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Fast Retailing’s Supplier Factories Torched Amid Mayhem in Myanmar

While the recent social and political unrest in Myanmar is taking its toll on the country, retailers with factory operations there continue to deal with the fallout. Japan’s Fast Retailing Co. said that two supplier factories in Myanmar were recently set on fire amid the violent unrest in the wake of coup executed by nation’s military junta on Feb. 1.

A representative for Fast Retailing, which owns Uniqlo, J Brand, GU, Theory and five more brands, confirmed to Reuters that fires had broken out on Sunday at two factories used in the manufacture of its apparel.

Fast Retailing did not immediately respond to Sourcing Journal’s request for comment.

The factories, located in Myanmar’s largest city, Yangon, were not operating at the time and there were no injuries, but the retailer said the situation will lead to some delays in the production and delivery of garment products.

Myanmar accounts for as much as 2 percent of Fast Retailing’s contract factories, with the retailer now working with six supplier factories in the country. Five apparel production plants in Yangon and one in Bago, northeast of the city, manufacture garments for the GU brand, the company says.

“We are deeply concerned about the current situation in Myanmar and have started conversations with international stakeholders, including United Nation agencies and NPOs and other global companies on this matter,” Fast Retailing said in a statement to Reuters.

At least two people protesting the coup were reported shot and killed by Myanmar security forces Tuesday. The United Nations has put the death toll at 149 since the coup toppled head of state Aung San Suu Kyi’s elected government. Another independent organization, the Assistance Association for Political Prisoners, tallies the death toll at 183.

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The outbursts in Yangon extended to factories after security forces killed at least 22 anti-coup protestors over the weekend. Dozens of Chinese-financed factories were vandalized and torched amid a wave of rising anti-Chinese sentiment in the country.

Myanmar’s garment sector employs an estimated 700,000 workers, most of them women, in approximately 600 factories, and generated $4.8 billion in exports last year, according to the Ministry of Commerce. With so much at stake, the apparel industry is monitoring the situation with wary eyes.

The Fair Labor Association (FLA), a multi-stakeholder initiative whose affiliates include Fast Retailing as well as Adidas, Gildan, Hanesbrands, Lululemon, Nike, Patagonia and Under Armour, is calling on apparel companies that source from Myanmar to engage with their suppliers to protect workers, particularly union leaders.

H&M, which works with 56 supplier factories in Myanmar, recently announced a temporary mortarium of new orders from the nation, citing “practical difficulties and an unpredictable situation limiting our ability to operate in the country, including challenges related to manufacturing and infrastructure, raw material imports and transport of finished goods.”

The Swedish fast-fashion retailer has not indicated how long it would halt the new orders.

Italy’s Benetton Group has also suspended orders from Myanmar.

Adastria, a Japan-based casual apparel retailer, told financial publication Nikkei Asia that it faces two- to three-week delays in delivery from contract plants in Myanmar due to disruption in production and logistics. The company plans to temporarily halt local production next month while it considers moving production to Vietnam, Indonesia and China.

Smoke believed to be from a factory fire rises during the security crack down on anti-coup protesters at Hlaing Thar Yar township, Yangon, Myanmar, March 14, 2021.
Smoke believed to be from a factory fire rises during the security crack down on anti-coup protesters at Hlaing Thar Yar township, Yangon, Myanmar, March 14, 2021. Nyan Zay Htet/Associated Press

Another Japanese apparel chain, Shimamura, said it suffered a delay in deliveries from Myanmar and is considering alternative production in China or other Southeast Asian countries.

With so much uncertainty for the apparel industry, the idea of moving more production out of a risky country like Myanmar elsewhere, or closer in the supply chain, isn’t out of the question.

And across all industries, international businesses have been urged to suspend operations in Myanmar to put pressure on the military regime to end the violent and deadly takeover.

In February, the White House imposed new sanctions targeting Myanmar’s military leaders, their families and businesses, redirecting $42.4 million of U.S. aid that would have supported the local government’s efforts to reform economic policy and strengthen civil society and the private sector.

The tension in Myanmar doesn’t appear to be easing up either. On Sunday, martial law was declared in the neighboring townships of Hlaingthaya and Shwepyitha, the first such declarations in Yangon since Feb. 1. This was followed by orders in four more townships in the city on Monday.

The declaration gives the military administrative and judicial authority in the areas.