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April 21, 2020

Korean textile firms criticise Kohl’s order cancellations

Representatives from the Korean textile and apparel industry are calling on US department store retailer Kohl’s to reconsider its recent decision to unilaterally cancel orders – which it says puts at risk the livelihoods of nearly 200,000 workers around the world.

Representatives from the Korean textile and apparel industry are calling on US department store retailer Kohl’s to reconsider its recent decision to unilaterally cancel orders – which it says puts at risk the livelihoods of nearly 200,000 workers around the world.

While “we recognise the devastating impact of Covid-19 pandemic is having on the global textile industry,” says Kihak Sung, chairman of the Korea Federation of Textile Industries (KOFOTI), “Kohl’s should not to turn its back on the moral and social responsibilities they have to these workers in the supply chain.”

Sung explains: “We recently became aware of Kohl’s unilateral decision to cancel orders already produced and in-production without prior consultation which has caused an unprecedented disruption to the supply chain and put at risk the livelihoods of nearly 200,000 workers at factories throughout the developing countries of Vietnam, Indonesia, Philippines, Guatemala, Nicaragua and Haiti.

“These order cancellations and payment term extensions are putting these factories at risk of having to shut down operations and send workers home indefinitely.

“Moreover, the human suffering and economic damages are also being felt at many fabric mills in Korea supplying fabrics to these overseas factories. It’s worth noting that some other US retailers are requesting payment term extensions and even cancel orders in some cases, but not without liability.”

The Korea Federation of Textile Industries told just-style the value of the cancelled orders is more than US$100m, and that the number of affected Korean suppliers is about 150 companies – which includes vendors, local fabric mills, accessory mills and sample rooms.

The association also says that unlike most of the major US buyers, Kohl’s is the only one that has responded to the Covid-19 pandemic by acting “unilaterally in terms of decision making and notifications without consultation, and in turn, turning a blind eye to the disruption to the supply chain.”

The group adds: “Kohl’s supplier partners, the majority of which have been doing business with Kohl’s for almost 20 years, were informed of cancellations of orders already produced and in-production without liability with no prior consultation. In addition, Kohl’s left no room for any negotiation.  

“Due to the Kohl’s decision to cancel without liability, the immediate livelihoods of many workers in underdeveloped countries are being threatened.”

Chairman Sung adds: “On behalf of the Korean textile and apparel industry, we strongly urge Kohl’s to reconsider the recent decision to cancel orders and not make use of “force majeure clauses” in the contracts with their supply chain vendor partners.”

Major brands and retailers like H&M, Zara and Primark have recently made commitments to pay textile workers in developing countries after intense scrutiny from the media. 

KOFOTI wants to see Kohl’s do the same thing and “resolve this matter amicably with their supply chains including sewing factories, fabric mills and trim suppliers.

“Now more than ever, all stakeholders in the supply chain must cooperate more closely and look for creative solutions to survive this crisis together.”

While Kohl’s did not respond to just-style’s request for comment, the retailer has shuttered all of its more than 1,100 retail stores and furloughed – or temporarily laid off – around 85,000 store and distribution centre workers. The Menomonee Falls-based business has also entered into a $1.5bn credit agreement and refinanced about $1bn in debt.

However, it is still making sales online.

The retailer is listed on a new online Covid-19 Brand Tracker as one of the leading apparel retailers that has made no commitment to pay in full for orders completed and in production.

There is also widespread industry concern at the increasing use of force majeure clauses in contracts to enable apparel brands and retailers to stop shipments and avoid paying for the goods they ordered.

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