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Asian Manufacturers Fight Back Against Payment Terms

In an unlikely move for such disparate and competitive countries—Asian manufacturers banded together on Monday to launch an initiative to work collaboratively from the region that accounts for more than 60 percent of global sourcing of garments and textiles.

Restless after Covid-19, and the immense pressure they have been facing from all sides to keep labor employed, manage sudden cancellations of orders, manage costs and sudden bankruptcies, and meet pressure for best practices, manufacturers are determined to handle the second wave, and the coming years, differently.

“This common position will be powerful,” Miran Ali, spokesperson for the initiative, told Sourcing Journal. A prominent factory owner in Bangladesh, Ali is also on the board of directors of the Bangladesh Garment and Manufacturers and Exporters Association (BGMEA), and the RMG Sustainability council (RSC). “We have all had similar experiences during the Covid-19 crisis, which has brought us closer together. The situation has been difficult before, but Covid-19 changed everything.

“However, it does not end with Covid-19,” he added.

Dubbed the STAR Network, the grouping from six countries—China, Bangladesh, Vietnam, Myanmar, Pakistan,  and Cambodia—includes nine member manufacturer organizations, and aims to ensure better purchasing practices in the textile and garment industry. China, Bangladesh and Vietnam are among the top five exporters of textiles and apparel worldwide.

Talks with other countries for inclusion in the initiative are still underway.

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Miran Ali is the new spokesperson for STAR Network, an alliance of Asian garment and textile manufacturers fighting for better purchasing practices.
Miran Ali Courtesy

Although it seems an unlikely alliance—as these countries in Asia have been bitter rivals competing for business from global brands and retailers, undercutting pricing, with efforts to be stronger on the supply chain, and other issues—Ali said that the bigger common objective takes precedence.

“We will always compete for business—that will always be there. So, among the things we are looking at are not items on specific pricing, for example, but rather a focus on payment terms—like the 180-day payment cycle, the cancellation of orders, etc. By working in this way, we can make sure the business becomes more transparent, more responsible as a whole,” he said.

The focus will be on better purchasing practices in the textile and garment industry, which has been characterized by a power imbalance between the brands and buyers on the one end and the textile and garment producers on the other, he said, with a look at how a correction can be made.

Immediate action begins with defining ‘red lines’:  the areas that have not been previously crossed, such as a focus on payment and delivery practices, third-party negotiations that often leave the manufacturer in the lurch, and better ways to focus on sustainability that can work as much in favor of the manufacturer as the buyer and the end consumer.

Although the STAR network has already existed as an entity funded by GIZ, the new entity has an additional collaboration with the International Apparel Federation (IAF).

GIZ, (Deutsche Gesellschaft für Internationale Zusammenarbeit GmbH), is a German development agency headquartered in Bonn and Eschborn that provides services in the field of international development cooperation; IAF is a global federation for apparel manufacturers, brands, their associations, and the supporting industry.

The secretariat for the new initiative is to be based out of Netherlands.