Apparel buyers bargain for price discount as Bangladesh faces “energy crisis”

It’s like ambushing Bangladesh on the business front. The buyers are allegedly taking advantage of Bangladesh’s power outage and offering a low volume of work orders.

No sooner had Bangladesh started declining work orders, as plenty of it were placed than the Russia-Ukraine war made the apparel trade upside down.

The importers dependent on getting ready cloth from Bangladesh are currently taking much time to place orders and, unfortunately, using the power crisis as a bargaining tool.

The industry insiders think as the buyers are not confident about the uninterrupted energy and power supplies, they are getting slow while placing orders. And, their actions are badly affecting small and medium-sized factories which are laying workers off and keeping production lines to sit idle.

“We are suffering from five and a half hours of load shedding on average. Our Productivity has been down by 10 to 15 percent. As the national grid failed on October 4, the buyers began taking advantage of it,” Majharul Hassan, managing director of JMS Garment Ltd told Business Insider Bangladesh, on Wednesday.

He said the buyers are now offering 10 to 12 percent less price for a product.

The factories of Ashulia, Konabari, Mowchak are running at 60 to 70 percent of their capacities.

He said, “To survive along with the labourers, the businesses are bound to entertain such lower prices.”

Another factory official agreed.

“It’s very true that the buyers are cashing in on the energy crisis. Small and medium-sized factories will fall into the trap as they are worried about paying salaries and arrears to the staff and labourers,” Mejbah Robin, Head of HR of Ananta Group, told Business Insider Bangladesh.

Requesting anonymity, a merchandiser of a giant factory said, “The EU buyers are using their crisis as a trap to cut the prices. Currently, they are offering 10 percent less price. Though we are not entertaining those orders yet, after two months we won't have any option.”

Meanwhile, Bangladesh Garment Manufacturers and Exporters Association is advising fellow members not to entertain any discounted orders.

“I am requesting my fellow members to refuse any lower-priced orders in this crisis moment. If we can tackle the situation with patience, next year will be a good one for us. But, if the businesses practice ill competition, they will suffer even in the good time,” Faruque Hassan, president of BGMEA told Business Insider Bangladesh.