How long can factories survive without cash flow?
It is a chaotic and difficult time; by far the worst in living memory.
Where will we be in the next one to three months?
This depends on how the authorities get this pandemic under control. There is talk of ending lockdowns in many of our markets. But there is also talk that things might open up then close again if the virus returns. Until a vaccine is available, we have a huge dilemma on our hands as it is a global crisis now.
Buyers and brands are cancelling orders and demanding discounts. Why are they doing this?
They are demanding discounts because they can. They know suppliers are desperate. Hence, they are exploiting that situation. If suppliers say no, they get nothing. A discounted price is better than nothing. It is unethical behaviour. Can we fight it legally? In theory, yes. In practice, it is very difficult as there are financial, practical and logistical constraints.
How can retailers, buyers and brands help Bangladeshi manufacturers tackle this situation?
By standing beside the manufacturers and their workers. That means paying for all completed or partially completed work-orders. We cannot ask for anything more than that. We recognize they have their own problems. However, they need to pay their bills at the very least, just as we have to pay ours.
Which buyers and brands are behaving ethically until now?
So far, H&M, Adidas, Inditex, Kiabi, LPP, Marks & Spencer, Nike, PVH, Target (USA), UNIQLO, VF Corporation and several others have been paying bills to their suppliers till now.
Which brands are not resorting to ethical buying practices?
A group of brands are doing the right thing, but that group is small in number. Other brands are being unethical, such as Arcadia, ASOS, Bestseller, C&A, Gap, JCPenney, Kohl’s, Mothercare, Next, Primark, Tesco, Urban Outfitters, Walmart, and more,