H&M wins trust of Bangladeshi apparel exporters

Swedish fashion retail giant Hennes & Mauritz (H&M) continues to place a significant number of orders with their apparel supply chain partners in Bangladesh despite its losses for the first time in decades due to the Covid-19 pandemic.

The group intends to increase its commitment in the country, as lockdown measures imposed in Europe and the USA – inthe wake of the global pandemic – arebeing relaxed gradually.

H&M is the world's secondbiggest fashion retailer but the largest for Bangladesh in terms of the volume of readymade garments sourced from here.

Last year the Swedish retailer purchased apparel products worth approximately $3.5 billion from its 235 Bangladeshi garment suppliers, contributing to over 10 percent of the country's total apparel exports.

"We stand by our supply chain partners and are continuing to place orders with all of our suppliers in Bangladesh to enable them to run their units," said Ziaur Rahman, regional head of the H&M Group for Bangladesh, Pakistan and Ethiopia.

"We are planning to place more orders in Bangladesh as H&M has been working in the country for more than three decades and has developed a strong bond of confidence and trust between us and our supplier factories here," he added.

A number of fashion brands and retailers have cancelled orders, delayed shipments, demanded discounts or deferred payments from their suppliers in the aftermath of the Covid-19 pandemic.

H&M has honoured its commitments to its supply chain partners, taking delivery of finished products and making full payment for goods, on time, according to the industry insiders. 

"We have been doing business with H&M for many years and have become a trusted partner of the group," said Fakir Kamruzzaman Nahid, managing director of Fakir Fashion Ltd, a concern of the Fakir Group that supplies$150 million worth of apparel to H&M annually.

Nahid further said, "During the pandemic, H&M took delivery of all the goods which we could ship for it, and released timely payments. We did not face any order cancellations or demand for discounts from this retailer."

"At present we have full orders as well as projections of future orders from H&M," said Nahid, adding that although many involved in the Bangladesh's RMG sector feared a steep decline in apparel orders globally because of the pandemic, H&M has continued to place the same volume of orders with the company as previous seasons.

Nahidwas echoed by MA QuaderAnu, deputy managing director and chief executive officer of the DBL Group, another leading apparel exporter, who said in March, when the pandemic first broke out, every customer of the company delayed or cancelled their orders, with the exception of H&M.

Anu also said the company is now receiving orders from H&M in line with the retailer's earlier projections and full production of H&M garments is currently being processed through the company's factories.

When the world's largest apparel retailer, Inditex, reported a loss of 409 million euros from February to April this year compared to a profit of 734 million euros over the same period last year. 

The H&M Group has not been immunetothe impacts of the coronavirus pandemic. In the March-May quarter of the year, the company has reported a loss of 559.4 million euros for the first time in decades. The retailer made a profit of 511.9 million in the same quarter of 2019.

Ziaur Rahman said H&M is expecting to recover the loss in the coming quarters of the year.

The signs of the Swedish group's recovery are tangible as revenues from June 1 to 24 were down only 25 percent following a decline of a staggering 50 percent in the second quarter, according to a report in the UK's Financial Times.

In a response to The Business Standard, Ulrika Isaksson, press officer at the Communication Department of H&M Group, outlined the retailer's strategy for its supply chain partners.

"We stand by our responsible purchasing practices and contractual agreements. We take delivery of and pay for already produced goods, as well as goods in production, if delivered within a reasonable timeframe. We are fulfilling all payments to our suppliers on time. Even if suppliers offer discounts, we pay the original agreed price, without any re-negotiations," she said.

"We want to support a viable industry going forward and are acutely aware that garment workers are extremely vulnerable in this situation. The H&M Group is therefore in close dialogue with several partners and industry stakeholders to see how we can and should support with the aim of finding a joint industry solution," Ulrika Isaksson added.