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“The Low Price” of the textile discounter KiK – consequences for labour conditions in textile factories in Bangladesh: Difference between revisions
“The Low Price” of the textile discounter KiK – consequences for labour conditions in textile factories in Bangladesh (view source)
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“The phase-out of quotas led to price reductions and strong competition among the poor countries that export clothing and whose national income is heavily dependent on exports.” “The poor countries, competing to retain their clothing industry, try to offer the lowest wages. If, however, one looks at the various cost components from the viewpoint of the buyer/company, wages only account for 0.5-1 percent of the ultimate selling price of the product, as the following chart illustrates. In contrast, marketing and advertising, as well as the profit for the company in Germany/ Europe amount to about 25 percent of the endselling price. An increase in wages is, therefore “peanuts” in the eyes of the buyer.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13)</ref><br><br> <br> | “The phase-out of quotas led to price reductions and strong competition among the poor countries that export clothing and whose national income is heavily dependent on exports.” “The poor countries, competing to retain their clothing industry, try to offer the lowest wages. If, however, one looks at the various cost components from the viewpoint of the buyer/company, wages only account for 0.5-1 percent of the ultimate selling price of the product, as the following chart illustrates. In contrast, marketing and advertising, as well as the profit for the company in Germany/ Europe amount to about 25 percent of the endselling price. An increase in wages is, therefore “peanuts” in the eyes of the buyer.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13)</ref><br><br> <br> | ||
[[Image:Costs.jpg|frame|center|800x400px | [[Image:Costs.jpg|frame|center|800x400px]] | ||
This figure is adapted from the brochure of the CCC.<ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref> “Only around 14 percent (factory and wage costs) remain in the country of production, e.g. Bangladesh.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 13).</ref> | |||
===== Purchasing practises of business companies: three tendencies ===== | |||
<u>1) Cheaper: </u><br>• Prices are dictated, the producer in Bangladesh take such small prices because they otherwise loose the job. “Suppliers are threatened with being removed from the lists, if they do not reduce the price.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16).</ref><br>• Although the costs for energy have raised, the prices for garment still decline. <br><u>2) Quicker: </u><br>• “Collections change more and more frequently: In the past, there was a change twice per year; today, depending on the retailer, such a change can take place up to 12 times per year.”<br>• “Delivery times are becoming shorter and shorter.”<br>• “Today, buyers, with the help of global electronic networking, are able to control the entire value chain. In the internet, contracts are awarded with the help of “online reverse auctions”. Those wishing to make an offer can see what price the others are offering, leading to scandalous underbidding. Interested parties have to act quickly since a contract can be awarded within a few hours. The supplier, therefore, does not have much time to make his calculations.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16)</ref><br><u>2) Risk-shifting:</u><br>• “Suppliers have to adjust to the fact that merchandise, depending on sales levels, can be ordered at short notice. Companies reduce their stock levels to a minimum in order to cut costs. “Quick response” is a form of information technology, which functions as follows: “Once per week, usually on a Sunday after weekend trading, the company sends an order to the supplier, who receives it on Sunday evening. He then has to deliver the goods by Wednesday.” (Abernathy et al 2005). The company not only saves storage capacity, but also passes on all risks to the suppliers (that have costs for the purchase of materials).” <br>• “Suppliers are increasingly being forced to take on more tasks formerly carried out by the textile trader. Thus, more and more suppliers have to buy cloth and yarn and other accessories (buttons, zips, etc.) at their own risk. Buyers are, thereby, able to reduce delivery times and cut costs.” <ref>Who pays for our clothing from Lidl and KIK? Published at Kampagne für Saubere-Kleidung (Clean Clothes Campaign; CCC). Published as brochure at January 1st, 2008: http://www.saubere-kleidung.de/downloads/publikationen/2008-01_Brosch-Lidl-KiK_en.pdf (p. 16).</ref><br><br> | |||
=== References<br> === | === References<br> === | ||