RMG exporters under increased pressure as buyers look for discounts

The demand for discounts of up to 5% by international brands from Bangladesh’s RMG exporters has created fresh pressures for the exporters, according to media reports.

As the exporters are coping with a number of problems in the context of the current global economic turmoil, the new pressures put them in hot water.

Manufacturers said the retailers wouldn’t place orders with them if they don’t agree to the new discounted prices.

As a result, the suppliers are being forced to accept lower or discounted prices.

Speaking to the media, Mohammad Hatem, executive president of the Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) said that sometimes prices are less than the cost of production.

He also said that the local manufacturers require a profit margin of 20% to 25% rather than the present 10% to 15% given the current cost of production.

He said that if the profit margin ranges between 20%-25%, manufacturers can pay a living wage to the workers.

He also said that the retailers and brands need to follow ethical and responsible business practices as local suppliers have spent billions of dollars to strengthen workplace safety in line with the recommendations of the Accord and the Alliance, the two factory inspection agencies backed by global buyers.

Abdullah Al Mamun, vice-president of the Bangladesh Textile Mills Association, said that the local textile and clothing manufacturers receive the lowest prices from the brands despite paying higher gas and power tariffs and investing extensively to build the safest industry in accordance with international standards.

Faruque Hassan, president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) said that because of the decline in sales in their individual regions and the accumulation of unsold inventory in recent seasons, the purchasers are now seeking discounts.

Given that many manufacturers have already filed for bankruptcy because they were unable to withstand the lower pressure on costs, Hassan urged merchants and brands to adopt ethical purchasing methods.