Asia's garment industry sees lay-offs, factories closing because of coronavirus
Image collected
Temporary factory closures and layoffs have already begun going to low wage personnel across Asia as quarantines and travel restrictions from the new coronavirus disrupt supply chains linked to China.
For 31-year-old Myanmar worker Aye Su Than, the suspension of production at Hunter Myanmar, which produces clothes for an Italian fashion brand, arrived of the blue when managers informed its 900 employees almost two weeks ago.
"They said, 'There are no orders, no buyers, because of the virus we will turn off,'" said Aye Su Than, who is five months pregnant and makes about $130 per month.
She said she got $320 in compensation from the factory, which declined to comment when contacted.
"We don't really know what to do now… It isn't easy to apply for a job elsewhere within my pregnancy," Aye Su Than said, sitting in a tea shop in Hlaing Tharyar, an professional district on the outskirts of Yangon.
Such bad news has been repeated in many elements of Asia's a lot more than $290 billion textile industry, which accounted for 60% of the world's readymade garments, textiles and footwear in 2015, according to World Trade Organisation statistics.
Low-wage staff are particularly susceptible to any global monetary downturn triggered by travel restrictions and quarantines as the coronavirus outbreak spreads from China around the world, roiling supply chains.
International brands from Uniqlo to Adidas have wide networks of suppliers and will potentially shift production outside China to fill the potential gap in production from that country - the world's largest apparel and textile manufacturer.
Still, sourcing lines in the clothing industry are deeply intertwined and factories in southeast Asia are dependent subsequently on China for supplies like cloth, buttons and zippers.
Cambodia said this week that 10 factories had already applied to suspend procedures and would pay partial wages to about 3,000 workers.
The federal government in Phnom Penh expects a complete of 200 to slow or stop production in March as a result of coronavirus, affecting 100,000 of more than 850,000 employed in the $7 billion sector, which is Cambodia's greatest employer.
In Bangladesh, the world’s second-largest garment manufacturing industry after China, factories are still running but anxiety keeps growing.
"Nobody knows what will happen ahead however the factory owners are actually worried," said Mohammed Nasir, a director of the Bangladesh Garment Manufacturers and Exporters Association.
DEPENDENCE ON CHINA
Readymade garments certainly are a mainstay of Bangladesh's economy, contributing almost 16% of national output and about $34 billion worth of exports within the last fiscal year ending in June 2019.
"Almost 70% of our woven fabrics come from China and naturally if goods usually do not arrive promptly, the readymade garments industry will be affected. If the crisis in China is prolonged, the impact will be severe," Nasir said.
Bangladesh has about 4,000 garment factories employing some 4 million workers.
Neighbouring Myanmar has a smaller industry but is more reliant on China, with the Myanmar Garment Manufacturers Association warning that half of the nation’s 500 factories could turn off by March if the crisis persists.
China supplies about 90% of fabrics delivered to Myanmar, which up to now hasn't reported any cases of the virus, however the closure of the land border to try to keep infections out has disrupted the supply chain.
"We are able to still export, but we can not say what is going to happen within the next a couple of months," Aung Min, vice-chairman of the manufacturers' association, told Reuters. "That is sort of scary - the problem is uncertain."
An extended crisis could eventually see retailers face a shortage of clothing, although fashion giant H&M Group said it currently doesn’t start to see the virus leading to any larger delays in deliveries.
"We are in close connection with our suppliers in China and evaluating the situation together with them every day," H&M spokeswoman Ulrika Isaksson said, adding that the business was also exploring other options for production.
Manufacturers, too, are scrambling to find alternative suppliers of from fabric to buttons and zippers.
"It is not simple to shift the sourcing destination overnight. But buyers are looking for alternative sources," said Siddiqur Rahman, a leading garment exporter.
Alternative raw material suppliers are being explored in Thailand, Indonesia, Pakistan and India but then costs will rise, he said.
"Are the buyers prepared to pay more? I don't believe so. So, it is not that easy. But we’ll need to look beyond China to survive over time," said Rahman.
Source: https://finance.yahoo.com
Previous Story
- Subsequent challenges of Bangladesh's RMG
- Has Bangladesh made progress on the rights of...
- Cotton and yarn update
- Is denim offering new trusts in Bangladesh's clothing...
- Battling style squander with digitized information framework
- The importance of building relationships in the apparel...
- Why RMG sector needs a change of mindset
- The Environmental Cost Of Fashion