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ASDA is creating a ‘climate of fear’ on its south Asian suppliers

ASDA is creating a “climate of fear” among garment manufacturers in south Asia as it pushes for delayed and discounted payments, British campaign group Traidcraft Exchange warned today. 

Analysis of the supermarket giant’s purchasing practices during the coronavirus pandemic has exposed it as being among the worst, the group said.

This is despite the company being owned by the wealthiest family in the world, the Waltons, valued at $130 billion (£103bn). 

Asda stores remained open during the lockdown and recorded sales growth of more than 15 per cent in March.

According to Bangladesh manufacturers’ association BGMEA, many suppliers are “feeling inhibited” from sharing details of the changes some buyers are forcing on them, even when subjected to “extremely negative” contract revisions.

Traidcraft Exchange’s Fiona Gooch said: “There is such a climate of fear, suppliers are afraid to speak out. 

“Companies who have already made clothes for Asda’s George range have had orders cancelled and some have been told to hold onto stock for as long as nine months or more. 

“Even then, Asda is demanding discounts of around 30 per cent on the agreed price. It means the suppliers are likely to make a loss and possibly go under, with the loss of thousands of jobs, but they don’t have any other options. 

“They are desperate not to lose huge-volume orders in future.”

Ms Gooch warned that women in Bangladesh who have been making school uniforms for families in Britain could soon be losing their jobs, meaning their own children could have to go without food or medical care.

“Asda and the other supermarkets have no excuse when it comes to this kind of bullying behaviour,” she said.

An Asda spokesperson told the Morning Star: “We have long-standing and valued relationships with our suppliers in Bangladesh and intend to honour over 95 per cent of our annual orders with them – by taking ranges as planned, storing items until next year or reusing fabric in new designs. 

“We want to help them weather this crisis and be in the best place possible to continue working with us once Covid-19 has passed and factories reopen. 

“Where there is a small amount of product that we are not able to take from them at this time, we are proactively working with suppliers to agree to mutually cancel the order and pay a proportion of the costs within seven working days, which is much quicker than standard industry terms, as well as agreeing suppliers can resell items or donate items. 

“This approach during these unprecedented times gives our valued suppliers the benefit of an immediate cash injection into their business so that they may pay their workers, as well as starting to plan work on next seasons ranges with us and ensuring we continue to have a strong, sustainable supply chain for the long term.”

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