It was sometimes around the middle of last year that the British clothing retailer Edinburgh Woollen Mill or EWM hit headlines in Bangladesh for what suppliers in the country alleged issues related to payment and orders — the EWM and its subsidiary brands allegedly owed about US $ 27 million to some 22 Bangladeshi apparel exporting companies — even as reports were also doing rounds that EWM, by that time, had cancelled substantial work orders in Bangladesh due to the Coronavirus pandemic.
The issue had attained such proportions that at one point of time, the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) sent a letter to the British billionaire Philip Day (the then owner of England’s Carlisle-based retailer EWM), in this regard, which also included the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) in the letter even as the garment makers’ bodies were mulling to blacklist the so-called errant retailers.
“We are blacklisting non-responsive buyers who are not paying and also not responding to suppliers,” underlined the then BGMEA President Dr Rubana Huq while speaking to the media even as the letter included EWM’s affiliates, including the brands and retailers Peacock, Jaeger, Austin Reed, Jacque Vert, Country Casuals, Windsmoor, Baumler of Germany, Bonmarche, Ponden Home, and various agents, importers, full service vendors and other third parties which have been working indirectly and/or directly with each of these companies and brands, all of which faced the threat of being blacklisted.
“We are never going to go for a confrontational relationship with anyone. And we have always been strategic,” underlined the then BGMEA President, adding, “But with our businesses hanging by a thread, we need to step up and also rate and rank buyers. There is a lot of discussion on sustainability, but sourcing practices are often not syncing with sustainability concerns. For example, many buyers haven’t paid us but we have had their offices chasing us about salary and bonuses and whether those have been paid. This is not fair… So, we have to step up and take a stand and ensure that our terms of engagement with our buyers change for the better and that we end up having a more sustainable relationship with them…Bangladesh’s RMG sector is huge and we need to proceed with caution and protect our businesses and our workers.”
In the letter, Rubana reportedly said that it was found that some buyers, including EWM, have been taking undue advantage of the COVID-19 situation and demanding unreasonable discounts despite having concluded contracts before the outbreak and amidst continued business activity.
Such undue advantages are not only impossible for BGMEA members to grant, but are also violations of local laws and internationally acceptable standards, and moreover defy all principles of ethical sourcing and governance that international brands and organisations expect of the industry and all its stakeholders, the letter said while adding that until the pending issues in this regard were settled and agreed, the associations will not issue any new Utilisation Declarations to its members for any order of EWM, which includes all its affiliates and associates even as the BGMEA letter requested the EWM to comply with the requirements and settle all outstanding dues as prescribed, adding that it would blacklist and place an embargo on the retailer and its agents otherwise.
Meanwhile, responding to the BGMEA letter, EWM spokesperson reportedly said BGMEA and BKMEA’s approach has been ‘unproductive and uncollaborative’ even as the high street retail empire underlined the associations’ approach has left it with a very bitter taste in their mouth and insisted it has been engaging with suppliers with “the best of intentions”.
An EWM Group spokesman then said the company had not received the letter until after it had appeared in Bangladeshi media and that it was the first time it had been contacted by BGMEA and BKMEA.
“We are left with a very bitter taste in our mouth over the sincerity of this letter,” reportedly said the spokesperson, adding, “We think their approach has been unproductive and uncollaborative,” even as the spokesperson went on to maintain that conversations with the vast majority of its suppliers have been positive, and added: “They have understood that we are trying to find a balanced way forward that matches the immediate, urgent challenges faced by high-street stores nationally and those of suppliers.”
We have looked at literally every option on the table and worked hand-in-hand with all our suppliers to find solutions, but we also need to recognise that these are difficult and complicated issues, said the spokesperson then, adding, “There are not simple problems, and every potential quick solution has long-term implications. If we took delivery of remaining unmade stock for the spring season with all our stores closed, this stock would only be stored for next year and depress 2021 orders.”
Reports then even suggested that EWM was considering filing a lawsuit against the trade organisations after it was accused of owing manufacturers £ 27 million in unpaid bills.
