Last week, Bangladeshi garment factory owners made history. A total of 21 Bangladeshi factories won a $40M lawsuit against US buyer Sears Holdings. Bangladeshi garment suppliers which have already been battered by the Covid-19 and have been the long-time victims of unethical business practices of Western clothing giants secured a rare victory.
Attorney Joseph E. Sarachek, whose firm represented the 21 Bangladeshi factories, said that the lawsuit was filed against Sears last June.
Now, we need to remember that when we do business, we have to do the business completely based on mutual trust. We have to enter into contracts based on trust too.
Nowadays, in many cases the buyers do not give us a letter of credit. Also problems arise when we enter into contracts. Under the terms of the contracts, there is no legal binding. And, there are some contracts we enter into which have very weak legal binding. As a result, there are some buyers who always try to take advantage of it.
Some buyers want to make our garment factories bankrupt. After receiving our products, they refuse to make payments. They wrongly import our products, cancel orders too. And these buyers have long been engaging in these unethical practices.
The winning of the case is highly significant. It will set an example in the readymade garment sector as for future reference for the bad buyers. Many bad buyers will see that it will not be easy any longer to make our suppliers bankrupt. This case will take precedence.
From now on especially bad buyers will have to think twice before swindling our garments owners out of tens of thousands of dollars. I think the incident will discourage buyers from engaging in unethical buying practices and the buyers will get out of the bad habit.
In this case, unity among garment owners worked well. In general, buyers do not buy products from a single factory, they have to purchase products from different factories at a time. Sometimes, the buyers make payments to some suppliers, mainly the influential ones and try to manage other suppliers by other influence. But that kind of situation did not arise this time around. I will say that it is good to have unity among the suppliers.
If there are any accidents or criminal activities in future, and all the factory owners are united, it will be tough for the buyers to swindle our factory owners. I feel that we need such unity among the suppliers so that the buyers cannot go away leaving the suppliers in a difficult situation.
As an apex body of the readymade garment factory owners, Bangladesh Garments Manufacturer and Exporter Association (BGMEA) always extends its support. In this case too, the association has also provided support to these suppliers. The BGMEA supported them with proper guidance and the information they needed.
However, one thing is very important. We have to make our garment factory owners aware about good buyers. The factory owners will have to check the credit rating of buyers before doing business with them. They will have to scrutinise their track record too.
We have to stop the practice of selling products to buyers without being aware of their previous records. As the owner of the Surma Garments Limited, I have also fallen victim to order cancellations and non-payments before.
Once, I exported products to a US company. The company released my products and they were supposed to make payments on time. The company assured me that it would make payments on time but finally, they did not make any payments. I had to spend around 30% of the money I was owed by the company for the subsequent case proceedings. Finally, I brought some money.
There is always a risk in the business. What we all have to do is to be aware of the buyers. We will have to take orders being on full alert. To have clear communication with the buyers is very important.
Faisal Samad is the senior vice president of BGMEA and managing director of Surma Garments Limited