Source February 2013: distressed supplier countries show turnround signs


Turnaround in some distressed supplier countries as US imports pick up

US apparel imports grew sharply in December 2012 over 2011. A number of countries with weak exports to the US earlier in the year saw growth in the last quarter, with Bangladesh, India, Indonesia, most of Central America, Egypt, Jordan, Pakistan and Thailand  reversing earlier declines. China’s sales also grew, and its prices fell on 2011 – but its relative competitiveness fell as other countries’ prices fell faster and China’s policy on cotton meant extraordinarily high domestic yarn prices.


There was some evidence that China’s exports to the EU increased year on year in December: the first sign in over a year of European import growth


China leads on hitting wage arrears, abscondance and contract labour

Allegations of abscondance – investors closing factories without paying staff outstanding wages – emerged during January in Pakistan and Cambodia, and activists pursued those factories ‘alleged clients for the wages. So far, buyers have refused all such claims.


A different strategy has emerged from the Chinese and Vietnamese governments. China’s Supreme Court laid down severe jail terms for quite minor failures to pay outstanding wages or other benefits, as the country’s legislature issued legislation severely limiting the use of temporary work contracts, which from July 1 may no longer be used to avoid minimum wages or prescribed benefits. Vietnam increased fines for unpaid wages, and increased pressure on local government to compensate workers whose employers could no longer be found


Disorder threatened as SE Asian governments look at wage exemptions

After some confusion, the Indonesian government seemed by early February to be allowing most applications in large garment factories  for delays in meeting new, higher minimum wage limits. The decision may provoke more worker riots – but may also be too late to prevent some businesses from leaving. The government is preparing for substantial job migration from around Jakarta to more remote locations, while some factories claim to be leaving Indonesia because of union-incited disorder. The Malaysian government appears to be seriously considering a proposal to exempt foreign workers from receiving its new, higher, minimum wage. The Cambodian government has told its garment business to increase wages – but won’t say to how much


Sri Lanka hinting at “100,000 garment job loss” crisis says it will get GSP back

Sri Lanka’s industry minister claimed 100,000 jobs had been lost in the country’s garment industry as 40 factories closed. The extraordinary claim – made by no-one else – coincided with reports that Sri Lankan officials were preparing an application to regain the EU’s duty-free GSP+ concession. If true, and as stated the decision would represent an extraordinary climb down by the country’s government


Walmart tightens supplier rules as buyers hit unauthorised factories

Walmart promised immediate delisting of any supplier caught  using unauthorised factories, as Inditex fired two suppliers using what its Bangladesh auditor called “”a dump where no self-respecting brand would place an order” where a fire caused seven deaths. With H&M under activist attack when a Cambodian factory apparently absconding with unpaid wage bills turned out to have been used to make its brands without authorisation, it looks like major buyers will soon stop giving suppliers implicated in unauthorised manufacturers a second chance


Control over textile discharges grows

Most buyers targeted by Greenpeace over the past year to eliminate toxic discharges from their supply chains have now signed its Detox Challenge. The disruption claimed to have been caused by closure of Tamil Nadu dyeing plants is now thought to be exaggerated – because unauthorised dyeworks sprang up to replace them. US environmental rules cited as reason for onshore garment factories relying on imported fabric

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