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Retailers allegedly trying to unpick existing contracts with Asian garment manufactures, risking livelihoods as supply chain crisis deepens amid COVID-19

Author: Patricia Nilsson & Emiko Terazono, Financial Times, Published on: 21 May 2020

“Can fast fashion’s $2.5tn supply chain be stitched back together? Shuttered shops in London and New York translate into closed factories in Bangladesh and stockpiles of cotton in India”, 17 May 2020

[D]emand for new clothes has collapsed [and]…revenue streams for many of the world’s largest companies have been wiped out. [T]he impact is being felt all along the $2.5tn industry’s complex supply chains, hitting places where companies and employees cannot always access government-funded emergency support. [At] a time when retailers would normally be placing orders for their Spring 2021 collections, they are instead trying to unpick existing contracts...

[In] Bangladesh... clothing manufacturers have…lost out on more than $3bn in payments for [garments]... already produced or sourced...[and] workers demanding that employers continue to pay wages clashed with police, prompting the government to step in and cover 65 per cent of wages — a loan that manufacturers are expected to repay...

Lecturer, Patsy Perry, says retailers... have always had the upper hand in their relationships with Asian manufacturers, with demands of retroactive discounts commonplace in the industry: “We hear a lot of talk about partnerships but if a supplier says it cannot agree to certain terms, then the retailer can always go somewhere else…”

In Vietnam... the country’s textile and garment companies could lose more than $500m in revenues...[and] [f]urther along the supply chain..., Indian cotton farmer[s]... [are] bracing for…impact.  Unless retailers pay for clothes already in production, [one manufacturer]…says, he will have no business to save…“unless people understand the [scale of this] disaster”. 

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