Blog: Hannah AbdullaCoronavirus and its impact on fashion supply chains

Hannah Abdulla | 3 February 2020

The world economy in general, and the apparel industry in particular, depend on hugely complex, globalised, supply chains. So what are the consequences of the new 'Wuhan novel coronavirus'? And what is the potential impact of the coronavirus on global fashion retailers and their supply chains?

Denim giant Levi Strauss & Co expects the outbreak in China to knock revenues in the first quarter of 2020 and has closed about half of its stores in the country amid the epidemic.

In the US, The Trump administration has unveiled efforts to crack down on counterfeit and pirated goods sold over the internet via major e-commerce sites, a move applauded by the textile and garment industry.

Trump has also signed the US-Mexico-Canada Agreement (USMCA) into law, replacing the 25-year-old North American Free Trade Agreement. Among the biggest beneficiaries of the freshly-inked USMCA or NAFTA 2.0 are likely to be Mexican denim and jeans makers, with overall exports potentially jumping 10% this year.

Britain has officially left the European Union but a trade body has warned the manufacturing side of the fashion industry could be impacted if it cannot continue to access the skills that migrants often bring.

Elsewhere, Morocco's textile and garment industry is undergoing an intense process of redevelopment to better align with industry demands in areas from fast fashion to sustainable production.

And, wastewater management, dyeing solutions, textile waste and blockchain are among the solutions from the nine new innovators joining Fashion for Good's first South Asia Innovation Programme.

On the sustainability front, more signatories have joined the UN Fashion Industry Charter for Climate Action (UN Fashion Charter) - an industry-wide initiative to collectively address the climate impact of the fashion sector across its entire value chain. But, with the number of companies pledging carbon neutrality across their operations grows, is there is a risk of "greenwashing" when the real issue lies in the supply chain?

Ongoing concerns over the deteriorating labour and human rights situation in Cambodia prompted a number of brands and retailers to again call on the government to set out steps to bring the country in line with international standard. But garment manufacturers warn such a narrative puts workers at risk. Meanwhile, the International Labour Organization(ILO) is calling for a "whole-of-supply-chain" approach to addressing the issue of child labour in global supply chains.

In other news, following a slew of earnings slides, reports are now suggesting that L Brands' founder and CEO,Les Wexner, is looking to leave the business and that it is continuing to weigh up options for its Victoria's Secret lingerie brand. And increased full-price sales and decreased markdowns have contributed to a rise in both annual and fourth-quarter profit for Swedish apparel retailer H&M amid a leadership shakeup that sees Karl-Johan Persson step aside as CEO and Helena Helmersson succeed him.

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