Fashion questions sourcing in Bangladesh and India after Covid-19
Fashion groups that depend on these two markets follow closely the evolution of the pandemic and the business structure in both countries and are already beginning to think of alternatives.
India has already become the fourth country in the world most affected by Covid-19, only behind the United States, Brazil and Russia. In Bangladesh, there are more than 90,600 people infected. With factories not running at full capacity, the international fashion industry is closely following the evolution of two of the largest supply hubs in the world.
The coronavirus crisis and, above all, the risk of a new outbreak, is causing companies to start looking for alternatives to Bangladesh and India. According to an executive of a fashion company, the the health crisis is also having an impact on the apparel factories.
In May, both countries also suffered the impact of the cyclone Amphan, the most powerful storm that has been ever formed in the Bay of Bengal, according to the UN. The cyclone Amphan affected some 10 million people in Bangladesh, with at least 25 fatalities, while in India the number of deaths rose to 70 as of May 23. Half a million families lost their homes, according to the UN.
Cyclone Amphan joined the Covid-19 in May and affected Bangladesh and India
In India, Narendra Modi’s government decreed last March the world’s largest lockdown, affecting the 1.3 billion inhabitants of the country. In recent weeks, however, different restrictions have been eased and the return of migrant workers who had been trapped after the massive suspension of activities has been authorized.
On March 30, the Bengali government decreed the suspension of non-essential industrial activity to contain the advance of the pandemic . Despite the closure, the Bengali administration allowed factories with ongoing orders to continue working until they were completed. The country ended the lockdown by the end of May, despite having surpassed China in number of cases and being among the 20 most affected countries in the world.
As explained by different businessmen consulted by Mds, both in Bangladesh and India the textile industry is finding it difficult to maintain activity and employers are demanding public measures to keep up exports and regain employment.
Windy Group and Gokaldas have laid off 3,000 people and 1,300 people in Bangladesh and India
This week, for example, we have known the dismissal of 3,000 employees by Windy Group, a Bengali giant that has among its clients the largest fashion groups in Europe. In Gazipur, north of Dhaka, thousands of workers are awaiting the reopening of 52 textile factories, closed for more than two months due to the coronavirus crisis. Even global sourcing giants cut back in Bangladesh: Chinese group Li & Fung has laid off 100 employees as part of a global resizing plan.
In India, Gokaldas Exports, manufacturer for Gap, Zara, Adidas or Abercrombie, has closed one of its factories and dismissed nearly 1,300 employees for the cancellation or reduction of orders by large players. The company has twenty factories where it employs 25,000 workers. Another example of the cuts in India is Raymond, one of the largest manufacturers and distributors in the country, which has laid off 800 of its 7,000 employees.
Not only the lack of orders affects the sector, but also the labor force. Although the official speech notes that most workers have already returned home and are back at work, a report released this week by the Stranded Workers Action Network (Swan) notes that 67% of migrants in India are still trapped in the same place since the state of alarm was announced.
In Cambodia and Vietnam, textile production continues as usual
Which countries can capitalize on the doubts that are beginning to arise about India and Bangladesh? With the outbreak of the pandemic in China, European companies began to look to Turkey to save the closure of factories in the Asian country. The sector continues to focus on the Turkish market, currently to gain capacity to react to a frozen demand that could recover.
In Asia, Cambodia and Vietnam could also gain activity from India and Bangladesh . In both countries, according to industry sources, textile production remains “quite normal”, although some factories have stopped due to lack of orders when the big brands froze their production due to the closure of stores in Europe and the United States.
Bangladesh and Myanmar are currently among the cheapest textile supply hubs in the world, although the later does not have as much capacity as the first. Cambodia and Vietnam may come to match them in costs if they work with large volumes, but both countries have trade tariffs.
In early June, the National Assembly of Vietnam ratified the free trade agreement with the European Union, , although it has yet to be ratified by the Vietnamese National Assembly.
In the case of Cambodia, last February the European Union withdrew its tariff preferences to the country. Starting in mid-August, the country will have to pay tariffs on exports of certain types of clothing and footwear. Until now, Cambodia enjoyed zero tariffs under the Everything but Arms (EBA) program.
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The Chaiwala (Tea Seller) PM of India has found the solution to COVID.The man was born to doom Hindoosthan and the Hindoos and world. dindooo hindoo
His solution is to switch off the lights for 9 minutes at 9 pm and light candles,torches and cell phone lights – the sign of impending and inevitable doom.
business-standard.com/ article/ current-affairs/ coronavirus-on-pm-modi-s-exhortation-india-to-light-lamps-at-9-pm-today-120040500319_1.html
His aim is to plunge the Indians into the darkness of the shit hole – in which they are already resident.The Darkness of death in a morgue or a grave – as a premonition of a cold and miserable death
The Indian PM’s mother was and is a dishwasher.
1 week earlier he asked Indians to beat utensils in public on the roads – as an ode to his mother.
