The Coronavirus epidemic poses a threat to the country's apparel sector, as foreign buyers have started revising their business strategies amid the prevailing critical situation.
Sector insiders opined that export earning of the country's US$34-billion ready-made garment (RMG) sector, which is witnessing a negative growth in the current fiscal year (FY), 2019-20, might decline further, if the situation prolongs.
They feared that work orders might plunge due to disruption in supply chain. It includes delay in importing raw materials like fabrics, accessories, dyes and chemicals, buyers' adopting 'wait and watch' policy, and possible slowdown in demand from consumers' side.
H&M, one of the largest apparel buyers that sources more than US$3.0 billion annually from Bangladesh, has cancelled its officials' factory visits and all meetings with external visitors, and also reduced its Dhaka office activities.
The Swedish retailer, however, requested its local suppliers to conduct self-inspection of products and make shipments accordingly. It also asked the factories concerned to continue production of orders already placed or booked.
The retailer conveyed its latest business strategy to all its supplier factories on Sunday as part of precautionary measures immediately after three COVID-19 patients have been identified in the country.
Talking to the FE, Sayeed Ahmed Chowdhury, general manager of Square Denim, said: "One of our US buyers has refixed its demand by cutting 30 per cent of total work orders."
Buyers are pressing for timely shipments, and are not willing to extend lead time. But supply of raw materials has already been disrupted.
The company had to make costly air shipment to meet the lead time of a buyer, and it partially provided the cost.
Explaining the supply chain disruption, he also said they source 32 to 40 per cent of their raw materials, like - fabric, accessories, dyes and chemicals, from China.
Fazlee Shamim Ehsan, director of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA), said his company was negotiating an order with one Italian buyer.
"But the buyer has informed us that it will not give the order now, and will inform us in this regard in April."
The prices of basic raw materials, including sewing thread and level yarns used in production, are still high due to the virus outbreak.
However, Chinese suppliers, after resuming their operation partially, have started communicating with local factories, he told the FE on Monday.
He feared that the supply chain, especially of man-made fibre and woven fabric, might be affected, as majority of those are imported from China.
Talking to the FE, Mahmud Hasan Khan, a former vice-president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), opined that buyers might defer their shipments considering the overall situation, and so, local suppliers might incur financial loss.
The industry people noted that the ongoing crisis in China will cause delay in arrival of raw materials from there, late shipment and delivery, and cash flow crunch.
According to the industry people, about 46 per cent of raw materials for the local RMG industry are sourced from China.
Bangladesh imported textile fibres and articles worth $5.02 billion, out of its total $13.63 billion import, from China in FY 2018-19.
Taking the contingency into account, the BGMEA has opened a Corona Control Room at its Uttara office, and requested all member factories to call at the hotline number 0173442211.
The trade-body in a circular also requested all its members to abide by instructions, provided by the government, for ensuring safety of all officials, employees and workers of the industry.
The BGMEA also asked its members to make all the workers aware of Coronavirus to take precautionary safety measures by raising awareness through safety, participatory and OSH (occupational safety and health) committees in the RMG units.
munni_fe@yahoo.com