Fashion brands cut orders in Bangladesh after unrest caused delivery delays - FT
Kyiv • UNN
Leading fashion brands are shifting orders from Bangladesh due to unrest following the fall of the government of Sheikh Hasina. Factories have been closed, some have been burned, leading to supply delays and loss of trust from international companies.
Leading global fashion brands are shifting orders from Bangladesh due to unrest that accompanied the fall of authoritarian Prime Minister Sheikh Hasina, according to information from manufacturers, the world's second-largest clothing exporter, reports the Financial Times, writes UNN.
Details
Factories were closed for several days after the government of Sheikh Hasina brutally suppressed student protests, triggering an uprising that toppled her regime last week. Several factories, including suppliers to global brands such as Swedish retailer H&M and the Spanish Zara network, were burned down during the actions, the publication points out.
Weeks of violence, in which about 500 people were killed, have led to delays in the delivery of clothing and footwear for the winter season for retailers in Europe and North America, the publication writes.
Factories, as indicated, resorted to overtime work and air delivery of products, which is an expensive option that has wiped out the profit from deliveries to compensate for the delay, which stretched for a month.
Bangladeshi exporters said some major brands have shifted orders for future seasons to competing suppliers in Southeast Asia, disrupting existing global supply chains and jeopardizing the economic foundation of the country with a population of 170 million.
Factories "received calls from Spanish and German buyers: "We are currently transferring 40 percent of our orders to Cambodia or Indonesia," said Mamun Rashid, an advisor to garment manufacturers in Bangladesh. "They didn't know how long this unrest would last," he noted.
Sayed Nasim Manzur, managing director of Apex Footwear, which supplies the French sports retailer Decathlon and the Japanese parent company Uniqlo Fast Retailing, said the unrest "has led to a real shaking of confidence" in Bangladesh among international brands.
"Major groups are saying they will cut their supplies by 30 percent next season," said Manzur, who is also president of the Bangladesh Leather Goods and Footwear Exporters Association. "We need to make sure confidence is restored".
The authorities have set up a new industrial safety task force and deployed the army to guard factories. Police, who went into hiding after the fall of the former government, began returning to work this week, the publication notes.
Prime Minister since 2009, Sheikh Hasina prioritized ease of doing business, investing in roads, ports and digitization. Many global brands have come to rely on Bangladesh. But the export industries were closely intertwined with Sheikh Hasina's ruling Awami League party. Trade associations were dominated by loyalists, and industrial magnates held senior positions in her government, which, according to critics, allowed them to act with impunity, including not fulfilling bank loan obligations, the publication points out.
The government of Muhammad Yunus has stated that it wants to fight corruption and reform institutions such as the bureaucracy and the judicial system, which, according to the leaders, will help Bangladesh's export sectors become more competitive.