Another Indian Genius is using Cow Piss on a large scale,to cure COVID
When Babar was at the doors of Hindoosthan – Hindoos were praying to idols of Shiva and sacrificing goats,bulls and temple prostitutes. Rest is History
I really worry about the US and EU health systems (with the Indians working in it)
1300 years ago, a man called Beruni made a prophetic statement on the worth of the Indian race
The words of Beruni are prophetic,in this regard.
– The Hindus believe that there is no country but theirs, no nation like theirs, no kings like theirs, no religion like theirs, no science like theirs.
– They are haughty, foolishly vain, self-conceited, and stolid.
– They are by nature niggardly in Communicating that which they know, and they take the greatest possible care to withhold it from men of another caste among their own people,still much more, of course, from any foreigner
Chaiwala (The Indian PM) though he was special, along with his countrymen -aka, from the Lost Tribe of Israel.Those fantas-ical land – statistical contortions by the Indians, that the numbers were doubling at the lowest rate in Hindoo-land – lapped up by the lackeys in the Hindoo Media – made them feel mighty special – just like the sons of Rama.
You are missing “The Corona Bonanza” for LDCs like Pakistan.The Opportunity is being missed out.
There will a temporary shock to the government fiscal revenues as Imports will crash,CIF rates of imports will also crash,domestic production has stopped (as tax on MRP less deductions is paid at the time of production and not sale),domestic MRP rates will also crash.That is Y the state has not passed the benefits of lower crude and palm rates to the people.dindooohindoo
The Bonus is in non-salary expenditures of the state,which are on ARC (Annual Rate Contracts) or other RC.With crash in commodities and surplus capacities – Pakistan can easily make and re-negotiate its procurements.Large nations like Hindoosthan,will face disaster,as they will face supply risks,per se.W.r.t the purchases by the Pakistani state,the state can declare Force Majeure,especially on International contracts.
There is no immorality in this,as the suuply and value chain of the suupliers to the state – will,in any case,declare Force Majeure – which will ensure that the suupliers will default on the government contracts.The supliers will make supplies at ARCs,only to the extent of the existing stocks,as at March 15th,2020.They cannot be allowed to supply,from new purchases at the old ARC rates.
Global suppliers will be glad to dump their stocks – with depots in Pakistan – for sale to the Pakistani State.
This could easily reduce the costs by 30-50%,on a one time and recurring basis.Once this Cost is saved,in phases,the benefit of oil price crash on fuels and edible oils and also power tarriffs and fertilisers,can be passed on to the public.That will be pure jannat.
The Only Solution to the supply chain risk in USA/EU (w.r.t their supply chains in PTRC) lies in massive robotics and AI – which will make humans obsolete in manufactuirng and also,in part,in IT.The question is,what to do with the humans.That is Y the virus is sought – Simple !
For Pakistan – the crash in Raw Materials and cost of capital, availability of capital and crash in logistics costs will make manufacturing and exports viable.That makes existing unviable manufacturing units viable and jobs and decline in NPAs.No fresh capacities should be launched,solely based on the current cost structure.Crash in costs plus the low labour costs in Pakistan and stable PKR – is the Alt-AI and Robotics
The Pakistani people should thank its prior leaders,that they made manufacturing unviable in Pakistan,and made it a trading nation. Had the state set up manufacturing units – they would be unviable,banks would be busted and there would have been mass skilled unemployment. Just look at Hindoosthan. dindooohindoo
This is the time for setting up manufacturing units – SME and others.
The military,food,telecom,technology and health secuirty of the USA and EU is in the hands of the PRC.These nations will be FORCED to move at least 10-20% of their supply chain,to other nations.They have no choice.
The SBP and the treasury of the private sector,should suck in the Corona rate cuts and packages in EU/Nippon/North East Asia and the USA – and restructure the entire FX loan portfolio,w.r.t tenor,spreads,risk premiums,swaps and hedges. One simple way,is by trade finance,which is based on underlying trade and other activties with those nations.
After doing 3 and 4 above,the state should invite bids to build and repair infrastructure on BOOT basis.The Cost of infra should reduce by at least 30%,supplemented with long term soft loans and grants.
With viable manufacturing and exports,lower cost of debt – an already cheaper infra cost – will make infra financing and operations,all the more viable
To lock in the gains to the people and industry,the SBP and the State should lock in to NYMEX crude and futures,at current rates (on CBOT or with large funds etc.) – for as long as possible,with reasonable contangos or maximum backwardation.A large nation cannot do this – as it will move the premiums,in the derivatives market.
The State should thereafter, lock in the oil and gas rates – and then affix power and fertilisr tarriffs, for the same tenor – with a priority for industrial zones – after meeting the consumer needs.Edible oil contracts can also be struck with large funds,in the USA/EU.
This is also the time for the state to declare Force Majeuer on the ulra high cost RPP/IPPs.With reduced power demand,the entire power demand of Pakistan, can be met from fuel and coal plants,at less than half of the previous marginal cost. For several people, this power supply can be free of cost,as the Marginal cost of power on current fuel costs,should be around 1-2 Rupees (which is not worth collecting from marginal users).
It is time to celebrate !