Nine apparel exporters in a tight spot as German retailer yet to clear dues
Nine small and medium-sized garment factories are in big trouble as a German retailer isn't paying them on the pretext to be hit by the coronavirus pandemic although the customer received the goods prior to the crisis began.
Colloseum bought t-shirts, polo shirts and sweaters worth $15 lakh from the Bangladeshi suppliers between December this past year and February this season through its Hong Kong vendor Asia Today Ltd.
The suppliers are Kappa Fashion Wear, Base Fashion Wear, Dynasty Sweater (BD), Bakhrabad Knitting Industries, Anzir Apparels, IRIS Fashions, Gramtech Knit Dyeing & Garment Industries Ltd, Seo Wan Bangladesh and Disney Sweater.
The German retailer owes a few lakh dollars for some buying houses as well.
The retailer isn't making the payment despite being served with legal notices. It, however, is purchasing goods from Bangladesh in another name, several suppliers say.
"We were ready to settle at 50 % payment. But there are no responses from the customer," said Ahmed F Rahman, chairman of Fatullah-based Kappa Fashions Wear.
Many buyers have offered a deferred payment to suppliers following consensus. However, Colloseum did not give any timeframe when it would be in a position to make the payment, said Rahman.
The entrepreneur has been supplying t-shirts and polo shirts to the retailer for the last five years. Rahman exports $10 million worth of garment items annually and 5 per cent of the consignment would go to the stores of Colloseum.
Rahman, who started garment business in 2006 and employs 1,000 workers, said he's in trouble now. In another blow, the central bank will accuse them of money-laundering if the payment isn't realised on time, he said.
Another supplier Md Ehterab Hossain sold $5.66 lakh worth of t-shirts and polo shirts, the best amount among the nine suppliers. A consignment involving $96,000 was cut back from the Chattogram port's store after paying Tk 2 lakh in demurrage in the last moment.
"Due to the nonpayment, I have been facing a whole lot of difficulties to perform my factory," said Hossain, managing director of Gazipur-based Base Fashion Wears Ltd, which employs 1,000 workers.
"Colloseum received the products but isn't making the payment. This is simply not right available relationship," he said.
Mohammad Hatem, vice-president of the Bangladesh Knitwear Manufacturers and Exporters Association, said the association has received complaints against Colloseum from its members.
"I'll send emails to the customer serving show-cause notice soon," he said.
Many local suppliers have already been facing similar problems linked to payment however the nine suppliers shipped goods to the customer prior to the crisis unfolded, he said.
He said small and medium-sized garment factories are suffering the most from such a predicament because their financial ability is not as strong as the larger units.
"Buyers aren't paying them promptly while banks aren't cooperating as a result of the fallouts from the pandemic."
KI Hossain, president of the Bangladesh Garment Buying House Association, said many buying houses are facing the task of non-payment.
Sales in western countries are time for normalcy with the reopening of stores. So, retailers and brands should honour their purchase orders accordingly, he said.
Every supplier ought to know about their retailers and brands before supplying goods, he said. "Many retailers and brands might take advantage of the problem, accept the shipment from suppliers and might not pay timely."
Asia Today, the German embassy in Dhaka and the head office of Colloseum did not reply to electronic mails requesting for comments.
Colloseum, the Oberhausen-based band of companies, mainly involves the non-operating holding company F1RST Retail AG, the operating Fashion FC Club GmbH and UFB Germany GmbH.
A vertical fast-fashion retailer for young and price-conscious women with a complete of 1 1,450 employees and a turnover of approximately 80 million euros, it's been declared insolvent and sold to Schulz Fashion GmbH, in line with the website of Acxit Recovery Management.
Acxit Recovery Management acted as the exclusive merger and acquisition adviser to Fashion FC and the preliminary insolvency administration.
The new owner would dominate 104 of the 136 stores operated by July 1.
The entire difficult industry environment, frequent changes in management together with an unfinished, initiated restructuring process in combo with the extreme cutbacks in the retail sector caused by the coronavirus pandemic forced F1RST Retail and Fashion FC to apply for insolvency on March 30, 2020, said Acxit Recovery Management.
Some German media outlets also published reports about the development.
