A new report published by the Better Buying Institute (BBI) has concluded that fashion brands and retailers are offloading their financial hardships onto suppliers. The survey of 147 factories across 30 countries highlighted that since demand picked back up, brands have attempted to undercut the prices they would typically pay to cut costs.

The report, titled ‘Cost and Cost Negotiation and the Need for New Practices,’ assesses the state of relationships between fashion brands and their garment suppliers since business resumed. The report claims the two most reported pricing and ordering strategies: smaller volumes at the same price and lower target prices from previous orders highlights the financial hardship the industry continues to face – as well as the prevailing strategy of offloading financial pressures onto suppliers.

Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), which is cited in the report says, suppliers are facing upto 15 per cent decline in price points than previous years. The report says that if customer brands to continue to undercut suppliers –then it could signal the demise of decent working conditions in factories. Over half of the surveyed brands indicated that remaining profitable is integral to retaining good working conditions for factory staff.

Home Textile Exporters' Welfare Association (HEWA) has informed that acceding to its request, the government will introduce Faceless Assessments and Faceless Appeals scheme in the indirect tax regime and the same would come in force from September 25 onward. Amending thee-assessment scheme launched last year, the Central Board of Direct Taxes (CBDT) recently notified changes to include change in nomenclature of scheme from ‘E-assessment scheme’ to ‘Faceless Assessment Scheme.’

HEWA had sought help for small and medium textiles exporters impacted by the COVID-19 pandemic by requesting the government to relax the GST tax regime. As per the association exporters are facing liquidity crunch due to delayed overseas payments and large scale migration of laborers and reduction of working hours, shortage of working space due to adherence of social distancing norms. These exporters are also not well versed with the GST tax regime and depend on tax consultants who charge hefty amount as professional fee.

The association has demanded in case of an exporter being red flagged or declared as 'risky', he must be informed by field formation the exact cause or the reason for his being red flagged.

The 2025 Industrial Policy (IDP) policy report states the share of industrial sector in Cambodia’s GDP is expected to increase by 30 percent by 2025, of which the manufacturing sector will increase to 20 per cent. The country’s export of non-textile products will reach 15 per cent of the total export volume by 2025, boosting the export of agricultural processed goods to 12 per cent of total exports.

The report shows that the industrial sector ratio in terms of GDP has increased from 27.7per cent in 2015 to 32.6 per cent in 2018, beyond the target set in 2025. However, the share of garment and footwear exports has declined steadily from 71.6 percent of total exports in 2015 to 69.2 per cent in 2018 as the country diversifies export products as set out in its 2015-2025 industrial development policy (IDP).

Approved by the Office of the Council of Ministers, the IDP draft last report said, during three year of its implementation, the three main goals of the policy were fully implemented by relevant ministries, institutions and sub-national administrations.

Though the European Union (EU) partially suspended the Kingdom’s annual $7 billion garment and textile sector from 12 August, the new law will help Cambodian government to diversify its production line beyond the garment sector.

A new study highlights around 55 per cent of US fashion brands plan to increase sourcing from Bangladesh in next two years. The ‘2020 Fashion Industry Benchmarking Study’ jointly conducted by the United States Fashion Industry Association (USFIA) and the University of Delaware reveals though Bangladesh faced work order cancellation or postponement during the COVID-19 pandemic, it managed to become the third largest sourcing destination for the US with 85.7 per cent respondents opting for US, while China and Vietnam secured 100 per cent and 95.2 per cent respectively followed by India 81 per cent, Indonesia 71.4 per cent, Cambodia 66.7 per cent, Philippines 57.1 per cent and Sri Lanka 52.4 per cent.

In the first five months of 2020, Bangladesh accounted for 9.4 per cent of total US imports. Its exports to the country increased despite COVID-19 and the US-China trade war. The country’s strong ability to produce yarn and fabric locally without relying on imports despite labor cost contributed to a significant price advantage for ‘made in Bangladesh’, products.

Moreover, US fashion companies’ eagerness to diversify sourcing from China especially for MMF apparel also boosted Bangladesh’s position as a preferred sourcing destination. However, respondents consider sourcing from Bangladesh involves higher compliance risk with 2.0 rating score, same as last year. The study surveyed some of the country’s largest brands and retailers, including the top 25 US-based fashion brands, retailers, importers and wholesalers.

Heavily influenced by fashion trends, the global clothing and textile market has grown from $925 billion in 2015 to $1 trillion in 2019, indicates Trade Map. During this period, top global exporters of clothing and textile last year were: China, Vietnam, Italy, Germany and Bangladesh.

