As the foreign epidemic continues to ferment and the number of confirmed cases continues to rise, many countries have taken emergency measures such as city closures, country closures, and work suspensions to deal with the spread of the epidemic! This has also led to a temporary shutdown of the global economy. Some experts and scholars believe that the epidemic has the risk of triggering a world economic recession.
Thousands of orders were cancelled, Bangladesh’s economy has been hit hard by the epidemic
Rubana Huq, chairman of the Bangladesh Garment Manufacturers and Exporters Association, recently posted a LinkedIn tweet, as follows:
She wrote: So far, losses of 1.5 billion US dollars have been incurred. Brands have canceled or postponed orders one after another. We don’t know what we will do tomorrow. Brands that have been partners for months have become strangers.
She said that orders from as many as 1,089 Bangladeshi garment factories have been cancelled, which will severely hit the country’s economy. Huq has called for a joint effort to tide over the crisis and said: “In emergencies, we can accept deferred payments.”
Bangladesh is a major clothing exporter after China. This crisis will have a wider impact on Chinese exporters – as soon as the COVID-19 epidemic subsided in the country, a surging wave of cancellations hit foreign traders!
Currently, the international market is canceling or postponing a large number of orders, and the world economy may be shut down
Primark, the largest fashion retailer in the UK market, cancels all orders
According to news on March 22, the famous British affordable fashion chain Primark has canceled all orders from suppliers that have not yet been delivered. There is a force majeure clause in the contract, and it is precisely based on the force majeure clause that the order can be canceled.
After the British epidemic situation took a turn for the worse, the company group announced that due to the impact of the health incident, it expected to close 20% of its Primark stores. These stores currently account for 30% of Primark’s sales. It is expected that these stores will close in the future. The impact on sales will be £190 million over four weeks.
Nike, Adidas, Uniqlo and other clothing giants have closed a large number of stores
Let me ask, the stores are closed and consumers are staying at home. How to sell? Please pay attention to the operating conditions of the following major customers, especially those with financial problems themselves. Be sure to follow up on the progress of orders in a timely manner to ensure the security of payment.
Sports giant Nike announced on March 15 that it would close all offline retail stores in the United States, with a planned resumption date of March 27. Nike’s retail stores in Canada, Western Europe, Australia and New Zealand will be closed starting from March 16, local time, and will last until at least March 27.
On March 17, Adidas announced that it would temporarily close Adidas and Reebok stores in Europe and North America to curb the spread of the new coronavirus. European stores will be closed from March 18th to 29th, and stores in the United States and Canada will be closed from March 17th to 29th.
On March 17, the Japanese retail company Fast Retailing Group, the parent company of Uniqlo, announced that it would temporarily close all 50 of its Uniqlo stores in the United States.
On March 17, American fashion group L Brands Inc. stated that due to the spread of the epidemic, it would close its underwear brand Victoria’s Secret, fashion brand Pink and bath brand Bath & Body from that day. Works at all physical retail locations in the U.S. and Canada until March 29.
On March 18, H&M, the world’s second largest clothing retailer, announced that it would temporarily close all 460 stores in Germany and all 590 stores in the United States. It has previously closed all stores in Italy, Poland, the Czech Republic, Bulgaria, Australia, Luxembourg, Bosnia and Herzegovina, Slovenia and Kazakhstan, as well as some stores in Greece. H&M will also close all stores in Canada, Portugal and Belgium in the future.
On March 18, IKEA announced the closure of stores in nine countries, including Spain, Italy, Germany, the United States and Canada.
On March 21, Zara parent company and Spanish fast fashion brand Inditex closed 3,785 stores in 39 countries and regions around the world. Among them, all stores of Inditex’s brands in Spain have been closed.
On March 23, US consumer electronics retailer Best Buy announced that it would close all stores.
How do textile foreign trade companies avoid risks
Textile companies must be more cautious when accepting orders. Even if an order is actually placed, they must consider whether it will be canceled in the future: if they don’t do it, the delivery date will not be met; if they do, it may be canceled halfway. Cancellation wastes investment and increases inventory.
Based on the business characteristics of most foreign trade, it is recommended that:
Don’t accept foreign trade orders without a deposit easily, or try to get reliable insurance, which can support customers and transfer risks. If you have been a customer selling on credit before, you can tell your customers that the COVID-19 outbreak has caused various raw material manufacturers to be strapped for funds, and they only accept cash orders.
Orders that are already in production must be confirmed with the customer. Avoid using expressions like “Do you still want this order?” If the customer doesn’t reply to you, you will be in trouble. It is recommended that “I understand that the new coronavirus has a serious impact on your country. If there are any problems with the transportation or sales of your order, if it cannot be confirmed within three days, cancel it (or ship it, depending on the specific situation).” In this way, customers are forced toIf necessary, confirm the contract again to avoid claiming “force majeure” for breach of contract in the future.
For those that have been shipped and have reached the due date, you must hurry up and collect payment. Money payment obligations will usually not be missed due to the epidemic. If the customer uses this as an excuse, it is very likely that the other party has financial difficulties. Follow the trend and give a performance deadline. If the other party cannot pay, consider controlling the goods, returning the goods, etc.
It is recommended that export enterprises sort out the existing risks in key countries affected by the epidemic, pay close attention to the transportation situation of goods that have been shipped, consult and communicate with freight forwarders and shipping companies in a timely manner, and carry out loss reduction work in response to possible customs bans. . Strengthen the tracking of foreign exchange collection on the buyer’s due payables.
It is recommended that export enterprises communicate effectively with buyers in a timely manner for goods that have not yet been shipped. Reasonably arrange shipping time, and pay close attention to the buyer’s possible rejection and default risks during epidemic prevention and control.
It is recommended that export enterprises make an agreement in advance when negotiating new contracts. Through force majeure, property rights reservation clauses, etc., the risks that may be caused by the new coronavirus epidemic should be agreed in advance to try to avoid or reduce the impact of uncertainty caused by the epidemic.
The deadline for new contracts should be appropriately relaxed. For buyers whose business is indeed affected by the epidemic, when entering into a new contract, consideration may be given to appropriately relaxing the payment term and giving the buyer a certain buffer period.
During the epidemic, it is recommended to keep records of communication information with buyers. In particular, emails involving creditor’s rights and debt confirmation, repayment tracking, debt collection, WeChat chat records, etc. provide a reference for quick claims settlement in the event of an accident in the future. </p