Buyers place 30pc fewer orders
Just as Bangladesh''s main foreign currency-earning apparel sector had
begun recouping from shocks to its exports, a second wave of the
coronavirus pandemic has started inflicting damages again.
This is because international clothing retailers and brands have placed 30
per cent fewer work orders year-on-year for the next four months starting
December.
The figure on the export season came up as preliminary findings of a survey
carried out last week among 50 out of 350 major factories by the Bangladesh
Garment Manufacturers and Exporters Association (BGMEA).
Research by The Daily Star revealed similar findings of local suppliers
receiving fewer work orders.
Buyers have been taking a lot of time to decide and place work orders and
are not seeking the same volumes of the last export season due to the second
wave that has already jolted the Western world and economy.
The fear of contracting Covid-19 has kept buyers from travelling freely, a
practice aimed at checking proper work environments, product quality,
compliance and establishing better business communication.
Since they cannot come on visits to factories in Bangladesh, they have
currently reduced the volume of work orders for factories here.
For instance, a buyer was supposed to come to the factory of Shahidul
Haque Mukul, managing director of Adams Apparels, from France last week
but could not because of the second pandemic wave in France.
Though the buyer assured that an order would be placed, Mukul was still in
the dark as to when.
Similarly, a Brazilian buyer of Mukul was supposed to reissue an order for
60,000 pieces of trousers previously suspended for the first wave of the
pandemic.
"However, my buyer could take only 20,000 out of 60,000 pieces so far with
the recovery from the first wave. But this buyer again put a halt on the
orders," Mukul told The Daily Star over the phone.
"The inflow of work orders is slow, and the buyers are confused because of
the current Covid situation in the Western world," he said.
Like Mukul, almost all suppliers have been facing similar kinds of problems
arising from the buyers because of a second wave of the coronavirus
pandemic. Unfortunately, the buyers are also offering lower prices to the
suppliers, Mukul said.
Mahmud Hasan Khan Babu, managing director of Rising Group, a leading
garment exporter, said the second wave was already having an effect on his
factory In the case of knitwear, the buyers had placed 20 per cent fewer work orders
compared to the last season because of fresh lockdowns in some places in
Europe, his main export destination.
But, in case of woven, his buyers placed the same volume of work orders as
that of the last season, he said.
"Buyers are delaying in placing the projected work orders, but they are
pushing us for quick catering to the orders which have already been placed,"
Khan said over the phone.
He said although the buyers were promising to come back with work orders
with improvements to the Covid situation, the suppliers would by this time
face a gap in production and associated sales, which posed a danger to the
sustenance of the business.
The small and medium enterprises are the main victims from the overall
pandemic as they have a lesser capacity to cope up with work order losses.
For instance, Ahmed F Rahman, managing director of Kappa Fashions
which employs nearly 1,000 workers, received 30 per cent fewer work
orders.
On an average, he churns out one million t-shirts and polo shirts every
month from his factory, but this month he received work orders for only
700,000, as buyers were very cautious about placing work orders fearing
that they would not be able to sell those for the second wave.
A company in German already owes him over $150,000 and is citing excuses
of being under the process of liquidation. Other buyers are even negotiating
over prices in work orders that have already been placed, he said.
"This time I am very cautious (about which people to do business with) so
that I do not face any work orders cancellation and non-payment from my
buyers," said Rahman.
Data of the July-September 2020-21 period shows that exports to nontraditional markets suffered the most while that to the European Union and
the US maintained stable growth, which actually helped Bangladesh make a
turnaround in its exports.
"Now since Europe has entered into a fresh wave of COVID infection,
emergencies and lockdowns are being declared in many countries including
France, Germany, Belgium and Greece, and more are feared to follow the
trail…," said BGMEA President Rubana Huq.
"…it would be difficult for us to cope up if the EU''s demand for clothing and
its sourcing is troubled further. This is worrying for us since Europe is our
major market," she told The Daily Star a few days ago.
Huq in an audio message yesterday said the retailers and brands were
making delays in placing work orders.
The factories will have to suffer if the retailers and brands delay the placing
of work orders because the factories will have to keep the capacity idle if
there is no work order from the buyers.
The World Trade Organization (WTO) yesterday said world merchandise
trade appears to have rebounded strongly after plummeting in the midst of
the Covid-19 pandemic, but whether growth can be sustained going forward
was unclear.
A sharp rise in the barometer of trade index was driven by a surge in export
orders, but mixed readings in other components and the resurgence of
Covid-19 could weigh on trade in the coming months.
Trade-related uncertainty remains high. The second wave of Covid-19
infection is already underway in Europe and North America, leading to
renewed lockdowns that could trigger another round of business closures
and financial distress, said the WTO.
On a more positive note, progress has been reported in the development of
a vaccine, but when and how it might be deployed is not yet known,
according to the WTO.
Source: The Daily Star, Bangladesh Monday, 23 November 2020