Meanwhile Africa’s clothing and textile exports also surged during this period. According to Trade Map, the continent’s clothing and textile exports in 2019 were dominated by Tunisia with exports worth $4.3 billion; followed by Morocco, Egypt, South Africa and Mauritius with exports worth $4 billion, $3.2 billion, $1.5 billion and $687 million respectively. Tunisia’s totals exports during the year was $15 billion, while Morroco’s was $29 billion.

Zimbabwean stakeholders can actively contribute to national economic development by introducing an inclusive framework to harness the potential of all players, leverage on diaspora and address current challenges affecting the fashion industry. They can define Zimbabwean fashion by making clothes from locally available resources.

Zimbabwean fashion exporters can also link their national style and fashion with their cultural essence. This will make local communities and groups the owners of the essential raw materials and ingredients, unifying all participants under single brand to compete in the export market.

Develop capacities in young designers and businesses

Designers in the country need to collaborate to create national trends. Share information, skills, and periodic updates of trends in the fashion industry through digital media channels. Designers need to develop brands that will distinguish them on the international fashion scene.

Stakeholders should also need to develop capacities in young designers and youth led businesses as they are creative enough to keep up with changing global trends. Start-ups should be nurtured as a remedy for the country’s economic woes in the not so distant future.

Retool the industry

Stakeholders have to engage closely and address challenges that continue to affect the fashion industry. They need to engage in retooling the industry as most machines used by manufacturers have become obsolete and consume more power and raw materials. Stakeholders also have to focus on creating strong linkages between clothing manufactures and learning institutions for continuous upgrading of local skills.

The Zimbabwean government plans to establish a center of excellence for the domestic fashion industry to assist in improving the competitiveness of SMEs within the sector. The center will promote networks and foster cooperation between fashion and textile designers and other creative entrepreneurs, textile entrepreneurs and local mills. It will be integrated with creative incubators for fashion students and upcoming artists for generation of ‘cross-over-effects’ and learning. It will also improve the employability skills of youth and make them ready for international markets.

Earlier, Lost Stock, a UK scheme that repackages garments from cancelled western orders seemed to be a good idea to deal with unsold inventories. However, recently experts have been questioning the scheme’s efficacy as it not only burdens consumers with the responsibility of rescuing unemployed workers but also enables retailers to exploit contractual loopholes to deny payment, demand heavy discounts or compensation on completed and in-progress goods commissioned before the viral outbreak.

The scheme has proved more popular than was anticipated. However, not everyone is convinced about it. Mostafiz Uddin, Owner and Managing Director, Denim Expert, a jeans manufacturer in Chittagong, Bangladesh disapproves of the scheme fully. He feels factories are forced to sell surplus goods to Lost Stock because they have no other option. These goods are sold at highly discounted rates to get rid of the manufacturers’ huge bank liabilities. The payment received from their sale does not cover the total value including raw materials, worker wages, storage costs and bank interests.

The scheme negotiates a cash price with each factory in Bangladesh. This amount is further supported by financial assistance from the Sajida Foundation. When combined together, both these payments aim to exceed the originally agreed rates with retail brands.

No solution for core issues

Ayesha Barenblat, Founder and CEO, Remake believes, Lost Stock is an interim charitable act that doesn’t deal with the core issue of suppliers not being paid for their work. She believes the scheme offers a short-term hopeful solution of clearing up some of the inventory and getting immediate relief to workers. Though it allows consumers to feel good about their efforts for the garment workers, it does not shield them from unrelenting buyers.

The garments sold by Lost Stock are attached with the organization’s tag, which further obscures their origin and reason for being sold. Christie Miedema, a Clean Clothes Campaign advocate points out this conveys a wrong idea to brands that they can shop their way out of the crisis and responsibility for solving it lies with consumers. She affirms brands shouldn’t consider the work of garment workers as charity and pay them accordingly.

Aiming to change consumer behavior

Cally Russell, CEO of online retail platform Mallzee views Lost Stock as part of a broader movement that targets consumers from different backgrounds and different types of belief systems and approaches to action. She hopes in the long term, the scheme helps people deal with problems created by some of their previous choices.

Lost Stock recently launched a children’s version of its box. The scheme has even bigger ambitions for the future and plans to create something that would change the way people buy products. However, labor advocates, like WRC’s Nova, believe that the only way to protect the rights of the workers is to compel brands and retailers to fulfill their obligations.

