Wednesday, May 29, 2024


Dhaka Tribune

Payment still eludes Bangladeshi apparel suppliers of Bestseller, Arcadia, Matalan, New Look

Says a study by London-based human rights charity Business & Human Rights Resource Centre

Update : 13 Nov 2020, 12:05 AM

As the global coronavirus pandemic was starting to take root in March, Bangladesh’s garment exporters were entering into panic mode: their Western buyers were cancelling orders or deferring shipments as much of the world was going on lockdown to flatten the curve on the rogue virus.

Orders amounting to about $3 billion were either cancelled or suspended, leaving the spirited sector into an existential crisis. Since then, many brands have restored the orders and made payments for all in-production or completed orders.

But a few are yet to make good on their words, and thanks to a study by London-based human rights charity Business & Human Rights Resource Centre (BHRRC), the names of the offending brands has been learnt.

Danish Bestseller, the group behind Vero Moda and Jack & Jones brands, and German C&A have emerged as worst offenders: they have asked their suppliers for an extension of 120 days to make payment for orders, have sought for retrospective discounts and have not committed to paying for orders that were in-production or completed when the pandemic began, according to the study.

What’s worse, Bestseller has recorded profits since the pandemic.

As per their buying policy, they make payments within 40 days of the date of invoice.

British high-street fashion giant Arcadia Group, which has brands like Burton, Topshop, Topman, Dorothy Perkins, Miss Selfridge, Evans, Wallis in its stable, is not far behind the two.

Owned by billionaire Sir Phillip Green, the retailer has sought an extension of 90 days to make payments and retrospective discounts. 

It has yet to pay for its orders that were placed before coronavirus began tearing through the globe but whose scheduled delivery happened to be during the pandemic despite over eight months of public pressure, according to the study.

Dhaka Tribune traced the Bangladeshi suppliers of Bestseller, C&A and Arcadia and the majority declined to go on record for the report for fear of reprisal from the buyers.

However, Snowtex Group, which supplied to C&A and Bestseller, portrayed a less grim picture.

With the advent of the pandemic, C&A cancelled or held work orders placed prior. Later, with the reopening of the economy, they restored the work orders and took the goods, according to SM Khaled, managing director of Snowtex Group. 

"Though 120 days was the payment term yet C&A had been paying us at certain LC discount through  vendor financing scheme for early payment for its suppliers. During and immediately after pandemic, they kept saying about  changing the tenure to 120 days or more. But good news was that C&A has brought down the payment tenure to 75 days. We are glad that they have not cancelled any orders or asked for any discount due to the pandemic," he also said

The shipment against which the payment is pending was made between September and November.  

“It will take 120 days as per their conditions. Hopefully, the payment would be done within the stipulated deadline as pledged by the buyer,” Khaled said.

Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, the sector's apex trade body, said C&A is working to clear the payments at the earliest.

“C&A has actually made a turnaround recently and committed to take everything,” she added.

On the other hand, Bestseller has made the payment on time and it has maintained good relations with the suppliers, Khaled said.  

However, all suppliers of Arcadia contacted by Dhaka Tribune said they are yet to receive the full payment for shipments made months ago. 

“Arcadia restored the work orders and took the products it had cancelled when the pandemic began. But it is making an unusual delay in clearing the payment,” said a supplier seeking anonymity to not upset the British fashion giant. 

Meanwhile, Arcadia is placing work orders to new suppliers, he said.

“Since Arcadia does not have an office here and is placing orders through third parties, the brand is escaping the responsibility,” he added. 

Another venerable British high-street department store Debenhams joins Arcadia in placing outrageous demands on its suppliers: it has sought for a 90 per cent retrospective discount. 

However, seeing that the company has entered into administration on April 9, its demands are understandable.

Three more British high-street brands -- Matalan, New Look and N Brown, which owns several brands including Simply Be, Jacamo and JD Williams -- are yet to make payments to their Bangladeshi suppliers on their in-production or completed orders, according to the study.

Dutch brand G-Star Raw said it has cancelled 5 per cent of its in-production orders, according to the study, which entailed surveying 50 fashion companies and 35 have acknowledged to sourcing from Bangladesh.

Earlier in May, the BHRRC conducted a survey of 35 fashion brands and retailers regarding their response to the pandemic since it related to garment workers. 

The charity did a follow-up survey in November with the original 35 companies and an additional 15.

“At the start of the pandemic, fashion brands said they had ‘no option’ but to cancel orders and protect their bottom line, regardless of what that meant for 60 million vulnerable garment workers around the world,” said Thulsi Narayanasamy, senior labour rights lead of the BHRRC, in a press release. 

Since then, garment workers have lost up to $5.8 billion in wages, faced discriminatory layoffs in countries with no safety net, and factory suppliers are still being mercilessly squeezed by brands on prices, struggling to stay afloat or pay worker wages.

The study found that $16 billion of orders remained unpaid by retailers globally, while suppliers were forced to accept 56 per cent lower pay for orders placed before the pandemic began.

“Our findings show the fashion industry thinks it can continue with a ‘business-as-usual' approach, sticking to the same policies and practices they used before the pandemic. But what garment workers are facing is nothing short of complete upheaval and crisis.” 

For workers already paid so little, to lose their jobs or not receive a full wage is the difference between feeding your family or not, she said.

The internal decisions brands make -- how they negotiate prices of clothes, or whether they monitor what happens in factories -- has a direct impact on the lives and livelihoods of the workers. 

“We know brands can do better because three out of the 50 we surveyed have stepped up and have implemented a pandemic policy which ensures vulnerable suppliers won’t be further squeezed on price during this time,” Narayanasamy added.

The three companies -- Aldi Nord, Aldi Sud and Lidl -- have implemented a new policy not to ask factories for price reductions/discounts relative to comparable items with last season, although 65 per cent of factory suppliers have reported demands of price cuts from brands.

Companies such as Benetton; Gap; Levi’s; Marks & Spencer; PVH that owns a portfolio of brands including Van Heusen, Tommy Hilfiger and Calvin Klein; and VF Corporation that owns a portfolio of brands including Timberland, JanSport, Terra, Eastpak and Vans, have sought for extension and have paid up in that time.

VF had recorded a profit since the pandemic began.

Household names H&M, adidas, Inditex, Primark, Next, Sainsbury’s, Tesco, Target, Lulemon and ASOS said they continued their normal payment practices. All posted profits amid the pandemic.

Primark, Levi’s and Gap had initially cancelled or refused to pay for in-production orders but made a positive U-turn later, found the study. 

Sainsbury’s, John Lewis and Zalando said they have shortened payment times for some suppliers to help cashflow during the crisis.

Bangladesh’s garment exports nosedived in April, fetching just $378.4 million. It picked up from the following month as retailers began to take deliveries of orders already placed after putting them on hold.

However, exports hit the bumpy road again last month in light of the emerging second wave of COVID-19 cases in the EU and the US, the two major destinations for Bangladesh’s apparel products.

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