Wherefore art thou ethical sourcing?

ঢাকা ট্রিবিউন প্রকাশিত: ০৬ এপ্রিল ২০২০, ২০:০৪

The hypocrisy of international brands knows no bounds The second highest export earner of Bangladesh, which is the footwear and leather goods sector, is reeling from the economic impact of Covid-19 at major export markets in Germany, Italy, France, and Western Europe -- along with the US and Japan, of course.As most retailers and shops remain closed in these markets, demand for footwear and leather goods has almost dwindled to zero. We have seen brand after brand and retailer after retailer – from Adidas to Nike, and Clarks to Macy’s -- close almost all their stores in their major markets in Europe and North America. Faced with such a situation, we have seen most retailers and brands resort to almost identical knee-jerk reactions:1. Cancel all open orders, even where materials have been purchased by the factories and some goods are already in production or even packed for shipment2. Refuse to pay for all open invoices as was agreed upon and either try to obtain a discount or ask for longer payment terms -- we have seen famous brands ask for 20% discount on goods already shipped and change of payment terms from 21 days to 200 days3. Put on hold and ask not to ship orders confirmed for production in March, and up to September or even longer, for some factories. No clear information about if or when factories can ship these confirmed order so factories risk incurring further losses of proceeding with these orders without confirmation by the buyers that they will accept, but most customers still unresponsiveAll three of these actions jeopardize the lifeline of the factories, which is export sales/revenue. Sales means liquidity, which means desperately needed cash for the factories so they can pay their workers, overheads, and suppliers.Unlike RMG factories, there is almost no back-to-back LC buying of required trims in our sector; we often buy with sight LC, cash, or advance payment from suppliers mainly in China, and so our import liabilities will need to be met on time. The government’s initiative to extend the payment terms for our import liabilities will be of great help here.A certain shoe brand has allegedly announced that they can make no further payments for the balance of 2020. So not only will they not pay for what they have taken already but, for future orders that remain, factories have to finance their business. Another UK brand has cancelled more than 50% of their orders already placed to Bangladeshi factories.For smaller factories working entirely with such shoe brands/retailers, they are literally helpless as they have no bargaining power or leverage. It’s very easy for the brands/retailers to throw them under the bus and move on to the next factory when they need. For larger factories, the problems are equally terrifying -- as they tend to work by season with longer order programs from April to September, all new sample development and orders discussions are on hold or cancelled.
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