Western brands demand big discounts from Bangladesh factories

by Naimul Karim | @naimonthefield | Thomson Reuters Foundation
Friday, 17 April 2020 11:04 GMT

Garments workers shout slogans as they block a road demanding their due wages during the lockdown amid concerns over the coronavirus disease (COVID-19) outbreak in Dhaka, Bangladesh, April 15, 2020. REUTERS/Mohammad Ponir Hossain

Image Caption and Rights Information

Clothing brands who decided against cancelling orders are now asking for lower prices, Bangladeshi manufacturers say

Coronavirus is changing the world in unprecedented ways. Subscribe here for a daily briefing on how this global crisis is affecting cities, technology, approaches to climate change, and the lives of vulnerable people.

By Naimul Karim

DHAKA, April 17 (Thomson Reuters Foundation) - Western clothing brands that agreed not to cancel orders due to the coronavirus epidemic are demanding price cuts of up to 50%, Bangladeshi manufacturers said on Friday, heaping economic pain on a country already reeling from the crisis.

Millions of Bangladeshi households depend on the garment sector, which has been hit hard by the epidemic. Exports fell by 84% in the first half of April as $3 billion-worth of orders were cancelled or suspended, according to factory owners.

Coronavirus: our latest stories

"We are still observing their departure from original contract terms... which includes renegotiating prices as low as 50% of the original deal," said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.

Bangladesh, which ranks behind only China as a supplier of clothes to Western countries, relies on the garment industry for more than 80% of its exports, with some 4,000 factories employing about 4 million people, mostly women.

Huq said many had yet to say when they would pay or take delivery, accusing them of "following a strategy to buy time".

"We are not aware of any other brand except one that has declared its plan in detail regarding delivery and payments centrally in black and white," said Huq, citing Swedish fashion giant H&M, the biggest buyer of garments from Bangladesh.

"(The) rest have all been conditional, mostly based on deferred payments, discounts and deferred deliveries."

Kalpona Akter, a labour activist, warned that workers would bear the brunt of reduced or renegotiated orders.

"We will be able to see the impact by next month, when workers will have to be paid their Eid bonuses and salaries," she said.

With Western economies struggling due to the crisis and retailers in many countries closed, brands have begun cancelling orders, though some have pledged to take delivery of garments already made or in production.

A government official said cancelling or renegotiating orders was unjust and authorities were addressing the issue through diplomatic negotiations.

"Our factory owners have spent a lot of money to be compliant and safe. It's an injustice to still not get good prices," Md Jafaruddin, secretary of the Ministry of Commerce, told the Thomson Reuters Foundation.

The government announced a $588 million package to help the crucial export sector pay its workers last month.

Labour leaders say that this is not enough and that buyers need to come forward to support workers.

Hundreds of workers took to the streets this week, defying a government lockdown to protest the non-payment of wages, according to police.

RELATED STORIES:

Job cut fears as fashion brands slash orders in Bangladesh with coronavirus

H&M in talks to support Bangladesh workers as lockdowns hit livelihoods

Bangladesh vows help to sex workers hit by coronavirus for as long as needed

Thousands of Bangladeshi garment workers ordered home as factories stay closed

(Reporting by Naimul Karim @Naimonthefield; Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

Our Standards: The Thomson Reuters Trust Principles.