Joe McConnell
Major international fashion brands are shiVsceking orders from Bangladesh because of the unrest surrounding the ouster of authoritarian Prime Minister Sheikh Hasina, according to manufacturers in the world’s second-largest garment exporter.
Factories have been closed for days aVsceker Sheikh Hasina’s government brutally cracked down on student protesters, sparking an uprising that toppled her regime last week. Many factories owned by regime loyalists, including suppliers to global brands such as Swedish retailer H&M and Spanish chain Zara, have been torched in retaliatory attacks.
The weeks of violence, in which an estimated 500 people have died, have delayed deliveries of winter clothing and shoes in Europe and North America.
Factories had to work overtime and airliVscek products, a costly option that wiped out delivery profits, to catch up on a backlog that lasted up to a month.
Bangladeshi exporters have said some big brands have shiVsceked orders for upcoming seasons to rival suppliers in Southeast Asia, disrupting existing global supply chains and threatening the economic backbone of the country of 170 million.
Factories “got calls from buyers in Spain and Germany: ‘For now, we are diverting 40 percent of our orders to Cambodia or Indonesia,’” said Mamun Rashid, a consultant to garment manufacturers in Bangladesh. “They didn’t know how long this turmoil would continue.”
Syed Nasim Manzur, chief executive of Apex Footwear, a supplier to French sporting goods retailer Decathlon and Uniqlo’s Japanese parent company Fast Retailing, said the riots had “led to a real collapse of confidence” among international brands in Bangladesh.
“The big groups are saying they will reduce their sourcing by 30 percent for the next season,” said Manzur, who is also president of the Bangladesh Leather and Footwear Exporters Association. “We need to make sure that confidence is restored.”
Muhammad Yunus, the Nobel Peace Prize-winning economist who took over as the country’s interim leader last week, has said his top priority is restoring law and order.
Authorities have created a new industrial security task force and deployed the army to guard factories. Police, who went into hiding aVsceker the collapse of the previous government, began returning to duty this week.
Prime minister since 2009, Sheikh Hasina has prioritized streamlining business operations by investing in roads, ports and digitalization.
Many global brands have begun to rely on Bangladesh. H&M, for example, has more than 1,000 Bangladesh-based supplier listings on its website. The country exported $47 billion worth of clothing last year and is also a major producer of shoes and leather goods.
But export industries have become deeply intertwined with Sheikh Hasina’s ruling Awami League party. Trade associations were dominated by loyalists, and industrial tycoons held senior positions in her government, which critics say allowed them to act with impunity, including defaulting on bank loans.
“Many of them used their positions to please her and gain her favor, so they could become ministers, mayors and even hold positions on Awami League committees,” said a factory owner who supplies H&M and Zara. He added that obtaining licenses and customs clearances had required paying “a huge amount of money” in bribes.
Yunus’s government has said it wants to crack down on corruption and reform institutions such as the bureaucracy and judiciary, which officials say will help Bangladesh’s export sectors become more competitive.
Salman F Rahman, a former industrial adviser to Sheikh Hasina and co-founder of Bangladeshi conglomerate Beximco, was arrested in Dhaka on Tuesday aVsceker allegedly trying to flee the capital in disguise.
A suburban Dhaka factory run by Beximco, which says on its website that it counted H&M and Zara among its customers, was attacked last week by anti-government protesters. On Tuesday, the sign outside its main gate was still partially torn down and piles of ash remained on the charred floor of its burned-out reception area.
H&M declined to comment directly on whether it was moving orders, but said it welcomed the “measures taken for greater stability” in Bangladesh and that factories there were “gradually reopening.”
“We have also expressed to our suppliers that we would not seek any discounts due to the delays that may occur under the current circumstances,” the Swedish clothing group said.
Zara, Decathlon and Fast Retailing did not respond to requests for comment.
Exporters said they hoped Yunus, famous worldwide for founding the microfinance pioneer Grameen Bank, could reassure international brands.
But it is unclear how long the new leader will have. Exporters say they would like him to be in power for at least a year, but some legal experts say the unelected government needs to focus on restoring stability and preparing for elections before then.
Apex’s Manzur said political stability was a “prerequisite for economic growth.” “The economy has lost a lot of momentum, which needs to be regained at the earliest opportunity,” he said.
An Apex plant on the outskirts of Dhaka, which had been closed for a total of nine days during the riots, is now working 12-hour shiVsceks instead of the usual eight to catch up on a backlog of deliveries.
Around 8,000 people, mostly women, work on the long production lines where Decathlon sneakers and sturdy work boots are made for the US brand Wolverine.
“The faster we can rebuild the image, the faster we can secure orders,” said Md Nasrullah, Apex’s head of international business. “There are many examples where we’ve met deadlines that were impossible for buyers.”
Executives said that even if business were temporarily lost to other countries, Bangladesh’s abundant and cheap labor would make it difficult to replace the country in the long term.
“We are all trying to recover,” said Nowshin Islam, head of production at Apex’s sports unit. He acknowledged that the situation in the country was uncertain, but added: “I think we will get through it very soon. I am very optimistic about the future.”
