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Bangladesh shows the ugly side of the global retail business

Posted by: under Retail, Target Updated: May 8, 2013 - 5:12 PM

The pros and cons of global trade perhaps have never been so starkly contrasted than this week.
 

On Monday, the National Retail Federation and other trade groups released a report they commissioned that articulates how the United States benefits from imported goods.
 

A few days later, Time magazine publishes this searing photo of two workers who perished after a building hosting apparel factories collapsed in Bangladesh, killing over 800 people.
 

In many ways, these two publications vividly demonstrates the paradoxical world of international economics: the benefits of low cost clothing in one country can often come at the expense of another country.
 

Bangladesh is a poor country in southeast Asia that’s home to a multi-billion apparel industry where low cost workers make clothing for the world’s top retailers, including Wal-Mart, The Gap, and Minneapolis-based Target Corp.
 

By using low cost suppliers in Bangladesh and other countries in Asia and Latin America, Americans enjoy cheap prices which allow us to afford a better lifestyle, or says the NRF report:
 

“Imports are not the bogeyman some Americans believe them to be. On the contrary, they benefit our economy in a number of ways. They provide consumers of all income brackets with a greater variety of goods at lower prices. They constrain inflation. They encourage manufacturers to constantly improve quality and innovate while providing them with needed inputs at lower prices…It is time to give imports the credit they deserve.”

Fair enough. But the report conspicuously omits how the United States’ appetite for imported goods impacts the countries whose citizens produce them.

Target and other retailers have noted they hadn’t knowingly sold products made from the collapsed factory in Bangladesh but that’s almost besides the point.
 

That incident, along with a deadly fire at another factory last November, demonstrates the systematic poor conditions garment workers face throughout the country.

Target is well aware of these problems, noting that it took action in 2011 to pull out or modify buildings that presented severe fire hazards. The company says it conducts several audits, some unannounced, of its suppliers.

But these audits seem like no match for an entire industry in Bangladesh that’s beset with fire hazards and dubious building designs.

So does Target stay in Bangladesh and help change things? Or does it pull out of the country? Most of its sourcing comes from China and the Americas anyway.

Target declined to comment on its future plans. But the fact remains that retailers’ business models depend on finding cheap sources of foreign labor.

Those business models produce tangible benefits to Americans, as the NRF report notes, in the form of low prices and jobs. But it also produces photos like Time’s pic.

 

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