Restructuring of global apparel order placement key to recovery: Experts
They also advise that the ILO could take the role of mediator
Highlights
- Better distribution of orders from buyers, brands is needed for recovery
- ILO can play an entrepreneurial role in bringing together buyers with suppliers to restructure demand management
- Bangladesh and Sri Lanka have the capacity to supply products that are supplied by China
The restructuring of the global apparel production order placement ratio would be helpful for apparel suppliers of Bangladesh and Sri Lanka to recover to the pre-Covid levels, according to experts and entrepreneurs.
The International Labour Organisation (ILO) can play the role of a mediator, they said at an international webinar on Tuesday while unveiling a joint study titled "Recovery of the apparel sectors of Bangladesh and Sri Lanka: Is a value-chain based solution possible".
The research explores a value-chain-based solution for Bangladesh and Sri Lanka, where major market players will undertake responsible business practices for sustainable recovery.
The Centre for Policy Dialogue (CPD), a private think-tank in Bangladesh, and the Institute of Policy Studies of Sri Lanka (IPS), in partnership with Southern Voice jointly conducted the study.
Some readjustment is needed in the distribution of market share, said CPD Chairman Professor Rehman Sobhan.
According to the study, the market share of China and Vietnam increased despite the pandemic, while Bangladesh and Sri Lanka lost their shares during the Covid period.
Prof Rehman said the ILO can consider playing an entrepreneurial role in bringing together OECD (Organisation for Economic Co-operation and Development) and other big buying countries with supplying countries to restructure the global demand chain.
In the keynote presentation, Kithmina Hewage, research economist of the IPS, Sri Lanka, said about 76% of suppliers had to reduce export orders during the pandemic, of them, the highest proportion of order reductions was in Bangladesh with 93%, Vietnam with 80%, China 74% and India 61%.
Fiscal constraints of Bangladesh and Sri Lanka squeezed domestic capacity to support the apparel sectors during the crisis period and initiatives of sourcing countries were inadequate, according to the study.
The second wave of Covid-19 in prominent markets such as the United States, United Kingdom, and the European Union significantly reduced demand, while China's return to relative normalcy has released the pressure on supply chains.
Medium-term recovery challenges will be extended with the pandemic during the second wave, Kithmina said, adding that despite uncertainty, brands are confident that Bangladesh will remain a major source of apparels in the coming months.
Dr Khondaker Golam Moazzem, research director at the CPD, said value chain level initiatives indicate whether a better distribution of orders would contribute to the recovery process.
The study found significant changes in order placement with the highest rise in market share observed in China, followed by Vietnam, Germany, Italy, and Turkey. On the other hand, Bangladesh and Sri Lanka lost their shares during the Covid period.
Buyers followed re-shoring and alternate strategies in placing orders in adversely affected poor developing countries, Dr Golam Moazzem also said.
"If buyers and brands maintained their market share of export orders with the largest supplier, China, during the pandemic period, an additional $2 billion worth of orders could be distributed to other traditional supplying countries," he pointed out.
He also mentioned that Bangladesh and Sri Lanka have the capacity to supply products that are supplied by China.
The CPD research director said brands and buyers could undertake a joint commitment to ensure a gradual return to pre-Covid market shares of import orders to traditional supplying countries.
Governments of sourcing countries, as well as brands and buyers, could extend their long-term support in developing the social insurance schemes targeting workers of the apparel sector, he added.
Describing entrepreneur's experiences during the pandemic, Mostafiz Uddin, founder and CEO of Bangladesh Apparel Exchange, said, "Buyers who have been working with us for 20 years, within a moment they have just changed their so-called relationship and partnership and the peach word – we will be working together for a long term, we are like a family."
As the moderator, Professor Mustafizur Rahman, distinguished fellow at the CPD, said major brands and buyers had shifted their positions during Covid-19.
To return to the pre-Covid level of business, there is a need for a collaborative effort, he added, warning that if entrepreneurs do not survive, brands and buyers will not survive too.
Husni Salieh, director at Strategic Transformation of MAS Holdings, Sri Lanka, Binu Wickramasinghe, co-founder and managing director of The Design Collective Store, Sri Lanka, Pierre Börjesson, head of Sustainability - Global Production of H&M Group and Craig Churchill, chief at Social Finance Programme of ILO, Geneva, were present as panelists at the discussion.
