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April 7, 2020updated 21 Jul 2021 12:35pm

Cambodia garment makers call on buyers to honour contracts

By Hannah Abdulla

A trade body representing garment manufacturers in Cambodia has appealed to buyers asking them to commit to orders already fulfilled.

The Garment Manufacturers Association in Cambodia (GMAC) issued an open letter to its buyers in which it said all parties in the global apparel supply chain are feeling the “extreme burden” caused by Covid-19, but warned that manufacturers operate on “razor-thin” margins and were less able to absorb financial shock compared to customers.

The Cambodian economy depends heavily on the garment industry, which accounts for more than 78% of the country’s total merchandise exports and 20% of its annual economic growth and is the main non-agrarian employer in the country with nearly 700,000 garment workers employed in 1,500 factories.

“The consequential burden faced by our workers who will still need to put food on the table is enormous and extreme,” reads the letter.

“We urge you to honour the terms of your purchasing contracts and fulfil your obligations by taking delivery and pay us for goods already produced and goods currently in production.

“This will allow us to continue to provide work to our 750,000 workers and provide us the ability to pay our workers and ensure the livelihoods of millions of Cambodians. 

“We appeal to all buyers to uphold your corporate and social responsibilities to your suppliers as well as to the workers employed in our sector.”

A number of high street retailers have cancelled orders with suppliers and are said to be delaying payments as stores around the world are forced to close as part of country-wide lockdown measures to try to stem the coronavirus outbreak.

New Look recently said it was halting supplier payments and new orders. A retail supplier engagement specialist, Solutions for Retail Brands (S4RB), warned the move could cause “irreparable damage to New Look’s supply chain,” and that its supplier relationships will take years to repair – if at all. 

Prior to this, Primark was widely criticised for cancelling all orders with its suppliers after closing its stores on 22 March, but has now set up a fund to cover the wages component of orders that it cancelled in Bangladesh, Cambodia, India, Myanmar, Pakistan, Sri Lanka, and Vietnam.

Meanwhile, Swedish retailer H&M has said it will pay and take delivery of goods already manufactured by its suppliers, as well as those in production, while Spanish fashion giant Inditex, which owns the Zara fashion chain, is to pay its Spanish workers their full salaries until 15 April – including those in its domestic factories. 

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