Bangladesh Unrest Disrupts Global Fashion Supply Chain 🇧🇩

Hey there! 👋

There is big news in the fashion world! Global retailers are shifting production away from Bangladesh following recent political unrest. Let's break down what's happening and how it might impact the fashion supply chain and legal landscape.

Don't have time for the full scoop? No worries, we've got you covered with a quick summary: click here

Many global fashion retailers rely on Bangladesh for garment manufacturing, including the likes of H&M, Zara, Uniqlo, Decathlon, and much more.

Factories had been closed for days following protests a few weeks ago, where the former prime minister’s government had been especially clamping down on student protesters.

Why is this happening? 🤷‍♀️

Protests began peacefully in July by students who were hoping to abolish the quotas on civil service jobs. A third of civil service jobs were to be reserved for those who were related to veterans of the Bangladeshi War of Independence from Pakistan in 1971.

Although Bangladesh has had one of the fastest-growing economies in the world, this growth has unfortunately not led to an increase in job opportunities for graduates. University graduates faced higher rates of unemployment than their non-university-educated counterparts.

With Bangladesh being one of the world’s largest clothing exports, selling around $40 billion worth of clothes to the global market, the sector has employed over four million people. However, factory jobs were insufficient for the younger generation, who aspired for more post-graduation. Thus, by abolishing quotas, more jobs would be available for them.

This quota had been described as unfair and discriminatory by protesters. Although most of these quotas were abolished by the top courts, the protests transformed into a larger, anti-government movement, where people other than students joined the movement. Clashes followed with the police, and over 450 people were killed.

Hasina resigned on August 5th, 2024, and has since fled to India. As of Thursday, August 22nd, her diplomatic passport has been revoked by Bangladesh’s interim government.

The bigger picture 📉

Some major retailers have shifted their orders to other Southeast Asian suppliers, such as Cambodia or Indonesia, disrupting the global supply chain. In addition, fashion deliveries to both Europe and North America have been delayed due to the weeks of violence. To make up for this disruption, factories have turned to shipping goods by air and working overtime to make up for their backlog.

Despite a fast-growing economy, Bangladesh still remains one of the poorest countries in the world, and the devastation of these government clashes will no doubt have an impact on its economy.

A lot of companies have become especially reliant on Bangladesh, and they will now be looking to minimise any risks, in particular by reducing their sourcing from the country. Being known for its fast-fashion exports, this shift could have negative consequences for Bangladesh’s citizens, particularly the over 4 million factory workers.

The impacts of these protests may be long-lasting on its economy, and only time will tell what fashion retailers will do next.

How does this impact law firms? 👩‍⚖️

Law firms and their lawyers can get involved in this issue in various different ways.

• Firms can offer advisory services to fashion retailers looking to relocate their manufacturing processes. This will involve renegotiating and amending contracts, as well as evaluating potential markets and performing any due diligence on new suppliers.

• Following these disruptions, lawyers may get involved in litigation and dispute work over existing contracts and agreements with suppliers.

• Finally, firms may get involved in human rights advocacy work, with the violence and loss of life related to the protests highlighting a significant human rights issue.