Cotton price surge threatens 'cheap fashion'
Posted: 28 November 2010 1549 hrs
DHAKA : In the home of cheap clothing manufacturing, the record price of cotton is causing havoc for producers -- and the pain will pass down the chain to buyers in developed countries, analysts say.
Bangladesh, the third-biggest producer of clothes worldwide, is one of the cheapest locations for manufacturing in the world and its factories churn out clothing for leading brands from Wal-Mart to H & M and Gap.
After reluctantly agreeing to a sharp rise in the minimum wage, under pressure from the government and violent protests from workers, the industry is now grappling with price and supply issues with its main raw material.
Cotton's price on world markets reached 1.50 dollars a pound (0.45 kilograms) for the first time on November 9, double its level of 12 months ago.
"Top global retailers have for years cut buying prices of clothing to ensure higher profits for their shareholders. But they must now understand that the era of cheap fashion is all but over," Hasan Khaled, former chief of Wal-Mart's Bangladesh buying office, told AFP last week.
"Western consumers will have to bear some pain of higher cotton prices even though they are facing tough times due to the global meltdown," said Khaled, who now buys clothing for US retailers such as Sears and JCPenney.
Garment-making is the backbone of Bangladesh's economy, accounting for 80 percent of exports, even though the country has no domestic source of cotton.
Instead Bangladesh buys one million tonnes of cotton a year, making it the world's second biggest importer after China, according to the country's commerce ministry.
Although prices on commodity markets have cooled in the last two weeks, Bangladeshi clothing manufacturers are having to manage a crisis.
According to the Bangladesh Knitwear Manufacturers and Exporters Association, most of its members who took orders from western retailers months ago are being forced to cancel them, renegotiate prices, or take a big hit on profit.
"Many buyers understand the situation and they have agreed to raise prices by 30-40 percent. But even they are not adjusting order prices fully," said Ziaul Islam Chowdhury, head of top producer Knit Asia.
"As a result, many exporters are being forced to cut profit margins for the sake of reputation. The export figures in recent months show tremendous growth but it does not show the kind of bleeding going on in the sector," he said.
The government has said it is "deeply worried" over the rising cotton price and has launched a policy of "cotton diplomacy" intended to secure supplies for its industry.
Accompanied by top textile millers and cotton importers, Bangladesh's Commerce Minister Faruk Khan has visited top producing nations India and Uzbekistan in the last month.
"Ensuring cotton supply to our millers is now a national security issue," he told AFP, a day after returning from Uzbekistan.
Zaena Miller, a London-based clothing analyst for research group Euromonitor, said calling an end to the era of cheap fashion was premature, but warned consumers already face price rises and more will come next year.
Retailers will adopt different pricing strategies depending on their business models, she said.
Low-cost specialists will look to absorb as much of the cost as possible, which will reduce their profits, while others will raise prices on some, but not all, of their clothing ranges.
As a general trend, they will try to sell at full price, which means fewer price-cutting promotions, and the trend could even be a boon for charity shops where second-hand clothes are on sale at a fraction of their original cost.
"There will definitely be slight price raises," she said. "And next year they will be more noticeable."
- AFP /ls
- wong chee tat :)
Sunday, November 28, 2010
Computer meltdown leaves millions of Aussies without cash
Computer meltdown leaves millions of Aussies without cash
November 27, 2010 National Australia Bank (NAB) is Australia's biggest bank
Customers are seen using ATM machines from the National Australia Bank (NAB) in central Sydney. A freak computer glitch at Australia's biggest bank on Saturday froze cash machines and left millions of people struggling to access their money.
A freak computer glitch at Australia's biggest bank froze cash machines and left millions of people struggling to access their money on Saturday.
National Australia Bank (NAB) said a corrupted file wiped out a huge number of transactions, including salary payments and transfers, and crashed some ATMs, angering many customers who were facing a weekend without money.
Spokeswoman Meaghan Telford said NAB was opening branches on Saturday and Sunday and bringing in extra call-centre staff as technicians scrambled to fix the problem.
"We're very apologetic," she told AFP. "We recognise this has caused people a lot of inconvenience. We're just working to resolve the problem."
Telford said the rogue file knocked out transactions on Wednesday, including salary deposits, bill payments and transfers to other banks, and then work to fix the problem hit Thursday and Friday's business.
As the electronic system buckled, some ATMs had crashed, she said, without revealing how many.
"There's been some issues with the electronic system because of the pressure the system has been under as a result of trying to resolve these issues," she said. "This has meant some ATMs have experienced issues."
Customers using microblogging site Twitter reported chaos with their bank accounts as mystifying sums appeared and disappeared, leaving many unable to withdraw cash.
Telford said NAB had cleared most of the delayed transactions but could not predict when the system would be back to normal. She did not estimate how many of NAB's 11.5 million customers were affected.
According to national news agency AAP, international banking giant HSBC's transactions to other banks, payroll deposits and direct debits were also affected, as NAB clears payments for HSBC in Australia.
NAB also warned on its website that its Internet banking was slow as millions of customers checked their accounts.
The meltdown comes at a time of growing discontent towards Australia's "big four" banks over rising interest rates and a swathe of minor fees, with even Prime Minister Julia Gillard urging unhappy customers to switch lenders.
Last week 250 investors brought a multi-million dollar lawsuit against NAB claiming it failed to properly disclose its exposure to toxic US debt during the financial crisis.
(c) 2010 AFP
- wong chee tat :)
November 27, 2010 National Australia Bank (NAB) is Australia's biggest bank
Customers are seen using ATM machines from the National Australia Bank (NAB) in central Sydney. A freak computer glitch at Australia's biggest bank on Saturday froze cash machines and left millions of people struggling to access their money.
A freak computer glitch at Australia's biggest bank froze cash machines and left millions of people struggling to access their money on Saturday.
National Australia Bank (NAB) said a corrupted file wiped out a huge number of transactions, including salary payments and transfers, and crashed some ATMs, angering many customers who were facing a weekend without money.
Spokeswoman Meaghan Telford said NAB was opening branches on Saturday and Sunday and bringing in extra call-centre staff as technicians scrambled to fix the problem.
"We're very apologetic," she told AFP. "We recognise this has caused people a lot of inconvenience. We're just working to resolve the problem."
Telford said the rogue file knocked out transactions on Wednesday, including salary deposits, bill payments and transfers to other banks, and then work to fix the problem hit Thursday and Friday's business.
As the electronic system buckled, some ATMs had crashed, she said, without revealing how many.
"There's been some issues with the electronic system because of the pressure the system has been under as a result of trying to resolve these issues," she said. "This has meant some ATMs have experienced issues."
Customers using microblogging site Twitter reported chaos with their bank accounts as mystifying sums appeared and disappeared, leaving many unable to withdraw cash.
Telford said NAB had cleared most of the delayed transactions but could not predict when the system would be back to normal. She did not estimate how many of NAB's 11.5 million customers were affected.
According to national news agency AAP, international banking giant HSBC's transactions to other banks, payroll deposits and direct debits were also affected, as NAB clears payments for HSBC in Australia.
NAB also warned on its website that its Internet banking was slow as millions of customers checked their accounts.
The meltdown comes at a time of growing discontent towards Australia's "big four" banks over rising interest rates and a swathe of minor fees, with even Prime Minister Julia Gillard urging unhappy customers to switch lenders.
Last week 250 investors brought a multi-million dollar lawsuit against NAB claiming it failed to properly disclose its exposure to toxic US debt during the financial crisis.
(c) 2010 AFP
- wong chee tat :)
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