LONDON – In the forthcoming edition of Apparel Insider, we lift the lid on the shady underworld of the market for excess clothing stock created by the cancelled orders crisis of the past 12 months.
Since the coronavirus pandemic hit, brands have collectively cancelled tens of billions of dollars’ worth of garment orders, many of which had been completed, and even shipped in some cases.
So what has been happening to this excess clothing? The people best placed to answer this question are manufacturers and agents, but it’s virtually impossible to get them to talk on the record for fear of reprisals.
However, plenty were more than willing to talk to us anonymously and by this means we managed to build a picture of how this issue has evolved over the past 12 months.
Our investigation uncovered a thriving secondary market for surplus stock, much of which can now be found being retailed in Asia in traditional stores, markets and even by the roadside.
A picture emerges of a saturated market, with suppliers placed in the desperate position of needing to move clothing on as quickly as possible to ease often dire cashflow problems. In many cases, the normal rules of business have been thrown out of the window by nature of sheer necessity amid an unprecedented crisis.
“There is plenty of possibility to use the stock at first, [but] after a while a good part goes to landfill as the amount of stock coming in is [so huge right now],” one consultant told us.
In shops in sourcing hubs across Asia, branded clothing is swamping local markets, and keeping track of patent and rights issue has become a logistical impossibility for brands.
Another agent told us: “[new] buyers popped up … where they buy the stocks from manufacturers and sell it to the countries where there will be no patent problems or if they wish they can change the label to a desired one to sell it to any country … or they can sell it illegally anywhere they want. These types of merchants usually pay in cash and take the delivery directly from the factories and the manufacturers are more than happy to get cash in hand and being able to avoid the related hassles of arranging No Objection Certificate, label removal or shipments.
“The point to be noted here is, the manufacturers are doing it basically to get cash in hand to keep the factory running for the present but actually it’s illegal as the merchandises were meant for export and thus executed under Tax free bonded facility.”
The full feature will appear in our next magazine. For subscriptions please click HERE
