November 29, 2003

Wringed and unable to breathe by Wal-Mart

There is an article in The Seattle Times, which describes how Wal-Mart is pressing its third world suppliers to supply the shirts and sorts it sells by millions at a lower price. Bangladeshi factory owners say Wal-Mart and other retailers have asked them to cut prices by as much as 50 percent in recent years.

One apparel manufacturer described a visit from a Wal-Mart buyer who showed him a European-made garment that retailed for $100 to $130. The buyer asked the Bangladeshi to produce a knockoff for $10 a dozen. He declined.

But the consequences are felt at the garments factories in Bangladesh who supply to Wal-Mart. The company bought 14 percent of the $1.9 billion in apparel that Bangladesh shipped to the United States last year. Keeping prices low like this means squeezing costs at every step. When the entrepreneurs think of cutting cost, inefficient workers get the axe first.

Khadija Akhter can attest to that. For about $21 a month, nearly three times what a maid or cook would make, the 22-year-old worked in a Dhaka factory, performing final checks on men's shirts and trousers.

Employees, she said, often worked from 8 a.m. to 3 a.m. for 10 to 15 days at a stretch to fill big orders from Wal-Mart. Exhausted, she quit after a year and took a lower-paying but less grueling job.

But it was not long when Wal-Mart took the initiative to better the conditions in Bangladesh's garments factory by putting up clauses that they should abide by labor laws and be equipped with better safety precautions.

Sheikh Nazma, a former child laborer, has seen the way Wal-Mart can help clean things up.

She worked at a Dhaka garment factory that had no clean drinking water and only a few filthy toilets for hundreds of employees. After the owner refused to pay their wages for three months, the employees complained to Wal-Mart, the factory's main customer.

"Wal-Mart interfered, and ... the owner paid our salaries and overtime, and even paid bonuses to each worker," recalled Nazma.

But Nazma adds:

Wal-Mart undermines its good efforts with its incessant push for lower prices. Factories often force employees to work overtime or stay on the job for weeks without a day off.

Now Wal-Mart is opting more from Chinese suppliers.

In southern China, Wal-Mart has found all the ingredients it needs to keep its "every day low prices" among the lowest in the world. Although labor costs more here than it does in Bangladesh, China offers other advantages: low-cost raw materials; modern factories, highways and ports; and helpful government officials.

Bangladeshi garments factories are facing hard times and a bleak future. They will be facing more competition from China because the Chinese entrepreneurs are shifting their plants to remote regions of China where labor, electricity, housing and taxes are cheaper. Because of the lifestyle of Chinese rural people, they can work like a robot and lead a rigorous life without much of frills. So they can work at a competitive wage rate. The Bangladeshi infrastructures are being upgraded all the time but they cannot be done all at once by this poor country with its scanty budget. So Bangladesh is likely to loose the battle in cutting costs.

And the freedom loving happy consumers of the west will opt for a Chinese shirt, which costs $2 less from a shirt made in Bangladesh or Honduras. They would not know that they had just terminated a couple of women employers job in Bangladesh who had fought hard to establish their right in a society of gender inequity where many women are merely housewives with no income and are subjected to gender discriminations.

Read another article "The Wal-Mart You Don't Know" where it is discussed how Wal-Mart's relentless pressure can crush US companies it does business with and force them to send jobs overseas.

And why Wal-Mart matters:

Wal-Mart is not just the world's largest retailer. It's the world's largest company--bigger than ExxonMobil, General Motors, and General Electric. It sells in three months what number-two retailer Home Depot sells in a year.

Thats when capitalism turns bad. Can anyone do something about it?


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