H&M looks for alternatives as Walmart blacklists 250 factories

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A leading European retailer is now searching for alternative sourcing destinations after US-based Walmart blacklisted 250 Bangladeshi garment factories.
H&M, the biggest buyer of Bangladeshi clothes in Europe, is rethinking its sourcing policy in the wake of factory collapse in Bangladesh on April 24 that killed 1,127 people, reports London-based Financial Times.
Quoting Karl-Johan Persson, the chief executive of H&M, the report said that Hennes & Mauritz was exploring sourcing clothes from Latin America and Africa for the first time.
Persson said they had to rethink their sourcing strategy because ‘it’s terrible, what’s happening in the Bangladesh.’
Publishing a ‘blacklist’ of 250 RMG units Walmart said in a statement that it was committed to increase transparency in their supply chain. Transparency helps all stakeholders improve worker standards. In keeping with that commitment, the listed factories in Bangladesh are barred from producing products for Walmart.
The list includes factories like Pacific Jeans Ltd, Frank Apparels Ltd, Onus Apparels Ltd, Pastel Apparels Ltd, Sinha Knitting Ltd, KDS Washing Plant, Mascot Apparel Ltd, Oishi Fashion Pvt Ltd and Sadma Fashion Wear Ltd.
The statement said, ‘In addition to the regular audits that Walmart conducts under its Ethical Sourcing programme, the company recently announced that it would conduct more in-depth inspections in Bangladesh relating to electrical, fire and building safety. These facility audits are conducted by accredited and internationally recognised auditing firms and are based on our Ethical Sourcing scope.’
The garment sector leaders said the sector was now passing through a severe crisis as H&M, the second-largest fashion retailer of the world, was rethinking its sourcing strategy after Walmart, the largest retailer in the world, published the name of 250 garment factories as ‘black listed’.
Persson told the Financial Times that the Swedish brand was looking at countries such as Mexico and Brazil after opening its first store in the southern hemisphere this year in Chile.
‘When that part of the world is growing, which it is, it becomes even more interesting to look at production in South America or Central America. So, we are exploring that opportunity,’ he said in an interview.
Although Persson made no direct link with last month’s Rana Plaza disaster he underlined the importance of sustainability when considering production, pointing to the possibility of production in northern or even southern Africa.
‘We are looking at [Africa] as well,’ he said. ‘Again, it goes back to quality, lead times, capacity, prices, sustainability and where we are present as well.’
H&M was one of the first of some 30 mainly European retailers to sign up last week to a legally binding agreement to pay for factory repairs after independent inspections.
Persson denied that he had promised last year to double H&M’s sourcing in Bangladesh in the next five years but said that if suppliers respected the company’s code of conduct ‘we are willing to stay and we will reward the partners that are working best with these issues’.
He has called on Bangladesh to raise its minimum wage of $38 a month and to revise it annually as the last change was in 2010.
Rethinking of the sourcing policy of H&M can be a severe blow for the RMG sector as the EU was the major destination of Bangladeshi apparel, said Siddiqur Rahman, former vice-president of the Bangladesh Garment Manufacturers and Exporters Association.
If the H&M shift its sourcing to Latin America and Africa it will give a negative signal about Bangladesh across the world, he observed.
‘Now we have to perform to regain the image of the garment sector otherwise the buyers will shift their sourcing and country will suffer a lot,’ Siddiqur said.
Former BGMEA president Abdus Salam Murshedy said the apparel sector of Bangladesh was facing continuous threat from the buyers and obviously it was a concern for the exporters.
Walmart has blacklisted 250 factories of Bangladesh but a good number of factories of them are not doing business with the
company for two or three years and a number of factories have already informed the retailer that they are not willing to work with it (Walmart), he said.
Salam, also the Exporters Association of Bangladesh president, said, ‘It is not ethical to include the names in the “black list” that are not willing to do business with Walmart.’
He also said that there are many factories in the ‘Walmart’s black list’ that are highly compliant and working with the more valued brands than Walmart.

News source: New Age

Image source: Voice of America