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“The Low Price” of the textile discounter KiK – consequences for labour conditions in textile factories in Bangladesh: Difference between revisions
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“The Low Price” of the textile discounter KiK – consequences for labour conditions in textile factories in Bangladesh (view source)
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Why can discounter sell their products for such little prices? As you can read on the KiK homepage their basis business model is to order a big number of pieces from each product and deliver them with an intelligent logistic system to their stores. It is important to plan an attractive product-range and be flexible enough to order quickly new products when they have sold-out.<ref name="B" /> The production of demanded clothes needs to be a “Just-in-Time” production, because this system allows a maximum of flexibility and very little costs for storage.<ref>Globalisierung. Author: PD Dr. Norman Backhaus. Published by Prof. Dr. Rainer Duttmann, Prof. Dr. Rainer Glawion, Prof. Herbert Popp, Prof. Dr. Rita Schneider-Sliwa. Published in Westermann Bildungshaus Schulbuchverlage, Braunschweig 2009, page 167.</ref> | Why can discounter sell their products for such little prices? As you can read on the KiK homepage their basis business model is to order a big number of pieces from each product and deliver them with an intelligent logistic system to their stores. It is important to plan an attractive product-range and be flexible enough to order quickly new products when they have sold-out.<ref name="B" /> The production of demanded clothes needs to be a “Just-in-Time” production, because this system allows a maximum of flexibility and very little costs for storage.<ref>Globalisierung. Author: PD Dr. Norman Backhaus. Published by Prof. Dr. Rainer Duttmann, Prof. Dr. Rainer Glawion, Prof. Herbert Popp, Prof. Dr. Rita Schneider-Sliwa. Published in Westermann Bildungshaus Schulbuchverlage, Braunschweig 2009, page 167.</ref> | ||
The big volume orders have both advantages and disadvantages for the textile producers at Bangladesh. As an advantage you can name that the factories are working to full capacity. This is under the economic point of view a status that one should aspire. The workers have jobs and are paid. The problem is that such factories depend on only one huge client. If this client decides to search for a new producer the whole factory is without an order. That means the machines stand still and the workers are dismissed. The factory owner won’t have enough money to pay his bills like rental fee or electricity costs. If he doesn’t get a new order he will soon be bankrupt. So, the dependence to one client is a clear disadvantage for the producers. The big client uses his power to keep the prices down. “The largest discounters pay their suppliers up to 15-20 percent less for their goods than normal department stores (ActionAid, 2007, p. 16).”<ref name="A" /> The consequence of steadily decreasing prices is the decreasing of the already low wages of the garment workers. <br><br><br> | The big volume orders have both advantages and disadvantages for the textile producers at Bangladesh. As an advantage you can name that the factories are working to full capacity. This is under the economic point of view a status that one should aspire. The workers have jobs and are paid. The problem is that such factories depend on only one huge client. If this client decides to search for a new producer the whole factory is without an order. That means the machines stand still and the workers are dismissed. The factory owner won’t have enough money to pay his bills like rental fee or electricity costs. If he doesn’t get a new order he will soon be bankrupt. So, the dependence to one client is a clear disadvantage for the producers. The big client uses his power to keep the prices down. “The largest discounters pay their suppliers up to 15-20 percent less for their goods than normal department stores (ActionAid, 2007, p. 16).”<ref name="A" /> The consequence of steadily decreasing prices is the decreasing of the already low wages of the garment workers. <br> | ||
In chapter 2 I have already mentioned the “Agreement on Textiles and Clothing” (ATC) of the World Trade Organisation that phased out in 2005. After this phase-out a hard competition between Bangladesh and the former restricted countries like China and India began with the consequence for Bangladesh – which is very depending on export of clothing – that price reductions started which were to be paid by the garment workers in the end. “The poor countries, competing to retain their clothing industry, try to offer the lowest wages.”<ref name="A" /> | |||
Figure 1 is adapted from the brochure of the “Clean Clothes Campaign”. It is necessary now to give a short presentation of the “Clean Clothes Campaign” because it offers important information in its brochure that is used as one of the key literature in this case study. The key aim of the “Clean Clothes Campaign” is to improve the working conditions in the global garment industry, especially in less developed countries. This campaign is widely supported by many NGOs and labour unions.<ref>Profile of Clean Clothes Campaign: http://www.saubere-kleidung.de/ccc-60_wir/ccc-60_wir-ueberblick.html (View: 28.2.2011)</ref> The figure shows of which price components a T-shirt price is made up. “Wages only account for 0.5-1 percent of the ultimate selling price of the product”.<ref name="A" /> The large portion of the price is gained outside Bangladesh in Western industrial nations like Germany. Only the factory and wage costs remain in the Bangladeshi economy. A huge amount of the later price is spend for marketing activities and the rest, about 50 percent is used to cover costs of the retailer and to gain some profit.<ref name="A" /> <br><br><br> | |||
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