Second wave starts going for a toll on garment export

November 22, 2020 Business
Just as Bangladesh's key foreign currency-earning apparel sector had begun recouping from shocks to its exports, another wave of the coronavirus pandemic has started inflicting damages once again.

Simply 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 completed last week among 50 out of 350 significant factories by the Bangladesh Garment Companies and Exporters Association (BGMEA).

Exploration by The Daily Star revealed similar results of local suppliers receiving fewer work orders.

Buyers have been taking a lot of time to choose and place do the job orders and so are not seeking the same volumes of the last export time as a result of second wave that has already jolted the Western community and economy.

Worries of contracting Covid-19 has kept buyers from travelling freely, a practice targeted 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 quantity of job orders for factories here.

For example, a buyer was supposed to come to the factory of Shahidul Haque Mukul, managing director of Adams Apparels, from France the other day but could not as a result of the second pandemic wave in France.

Although buyer assured an order would be placed, Mukul was even now in the dark as to when.

In the same way, a Brazilian buyer of Mukul was likely to reissue an order for 60,000 pieces of trousers previously suspended for the earliest wave of the pandemic.

"However, my purchaser could take only 20,000 out of 60,000 pieces so far with the restoration from the 1st wave. But this buyer again place a halt on the orders," Mukul advised The Daily Superstar over the phone.

"The inflow of job orders is gradual, and the clients are confused because of the existing Covid situation under western culture," he said.

Like Mukul, virtually all suppliers have been facing similar varieties of problems due to the buyers as a result of another wave of the coronavirus pandemic. Unfortunately, the potential buyers are also offering lower rates to the suppliers, Mukul stated.

Mahmud Hasan Khan Babu, managing director of Soaring Group, a leading garment exporter, said the second wave had been having an effect on his factory.

Regarding knitwear, the customers had placed 20 per cent fewer work orders when compared to last season as a result of fresh lockdowns occasionally in Europe, his key export destination.

But, in the event of woven, his clients placed the same level of work orders due to that of the previous season, he said.

"Buyers are delaying found in placing the projected work orders, nevertheless they are pressing us for easy catering to the orders which have recently been placed," Khan said above the phone.

He said although the clients were promising another with do the job orders with advancements to the Covid situation, the suppliers would by this time around face a gap found in production and associated product sales, which posed a threat to the sustenance of the business.

The tiny and medium enterprises are the key victims from the entire pandemic as they have a smaller capacity to deal up with work order losses.

For example, Ahmed F Rahman, managing director of Kappa Fashions which employs nearly 1,000 personnel, received 30 % fewer work orders.

On the average, he churns out one million t-shirts and polo shirts on a monthly basis from his factory, but this month he received job orders for only 700,000, as clients were very wary of placing work orders fearing that they might not manage to sell those for the second wave.

A enterprise in German already owes him above $150,000 and is citing excuses to be under the procedure for liquidation. Other clients are also negotiating over rates in work orders that contain recently been placed, he said.

"This time I am very cautious (about which persons to do business with) to ensure that I do not face any do the job orders cancellation and non-payment from my buyers," said Rahman.

Info of the July-September 2020-21 period implies that exports to non-traditional market segments suffered the most even while that to europe and the US maintained stable growth, that actually helped Bangladesh make a good turnaround in its exports.

"Now since Europe possesses entered right into a fresh wave of COVID infection, emergencies and lockdowns happen to be being declared in many countries including France, Germany, Belgium and Greece, and extra are feared to follow the trail…," explained BGMEA President Rubana Huq.

"…it would be problematic for us to cope up if the EU's demand for clothing and its own sourcing is troubled even more. This is worrying for us since Europe is definitely our major market," she advised The Daily Superstar a couple of days ago.

Huq in an music communication yesterday said the suppliers and brands were building delays in positioning work orders.

The factories will need to suffer if the retailers and makes delay the putting of work orders as the factories must keep the capacity idle if there is no work order from the clients.

The World Trade Corporation (WTO) yesterday said world merchandise trade seems to have rebounded strongly after plummeting amid the Covid-19 pandemic, but whether growth could be sustained going forward was unclear.

A good sharp rise in the barometer of trade index was driven by a surge in export orders, but mixed readings in other pieces and the resurgence of Covid-19 could weigh on trade in the coming a few months.

Trade-related uncertainty remains substantial. The next wave of Covid-19 infection has already been underway in Europe and North America, resulting in renewed lockdowns that could trigger another round of organization closures and financial distress, explained the WTO.

On a far more positive note, improvement has been reported in the production of a vaccine, but when and how it might be deployed is not yet known, in line with the WTO.

Source: Thedaily Star

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