As per figures provided by the country’s Export Promotion Bureau (EPB), in July 2019, Bangladesh’s export earnings were $3.88 billion which in this July stood at $3.91 billion. The export earning this July is also around 44 per cent more than that of June.

Further, apparel export raked in $3.2 billion, which was 14.1 per cent more than the target set for July by the Commerce Ministry. However, it was less than the earnings of $3.3 billion registered in July last year.

Earnings from the knit items clocked a 4.30 per cent growth to touch $1.75 billion, but receipts from woven items suffered a decline of around 8.43 per cent to $1.49 billion during the month under review.

It may be mentioned here that export revenue in the apparel industry witnessed a year-on-year decline of 18.29 per cent in March, 82.85 per cent in April and 61.57 per cent in May, as economies the world over went under lockdowns in a bid to curb the spread of the coronavirus pandemic. However, as things started looking up a bit, restrictions were lifted and a state of normalcy returned to the global supply chain, when export earnings again picked up with receipts from apparel exports reaching US $ 2.71 billion in June, which was just 2.5 per cent less than what it was during the same period of the previous year.

Cotton demand is fast rebounding after easing lockdown as textile companies are abuzz with reviving industrial activities to include Pakistan among the world’s top recipients of foreign orders post shutdown.

While textile and spinning mills keep purchasing cotton arrival remains slow due to rainfalls, sending prices up during the start of the week. Later on, however, prices decreased in the market as quality of lint dropped because of rain, traders said.

During the outgoing week, lint prices in Sindh remained at Rs8,200 to Rs8,300 per maund. In Punjab, the prices were in the range of Rs8,550 to Rs8,650, while price was between Rs8,350 to Rs8,375 per maund in Balochistan. Karachi Cotton Association’s spot rate committee increased the spot rate by Rs100 to Rs8,350 per maund.

In Pakistan, cotton production might fall in the country due to heavy rains in cotton growing areas of Sindh and Punjab, which might lead local mills to import more lint, said Ihsan ul Haq, chairman of Pakistan Cotton Ginners Association.

Cotton production in the Punjab, the biggest cotton producer, is estimated at around 7.5 million bales of cotton. Last year, cotton sowing in the country declined 18 percent in the country. In Punjab only, cotton sowing decreased 18.16 percent.

Clothing brand G-Star Raw Australia went into administration in May as a result of the coronavirus crisis and the subsequent downturn in sales which was exacerbated by government-ordered lockdowns. About 200 Australian workers at the denim giant's 57 stores will now be out of a job.

G-star first launched in 1989 with raw denim jeans that have not been washed or treated. The brand has flagship stores across the world including in New York, Paris and London. Global superstars including Pharrell Williams and Jaden Smith have worked with the brand - which specializes in unwashed, untreated, raw denim as its base material.It follows dozens of Australian brand names entering administration since the start of 2020.

Even before the lockdown impact was felt, swimwear label Tiger Lilly, accessories retailer Collette, and stationery chain Kikki K were all placed into administration. Brands like Harris Scarfe, Bardot, Roger David, and Napoleon Perdis also collapsed last year - resulting in heavy job losses.

The International Apparel Federation (IAF) regional president and Pakistan Readymade Garments Manufacturers and Exporters Association (PRGMEA) chief coordinator Ijaz A Khokhar has underscored the need of establishing central, provincial and regional task forces to determine the issues confronted by the industry.

He said Pakistan could grab bigger share in the global market of value-added textile adding that without the due support of the government exporters were unable to grab the share of global market. The business community engaged with textile sector was making strenuous efforts for increasing the exports of the country despite heavy odds.

He suggested that government should exempt cotton yarn, dyes, chemicals from all types of taxes and duties for encouraging this value-added sector and apparel industry should be allowed to import fabric as the weaving industry was unable to fulfill growing demand of fashion wear.

Ijaz further told that currently garment sector having a limited product line for export market due to non-availability of the latest fabric at local level adding that foreign buyers demanding new garment based on G3, G4 and technical fabric material and under the circumstance there was a great need of product diversified to compete in international market.

For this purpose government should provide special funds for initiating research and development for each industrial sector to ensure product diversification and currently we need to offer more diversified producers, he added.

PRGMEA chief coordination reiterated that government should consider on the restoration of zero rated regime for five major export-oriented industries (sports, surgical, leather, carpet and textile) on the priority basis for the survival of exports of the country.