Image by David Schwarzenberg from Pixabay
KEY POINTS
- Bangladesh is the second-largest clothing exporter in the world behind only China
- Bangladesh has more than 4,600 garment factories, employing at least 4.1 million people
- Bangladeshi factories are losing an estimated $100 million each day
Cancellation of orders by western countries due to the coronavirus pandemic could spell doom for the garment industry in Asian countries and wipe out millions of jobs.
"Across the entire industry, shops are closed, brands and retailers actually right now have an oversupply situation with whatever orders they have placed," said Stanley Szeto, executive chairman of Lever Style, a Hong Kong-based garment maker. "They fear that they may not be able to sell [the product], so they are actually canceling orders or delaying shipments of orders,"
Szeto, who also serves as an honorary chairman at the Textile Council of Hong Kong, warned that the garment sectors in Bangladesh, Cambodia and China faced particularly grave risks of collapse.
"A lot of factories in Asia -- they're seeing orders dry up in a few weeks," he added. "A month ago, we were talking about supply chain disruption ... but right now, everybody has forgotten about the supply chain disruption. Supply chain disruption has given way to a collapse in demand. Right now there's too much production."
Bangladesh, the second-largest clothing exporter in the world behind only China, has already seen garment orders valued at $2.6 billion cancelled or withdrawn, with more likely on the way.
"It's been very, very hard dealing with all the emergencies because we've been facing cancellations every day on almost a minute-to-minute basis," said Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association.
Bangladesh has more than 4,600 garment factories, employing at least 4.1 million people, mostly women, who toil to manufacture shirts, T-shirts, jackets, sweaters, and trousers which are shipped to retailers in Europe, the U.S. and Canada.
Huq's association noted that ready-made garments accounted for 84.2% of Bangladesh's total exports (valued at $40.5 billion) for the 2018-2019 fiscal year.
Europe received nearly 60% of Bangladesh's garment exports in 2018-19.
"We submit the export documents and then we get paid. If we don't get paid, we can't actually pay our workers, so it's difficult for us - even getting through with March salaries is difficult," said Huq.
She expects many more cancelled orders from foreign brands and retailers.
"My worry is, what is going to happen to so many people -- 4.1 million -- that are engaged in the garment sector and we are not being able to take care of them properly," she added. "We want the workers to be paid, we want them to be safe, and for that we need the brands to react and respond at this point in time -- with urgency."
Meanwhile, Bangladeshi factories are losing an estimated $100 million each day.
"We are trying not to shut down the factories," Huq said.
Huq complained that some foreign importers have even cancelled payment on orders which have already been delivered.
"Foreign companies talk about human rights and compliance. Then why are they being unfair to us?" Huq said.
Siddiqur Rahman, vice president of the Federation of the Bangladesh Chambers of Commerce and Industries, said: "Our orders until June have been canceled. The situation is dire."
Rahman thinks many garment factory owners will go bankrupt. "It is only a matter of time now. I think all the factories will be closed," he warned.
Huq urged European governments to help Bangladesh's garment sector.
"Your [European] stores are closed. Our factories are about to close and we will have no business. Some 4.1 million workers will go hungry if we don't fulfill our commitment to their welfare," Huq said.
Germany's Development Aid Minister Gerd Muller wrote to Huq that he hopes to "find an approach that will safeguard the textile industry's survival in both Bangladesh and Germany, since millions of people work in that sector."
Cambodia is also a major garment exporter, but it too has been faced with cancelled orders.
More than 10,000 garment workers have already lost their jobs as factories closed. Up to 200,000 people could potentially be laid off.
Cambodia's garment industry has about 1 million full-time workers. The EU accounted for about 45% of Cambodia's total garment exports in 2018.
Now, not only are Cambodian factories dealing with vanishing orders from the west, but its Chinese textile suppliers have largely shut down operations.
Ken Loo, secretary-general of the Garment Manufacturers Association of Cambodia, said Cambodia procures more than 60% of its textiles from China. Switching to other suppliers, like India, would take time to accomplish.
Lesser known to the outside world, Myanmar (formerly Burma) also serves as an increasingly important garment exporter to the west. But, as with Cambodia and Bangladesh, order cancellations by the EU have led to the closure of many Myanmar garment factories.
U. Myint Soe, chairman of the Myanmar Garment Manufacturers Association, said the EU accounted for 70% of the country's garment exports.
"All operations of the [Myanmar] factories that have accepted orders from the EU have stopped. I don't know how we will deal with this issue," he said.
Soe noted that China recently began re-sending raw textile materials to Myanmar again.
"We began to receive raw materials from China. We have no more [problems with] raw materials. Now, the EU no longer accepts our garment exports. It happened since last week," he added. "Garment factories in Myanmar face [difficulties] as [EU importers] told us not to make the clothes, which they have bought, and not to ship them. This problem is big. That's why factories have shut down and reduced their number of workers."
Global Apparel Textile Myanmar Co. Ltd. is one of several local companies stuck with huge inventory due to cancelled orders.
Another garment firm, Lat War Co. Ltd. has 500,000 pieces of unsold garments after a European buyer cancelled the order.
