Ten years ago, Bangladeshi businessman Mostafiz Uddin founded his own clothing factory, and cooperated with British fashion clothing brands Burton and Peacocks.
But now, the backlog of clothing in the factory has reached the ceiling. These include 38,000 pairs of Burton jeans and 15,000 pairs of Peacocks trousers.
In an interview with the “Guardian”, Yudin said that when the UK announced the “city lockdown” in March, he Here comes the bad news: major brands have canceled orders, many of which have been completed and awaiting shipment, and 80% of the canceled orders have not been compensated.
In order to produce orders, he has invested millions of dollars in advance to purchase raw materials and pay for labor. Now banks have stopped extending loans to Yudin, and the factory cannot pay wages. “My life has become a disaster movie.”
Yudin is not the only garment factory owner to experience disaster.
According to statistics from the Bangladesh Garment Manufacturing and Exporters Association, due to the impact of the new crown epidemic, at least 982 million pieces of clothing exports from Bangladesh have been cancelled. Or suspended, with a total value of US$3.18 billion and 2.28 million workers affected.
Garment manufacturing is a pillar industry for poverty alleviation in Bangladesh, creating jobs for 4 million people.
While major brands are canceling orders, analysts also predict that in the future, European and American companies will shorten delivery times and To reduce risks, clothing production may be transferred from Southeast Asia to countries such as Turkey and Mexico.
One million workers may lose their jobs
Since the World Trade Organization’s Textiles and Clothing Agreement came into effect in 1995, Bangladesh’s exports of finished garments have been able to enjoy quota-free restrictions in European countries and preferential quotas in the United States and Canada.
Since then, the country’s clothing manufacturing industry has developed rapidly. With the introduction of a series of new policies such as the U.S. Tariff Relief Assistance Act for Developing Countries, coupled with cheaper labor, Bangladesh became the world’s second largest clothing manufacturing country by 2011.
International brands such as GAP, Zara, H&M, and supermarkets such as Target and Wal-Mart all have garment cooperative factories in Bangladesh.
Today, the United States, Germany, the United Kingdom, Spain and France are the main markets for Bangladesh’s textile and apparel exports. Among them, Europe is the largest market, accounting for nearly 60% of the South Asian country’s textile and clothing exports.
In 2018, Bangladesh’s total exports were US$40.5 billion, of which US$34.1 billion came from finished garment exports, accounting for About 84% of the total. The entire garment manufacturing industry contributes 16% of Bangladesh’s GDP.
▲Bangladesh’s proportion of finished garment exports . Picture source: Statista
However, Rubana Huq, president of the Bangladesh Garment Manufacturers and Exporters Association, revealed that since Europe and the United States have become the epicenter of the epidemic, Since the disaster struck, Bangladesh’s garment factories have suffered an average daily loss of US$100 million.
From March to June, 179 garment factories across the country closed; of the US$3.18 billion in canceled orders, More than half are from European countries. Although countries are currently starting to restart their economies, the situation of canceled and postponed orders by various brands has not improved.
▲Picture source: Bangladesh Garment Manufacturing and Export Association
In addition to canceling orders, Rubana Huq pointed out that there are also a large number of buyers asking garment factories to provide 20 % to 50% discount.
Statistics from the Bangladesh Garment Workers Union Center show that among the 2.28 million workers affected by the epidemic, at least 70,000 People have lost their jobs.
It is predicted that the number of unemployed people will climb to 1 million by the end of this year. In major garment factories, more than 85% of workers are women, and the monthly income of ordinary workers is only about US$110.
In response to the impact of the epidemic, the Bangladesh government launched a US$600 million assistance plan for the manufacturing industry, including clothing manufacturing. . However, as the epidemic continues, industry insiders are worried that Bangladesh’s clothing manufacturing is facing a fatal blow.
In April this year, economists from the World Bank warned that the new coronavirus epidemic may push 50 million Bangladeshis back into poverty. On June 7, a report by the Center for Policy Dialogue, a think tank in Dhaka, further pointed out that the country’s poverty rate may regress to the 40% level of 15 years ago.
Also hit are textile and clothing exporting countries such as India, Vietnam, and Cambodia. According to statistics from the Wall Street Journal, about 250 garment factories in Cambodia have closed. Clothing, footwear and luggage account for 75% of Cambodia’s exports.
Clothing retail giant shuts down
At the other end of the industry chain, affected by the epidemic, various clothing brands were forced to close stores. Ascena, the American clothing retail giant, and Brooks Brothers, a century-old store that has provided clothing for many U.S. presidents, even announced…Property.
PVH Group, the parent company of Calvin Klein, announced to streamline its North American business and close 162 retail stores; more than 60% of GAP stores have been closed The sales of all offline stores under the brand fell by more than 50%; in March, H&M’s sales dropped by 46% and 3,778 stores were closed; the 2019 annual report released by Zara also showed that 50% of the group’s stores worldwide were temporarily closed.
In addition to the decrease in customers in physical stores, as more and more people begin to work from home, the demand for fashion and formal wear Also shrunk significantly.
A survey in June by the US market research company NPD showed that 47% of customers only wear one pair of clothes a day while working from home. Set of clothes. Nearly a quarter of customers prefer to wear sportswear, pajamas and home clothes compared to formal wear such as shirts.
Achim Berg, a senior partner at McKinsey & Company, predicted in an interview with the Wall Street Journal that throughout the In the clothing industry chain, 20% to 30% of companies will go bankrupt due to the epidemic.
He also predicted that in the future, in order to shorten the delivery time and be more flexible when placing orders, European clothing brands may partially produce From the Far East to Turkey, Eastern Europe and North Africa, North American brands will move to Mexico.
Rubana Huq also believes that the clothing manufacturing industry “will never go back to the past.” </p
