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Covid-19: Trade data reveals drop in apparel order volume & prices following brands’ order cancellations & refusals to pay

“Unpaid Billions: Trade Data Show Apparel Order Volume and Prices Plummeted through June, Driven by Brands’ Refusal to Pay for Goods They Asked Suppliers to Make”, 06 October 2020

… Suppliers around the world told the same essential story: beginning in March, many leading apparel corporations began reneging on their financial obligations to the factories that make their clothes.

According to supplier accounts, in some cases corroborated by leaked correspondence between buyers and suppliers, brands and retailers:

  • retroactively canceled, in part or in whole, orders that suppliers had already produced or were in the process of producing;
  • postponed delivery of, and payment for, orders on an indefinite basis; and/or
  • demanded large retroactive price discounts in exchange for agreeing to take delivery and pay for goods.

This behavior was enabled by the existing payments structure in the apparel industry, under which suppliers bear the up-front cost of production and buyers pay nothing until weeks or months after the factory ships the goods…

The CGWR and the WRC estimate that buyers, in the initial weeks of the crisis, reneged on their financial commitments on roughly USD 40 billion in orders— with devastating implications for suppliers and workers…

Labor unions and labor rights advocates responded with energetic efforts to hold brands and retailers publicly accountable and press them to pay their bills…

Newly released trade data provide powerful corroboration for suppliers’ claims … the value of apparel imports … [to the US] show … a drop of 49 percent.

For exports to the European Union (EU), for April and May 2020 (the most recent months for which data are available), brands and retailers took delivery on USD 6.5 billion less in garments than they did during these months in 2019, a decline of 45 percent…

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