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New Sourcing Countries Advocate ‘Complete Reset’ of Buyer-Supplier Relationship

A new initiative by Asian manufacturer associations to improve buying practices, increase transparency and drive sustainability is expanding beyond the continent.

The Platform on Sustainable Textiles of the Asian Region, or STAR Network, announced Thursday the addition of four new members from three countries: the Indonesian Textile Association, the Turkish Clothing Manufacturers Association, the Istanbul Ready-Made Garments Exporters’ Association and the Moroccan Association of Textile & Clothing Industries.

They join founding members from Bangladesh, Cambodia, China, Myanmar, Pakistan and Vietnam in banding together to agree on common positions regarding payment and delivery terms “so that we have a stronger voice in individual and in collective discussions with brands and buyers on improving purchasing practices,” Miran Ali, spokesperson for the initiative, said in a statement. “Following the pandemic, there should be a complete reset of the buyer-supplier relationship; we should not revert back to the norm.”

Suppliers in the STAR Network represent two-thirds of the global market for apparel and footwear factory exports, representing an “unprecedented collaboration in the industry,” Ali added. “The fact that there is fierce competition among manufacturing countries is not an impediment to collaboration.”

Suppliers were feeling a “sourcing squeeze” that was progressively worsening even before Covid-19 reared its head, labor advocates say. As the pandemic continues to rage on and demand for clothing has slackened, however, buyers are now “leveraging desperation” to demand steep discounts from suppliers, they add.

In a survey of 75 factories in 15 countries, published in October by the Worker Rights Consortium and the Center for Global Workers’ Rights at Penn State University, 65 percent of respondents said that buyers have demanded price cuts on new orders that are bigger than the year-over-year reductions they usually request. More than half of those polled (56 percent) said they have been forced to accept some orders below cost, while the majority anticipated it was only a matter of time before they succumbed to the pressure.

Suppliers now have to wait an average of 77 days after they complete and ship new orders before they receive payment, compared with 43 days pre-pandemic, the survey found. In addition, one in four buyers, suppliers said, have imposed payment terms of 120 days or more.

The timing of Morocco’s entry into the initiative comes as torrential floods killed 28 workers and injured 17 in a flooded underground garage that was illegally used as a garment factory. A 14-year-old girl was among the victims, who either drowned or were electrocuted due to a short circuit. Suppliers, experts say, frequently rely on such unregulated “shadow factories“ to ramp up production and meet tight deadlines for less money.

The STAR Network, in collaboration with stakeholders and partners such as GIZ (Deutsche Gesellschaft für Internationale Zusammenarbeit), the International Apparel Federation and the Better Buying Institute, seeks to create what it describes as a “safe space for manufacturers” to jointly draft a set of minimum expectations related to payment and delivery, including establishing red lines and core principles they “deem essential for fair, legitimate business.”

“Suppliers from around the world are coming together to offer solutions for strengthening global supply chains,” said Marsha Dickson, president and co-founder of the Better Buying Institute, a Texas-based research organization. “Suppliers often have the best ideas for how to overcome challenges and the impacts of brand and retailer purchasing practices on workers and the environment. It’s critical their voices be heard.“

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