In a letter sent to then BGMEA chair Rubana Huq, John Herring said the allegations were jeopardising the company and its 24,000 employees and that accusations made in the media of any remaining outstanding debt to suppliers in Bangladesh was “categorically false”.
“To the best of our knowledge, all outstanding amounts that were owed to suppliers in Bangladesh have been settled or agreed. Old figures that have been recirculated are completely baseless and without any merit,” the EWM said.
Since then, a lot of water has flown down the river till another report emerged lately that maintained that Bangladeshi apparel exporters were going to put diplomatic pressure on EWM for due payments for shipped goods and cancellations even as apparel suppliers here were reportedly planning to discuss the issue with the Bangladesh High Commission in Britain and with a number of British lawmakers.
Apparel suppliers said EWM’s brand Peacocks should pay for shipped goods and take all existing stocks which were ordered by it even as they maintained that the brand had cancelled all previous stocks without any valid reason and has not paid for previous shipments.
Peacocks was part of EWM fashion retail empire which collapsed in November last year and now, it has been bought by an international investment consortium backed by Edinburgh Woollen Mill’s COO Steve Simpson.
However, according to Bangladesh apparel industry insiders, the discount fashion chain has played what they termed “a trick” to deprive its suppliers through getting liabilities written-off even as they maintained that Bangladeshi factories were holding huge stocks of goods ordered by them and also have not received payments for shipped goods.
“I have discussed the issue with the Bangladesh High Commissioner in the UK…At the same time, we will also give a letter to the British High Commissioner in Dhaka,” reportedly maintained the newly-elected BGMEA President Faruque Hassan, adding, “We also asked all suppliers to give updates of outstanding payments from the Peacocks, then we will move forward.”
As per reports, port city Chittagong based jeans maker Denim Expert Limited is one of Peacocks’ suppliers in Bangladesh and has suffered allegedly on account of the cancelled orders.
Peacocks’ order cancellation hit my business hard; some other manufacturers also suffered from its order cancellation, reportedly maintained the Managing Director of Denim Expert Ltd., Mostafiz Uddin, adding he was now working with British MPs and European Commission to change the bankruptcy laws which such errant brands always resort to wipe out their debts to factories and come to business again under a new name, he added.
“We have to put concerted efforts to tame such unethical purchasing practices that are strangling the manufacturers,” reportedly maintained Mostafiz while another of Peacocks’ supplier said on the condition of anonymity to the media that the brand had pushed him to produce orders in November while it was still in EWM even as it later cancelled that order while the goods were ready for shipping.
However, after order cancellation, the brand reportedly also emailed the supplier saying they agreed to receive those jeans pants on condition of 50% discount, which the supplier claimed was the last email from Peacocks to the factory even as he maintained how they asked for shipping those goods as the cost of raw materials is over 80% even as he expressed fears of going bankrupt as he has paid all his suppliers and all the workers out of his own pocket.
He also reportedly mentioned that Peacocks’ total liabilities to his company stands at over US$ 2.6 million while another Bangladeshi garment exporter, KL Design, reportedly claimed due payment of US$ 438,151 to Peacocks for shipped goods last June.
So even as the suppliers in Bangladesh have reportedly been mulling to put diplomatic pressure, latest reports suggest that Edinburgh Woollen Mill (EWM) Group Chairman John Herring has reportedly told suppliers in Bangladesh that its new owners will purchase the cancelled orders that are sitting in factories, ready to be shipped.
“The EWM Group has no shareholding in the company of the new owners and therefore has no control over its day-to-day operations,” Herring reportedly wrote to BGMEA President Faruque Hassan, even as he went on to reportedly add, “The new owners are happy to take the stock that sits in Bangladesh factories that is finished and ready to ship. We are also of the understanding that they have credit facilities in place, ready to transact.”
Going by the recent turn of events, it seems the long-standing issue could at last get sorted and amicably, which of course, would be in the interest of all, as one would agree.