// UK retailers cancel £2.5bn in clothing orders as Covid-19 impacts fashion sector
// Arcadia, Frasers Group, Asda, Debenhams, New Look & Peacocks have cancelled contracts in recent weeks
// Bangladesh’s commerce minister Tipu Munshi called on UK Government to support the manufacturing industry
UK retailers have reportedly cancelled an estimated £2.5 billion in clothing orders from Bangladeshi suppliers, plunging the country’s manufacturing industry into a “major crisis”.
Sir Philip Green’s Arcadia, Mike Ashley’s Frasers Group, Walmart-owned Asda, Debenhams, New Look and Philip Day’s Peacocks have all cancelled contracts in recent weeks as the impact of the coronavirus pandemic settles in.
However, fast fashion retailer Primark has committed to paying for orders in a bid to support suppliers through the crisis.
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Last week, Primark said it would shell out £370 million for orders in addition to the £1.5 billion of stock it already has in stores, depots and in transit.
Despite this, Bangladesh’s commerce minister Tipu Munshi said this would not be enough to prevent factory closures and called on the UK government to intervene, ITV News reported.
The vast majority of Bangladesh’s factories in the capital city Dhaka have been closed since March 26.
The Bangladeshi Government has offered low-interest loans to factory owners to help them pay their staff during the crisis.
The clothing sector has been heavily impacted by the pandemic, with exports dropping by 84 per cent in the first half of April as £2.3 billion worth of orders were cancelled or suspended, according to factory owners.
Bangladesh relies on the garment industry for more than 80 per cent of its exports, with some 4000 factories employing about four million people.
Asda said it had only cancelled five per cent of orders from Bangladeshi suppliers, but was only paying 60 per cent of the previously agreed price.
Meanwhile New Look, which cancelled 20 per cent of orders from Bangladesh shortly after closing its UK store estate, has now reinstated some of the £6.8 million of business it initially withheld.