International Brands to Restart Sourcing in Myanmar

Updated: Jul 7, 2021

By Just Style

This article was published in Just Style July 1, 2021. This is an important topic for the sewn products industry which is often navigating the complexities and volatility associated with global supply chains. This article specifically dives into the crisis in Myanmar and response from global brands.

Brands and retailers want to re-engage with suppliers but unions warn military-backed manufacturers will benefit.

Amid a backdrop of violence and instability, international fashion chains plan to begin placing orders from Myanmar factories again in the hope of bringing back employment and stability to a devastated industry.

However, while this may seem like a ray of light in a dark time, many garment workers are not celebrating the news and fear what it might bring.

Since the military coup on 1 February, Myanmar has faced perpetual violence and fear. Coupled with the ongoing Covid-19 epidemic, borders began to shut down and factories faced difficulties sourcing raw materials while international brands, such as C&A, Hennes & Mauritz (H&M), and Bestseller began to cut business ties to distance themselves from a brutal military regime.

Since then, 40 of Yangon’s 200 garment factories have shut down, many of them reduced to ashes during political unrest caused by the coup. According to Myanmar’s garment labour union, nearly 42,994 workers have lost their jobs.

A semblance of stability is starting to return to Myanmar’s cities. People are going back to work, banks and schools are reopening, and government offices are running with non-Civil Disobedience Movement (CDM) staff those not engaged in boycotts. And garment factories, at least those still standing, have been slowly reopening in Yangon since April.

Despite the external appearance of normality, however, the death toll associated with political unrest continues to rise in the country.

Protests are held daily, and government troops patrol the streets cracking down on demonstrators by day and arresting anti-military activists at night. Junta forces regularly clash with anti-coup groups, and industrial zones in particular are plagued by bombings and arson attacks on a near daily basis.

Third Covid Wave

These problems have been exacerbated by the third wave of Covid-19, bolstered by new highly transmissible variants, sweeping unchecked through the nation.

Myanmar reported 859 new cases on Friday (25 June), putting the total number of cases at 151,573 including 3,282 fatalities.

Besides the lack of textile and clothing supplies and absence of orders, labour union leader U Thu Ya claims that the volatile and dangerous situation in the country makes it untenable for many factories to remain open.

This was the case with Hengmao, a large garment factory located in Yangon’s industrial Hlaingthaya district, which employed thousands of workers. According to the company’s social media bulletins, due to the ongoing difficulties they were forced to close their doors on 20 June. They are just one of countless businesses facing imminent closure.

New Orders

It is in this context that brands have begun to return to Myanmar factories.

H&M told just-style: “H&M have now gradually started to place new orders again. With our decision we want to avoid the imminent risk of our suppliers having to close their factories which would inevitably result in unemployment for tens of thousands of garment workers.”

It adds that while its primary concern is to “contribute to positive developments in the country,” H&M is “deeply concerned,” aware of the complexities of the situation, receiving advice and guidance from international agencies, and calling on all stakeholders to work closely together.

Ultimately, H&M takes the stance that “a preferred way forward does involve international companies staying and continuing doing business if they can ensure there are no ties with Myanmar’s ruling military.”

Propping Up The Military

This is, of course, very difficult given that the military, the Tatmadaw, has invested in the garment industry, as it has in many economic sectors. It partly or wholly owns many local factories through its dense and often obscure network of holding companies and private sector partners.

Indeed, opponents of the regime say that many thousands of garment workers who have lost their jobs were not downsized to compensate for declining sales, but punitively terminated for joining unions or supporting anti-military protests and boycotts. H&M says it is aware of “increased challenges in relation to fundamental human rights.”

By contrast, the Industrial Workers Federation of Myanmar (IWFM) has called for firm and concrete support from the international community for Myanmar workers and has treated the announcements from H&M, C&A and Bestseller with scepticism.

“Once the current orders are completed, many factories will close. Only those with a good relationship to the military terrorist army, or those under their protection will stay open in the long run,” predicts Daw Khaing Zar, president of the IWFM.

While increased confidence in the Myanmar economy and the international community’s willingness to re-establish trade relations with Myanmar companies is gratifying, it is also, he says, harmful to Myanmar workers and the long-term peace process.

Orders placed in the current political and economic climate will serve only to prop up the military dictatorship who own large stakes in the garment industry while doing nothing to return the unlawfully terminated workers to their previous positions and incomes.

Brand Action

Members of the ACT (Action, Collaboration, Transformation) initiative including Asos, Bestseller, C&A, H&M, Inditex and Primark last week adopted a new framework to help protect garment workers in Myanmar who are unable to attend work due to safety concerns. Between them, the companies source from more than 200 factories in Myanmar.

Danish fashion retailer Bestseller in April paused the placement of new orders in Myanmar and urged the EU to develop clear guidelines on how companies should conduct themselves when economic sanctions are imposed on sourcing regions.

The US has suspended all engagement with Myanmar until the return of a democratically elected government, while a growing number of brands have suspended production with suppliers in the country, including Italy’s OVS, H&M Group, and Benetton.

Garment, footwear and accessories are Myanmar’s three largest export sectors, accounting for one-third of total exports, worth around US$5.8bn. The sector is also a huge source of employment, with nearly 600 factories employing around 500,000 workers.

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