UK top retailer doesn’t pay Bangladeshi exporters and then feels ‘bitter taste’ when threatened with blacklisting

A British apparel empire, Edinburgh Woollen Mill Group (EWM), had placed orders with several Bangladeshi factories and then cancelled orders because of Covid-19.

When the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) sent it a letter to either pay up or face blacklisting with Bangladeshi factories, the UK company said the letter has left it "with a bitter taste in our mouth", as if the non-payment and order and cancellations had left 'sweet taste' on manufacturers' and workers' mouth.  

The high street retailer owning a number of brands including Bonmarche, Peacocks and Jaeger said after it got the letter that it has been engaging with the suppliers with the "best of intentions" although no manufacturer could say what that accounts for.

The UK retailer said the BGMEA was trying to invalidate the "productive" discussions it was having with its suppliers.

EWM's spokesman also claimed BGMEA's approach appears to be putting media noise and tactics above engagement, discussion and solutions, reports Inews, a British newspaper published by Daily Mail.

On May 21, the Bangladesh Garments Manufacturing and Exporters Association (BGMEA) President Rubana Huq sent an email to Philip Day, owners of Edinburgh Woollen Mill Group, warning him to settle his bills by May 29 or face a complete embargo on doing business in Bangladesh.

The Business Standard obtained a copy of the email.

However, EWM Group spokesman claimed that the company had not received the letter until after it had been published by the media.

Although, EWM wants a solution through discussions but BGMEA officials said the retailers has yet to communicate with the association or any of their suppliers in Bangladesh regarding this issue.

EWM now feels the BGMEA "approach has been "unproductive and uncollaborative".

BGMEA President Rubana Huq on Sunday Told the Business Standard "Their (EWM) vendors have reported to us that they (EWM) have actually gone ahead and started sending queries to new suppliers instead of settling their outstanding bills with previous vendors."

In her letter, the BGMEA president said the association's step came after receiving dozens of complaints from suppliers that Edinburgh Woolen Mills was avoiding contacts with the suppliers it owes money to for previous orders.

EWG has quite an impressive array of brands under its fold -- Peacock, Jaeger, Austin Reed, Jacque Vert, Country Casuals, Windsmoor, Baumler of Germany, Bonmarche & Ponden Home - and is owned by the British billionaire Philip Day.

She also mentioned that this email should be considered as official correspondence and notice from the BGMEA and the Bangladesh Knit Manufacturers Association (BKMEA) to Edinburgh Woolen Mills Limited and its brands.

BGMEA sources said Edinburgh Woolen Mills Limited and its subsidiary brands owe about $30 million to about 50 Bangladeshi apparel exporting companies.

The Inews report, however, claims the group has so far cancelled orders worth $8.22 million and said "it is understood that EWM has reached agreements with suppliers on more than half of this total".

The British company and its brands were doing business with Bangladesh through various agents, importers, full-service vendors and other third parties, BGMEA sources added.

RMG Sustainability Council (RSC) Chairman Nafis Ud Doula said that they cancelled all the orders in the first week of April. 

However, in mid-April they asked for a 70 percent discount to all suppliers. At the end of April, they again asked for a 30 percent discount. Whenever any suppliers asked for a formal mail, they would never provide it, he added.

However, from the first week of May, they began looking for new suppliers, sending random emails to manufacturers, which means they want to dump the existing suppliers, said the RSC chairman. 

"They never respond to any suppliers' communications over email or phone," he added. 

Edinburgh Woolen Mills was waiting for the suppliers to surrender to them with a substantial discount. It was trying to get a huge advantage out of this pandemic situation, said Nafis Ud Doula.

In light of the given circumstances, the BGMEA and BKMEA, upon fully taking into consideration the predicaments of both the exporters, the buyers and the local laws and regulations of Bangladesh have taken certain decisions about the alleged claim for discounts, said Rubana Huq.

"For goods already shipped and handed over to your nominated freight forwarders before March 25, Edinburgh Woolen Mills, which includes all its affiliates and associates, shall make the payment as per the originally agreed terms of payment i.e. concluded agreements. This payment has to be settled no later than May 29, 2020," said BGMEA official letter. 

For orders already placed, negotiation between the exporter and the buyer should be concluded within June 5, 2020. All negotiations must be mutual and not unilateral by the buyer. 

"If the instructions provided hereinabove are not followed, we will have no option but take the decision to place an embargo and black-list the buyers and their agents who do not comply with our instructions, which will prevent them from conducting business with our members in the future either directly and indirectly," said BGMEA president. 

In that letter, the BGMEA president also mentioned that a copy is also being sent to the Bangladesh High Commission in London, the Ministry of Foreign Affairs, BEPZA, Ministry of Commerce, the Bangladesh Bank and the Bangladesh Investment Development Authority, where Edinburgh Woolen Mills/Peacock and/or its affiliates is registered as a liaison office, for necessary information and assistance for compliance of this notice by all buyers. 

The letter is also being sent to the British High Commission and any other concerned ministries or departments.