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Article

14 Apr 2020

Bangladesh: Retailers commit to not cancelling orders; contract terms leave suppliers waiting for payments until orders are shipped

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“Retailers tell suppliers they won’t cancel orders. The reality is more complicated”, 06 April 2020

…H&M committed to keeping its financial commitments with suppliers. Target, … Inditex, … VF Corp, … PVH and ... Kiabi all … [announced]  they would pay … for all orders already produced or in production.

… [T]he reality … is more complicated .... Labour rights activists say typical contractual agreements leave suppliers vulnerable, as brands don’t pay for orders until they’re shipped …

… Some retailers are backing down from future orders …. Others are not … accepting… [orders] … which means suppliers … [will not] be paid until the brand decides to remove the hold.

… Labour activists are concerned that commitments to pay up could become meaningless if they end up … deferring but not cancelling orders.

… Several sources in Bangladesh … said that H&M and Inditex have taken their orders on time, as they’ve publicly committed to doing.

… One supplier said … C&A … cancelled all orders … including some goods that are ready to ship… one said that … Bestseller cancelled everything … while asking for a discount on orders that shipped … and two said that Gap … cancelled orders while … asking for discounts ...

Vogue Business reached out to every brand mentioned … Most did not respond; H&M, Inditex and Target responded that they would stand by their commitments … but did not provide a specific timeline for … [payments] … or confirm if they have already paid; C&A said it aims “to take delivery of as many orders as commercially viable”; and Bestseller said it would do its “utmost” to live up to its commitments….

… C&A said it is supporting collaborative efforts to help affected countries …

… [The] executive director of the Bangladesh Center for Worker Solidarity, says she wants to see contracts changed such that factories are paid once they complete an order… There are also growing calls for a relief fund … [for]  workers…

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