The Crooks and Conmen Among Us

Global garment sourcing has undergone tremendous change during the past 20 years.  For example, while FOB price is still an important sourcing determinant, 20 years ago FOB price was the only souring determinant.  At the same time, today sourcing specialists are better educated and more professional.  20 years garment sourcing resembled the Wild West of the 1870s where the profession had more than its fair share of outlaws and con men.

Buyers would place the same order with two factories, with the understanding that if the style did well, their employers would have enough stock.  Of course, if the style would not sell well, the buying office would regrettably have to cancel one order because of. . .

Another favorite ploy was to place an order and push the factory to buy the fabric.  Once the fabric arrived, the customer would regrettably have to cancel the order.  Later, the customer would, as a favor to the factory, accept the order but at a 60% discount.

In those days, buyers knew they had lowest price, only when they succeeded to force the factory into bankruptcy.  Buyers used to brag to one another about their abilities to ruin their suppliers.

I am happy to say the crooks and conmen for the most are now gone. Factories have become more knowledgeable, larger and more sophisticated.  The new generation of sourcing professionals now recognizes that extortion and highway robbery are self-defeating.

More importantly, importers and retailers have finally woken up to the fact that low FOB price was never as important they had been lead to believe; and that perhaps reliability and ease of doing business trumps a 10¢ CMT savings.

Service has become a serious sourcing determinant.  To a growing number of importers and retailers offshore product development and speed-to-market provide greater savings than cutting CMT.  Sustainability has also become an important goal

Even more recently, these same importers and retailers are beginning to realize that ethical sourcing behavior is also an important factor determining sourcing decisions. Importers and retailers now recognize that garment exporting is often the first stage of economic development and that the customer has a responsibility to ensure that development brings improvement to all.

These are remarkable changes: evidence that the global garment industry has come of age.

There is a potential problem.

Individual customers working alone with their suppliers can achieve product development, speed-to-market and sustainability.  However, as we have discovered in Bangladesh, to be effective ethical sourcing requires cooperation between customers.

Today, many if not most importers and retailers are making an honest effort to make Bangladesh a better place to work for customers, suppliers and workers alike. C&A, Il Corte Ingles, Inditex, Li & Fung and many others have rushed to offer compensation to the families of victims of the Tazreen fire; not out of guilt but rather out of a sense of responsibility. More recently PVH has offered to provide funds to improve conditions Bangladesh factories.

Against these positive efforts are the old-time crooks and conmen:  the followers of the PT Barnum School of Business (Mission statement:  Never give a sucker an even break). Wal-Mart and the Walmarkish wannabes clearly believe that their customers morons.  Having been exposed to be at the very least morally complicit in the deaths of the Tazreen fire their first comment was,  “We did not know that 300,000 garment were being produced at Tazreen.”

Rather than offering financial assistance to the families of workers who gave their lives to produce Wal-Mart garments, Wal-Mart is setting up a Bangladesh academy to teach fire prevention and safety. In this place of learning, presumably students would be taught that in the event of fire they must first ensure that all evidence of Wal-Mart presence has been incinerated before they themselves will be allowed to be engulfed  in the flames.

Clearly the good guys in Bentonville have taken old PT’s wisdom to heart.  “Nobody ever went broke underestimating the intelligence of the average American.

The more recent events in the building collapse have brought out some important truths.

  1. Despite the many promises made by the Bangladesh government after the Tazreen fire, nothing has been done.
  2. The Wal-Mart’s of the world will not permit any real change, which might raise FOB prices.
  3. The legitimate factories in Bangladesh cannot change the situation.
  4. The efforts of responsible importers and their sourcing professionals will not bring change.
  5. Any efforts on the part of the responsible importers and retailers will only make them part of the problem.

There comes a time when we must stop living in denial and recognize the situation as it exists:

  • Bangladesh is a country run by crooks and conmen;
  • Factories run by a bunch of crooks and conmen control the Bangladesh industry.
  • The customers who control those factories are crooks and conmen.

Inevitably the legitimate importers and retailers will learn that they have no future in Bangladesh.  Despite the attractive CMT price, they will leave the Bangladesh to the crook and the conmen.  The sooner the better.

Regardless of Wal-Mart philosophy, consumers are not stupid. Eventually they too will become disgusted with the shenanigans.  The longer importers and retailers wait the more likely they too will be held be responsible by their customers for the past, current, and inevitably future deaths in Bangladesh garment factories.  Legitimate brand importers and retailers must not allow themselves too be pushed into the same sack as Wal-Mart.

The bottom line is that with its 5% global market share, far from being irreplaceable, Bangladesh is not even important.  It certainly is not worth the cost.

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2 Responses to The Crooks and Conmen Among Us

  1. Heidi Liou says:

    I would like to begin by saying thank you for this article. I love the way you write and really allows me to understand your viewpoint.
    As I was reading, I was thinking about fashion companies in the US, and how they approach social responsibility. I don’t know if this is wrong of me to think that many companies just want profit and will do anything for it? It’s a scary thought but maybe the companies that participate in philanthropic activities are just trying to “boost their ego” and to let customers turn a blind eye to the dirty secrets of their business. I hope the company I work for in the future is authentic in social responsbility.

    • admin says:

      Dear Heidi

      There are indeed some pretty awful companies in our industry. However, there are also some exceptionally good companies. Companies tend to take on the characteristics of their bosses. The move from ethical to crooked is not in anyway related to profit. Far from it the unethical company follows the old comment, he would rather steal a dollar than earn five.

      Ethics is not philanthropy. In this sense the European customers who are lining up to pay compensation to the families of those who died in Tazreen and Sana are not trying to create a more ethical sourcing system. For the most part they are following in the footsteps of the 16th century Catholics who bought indulgences to obtain G-d’s forgiveness for past sins. I am no Christian, but I do not think that the Almighty is in the cash and carry-on business.

      DAVID BIRNBAUM

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