LPP withdraws decision to suspend business with Bangladesh

Polish fashion brand LPP has withdrawn its decision to suspend business with Bangladesh following a dispute over payments owed to several Bangladeshi exporters by Russian buyer FES Retail.

The development was announced in a joint statement issued by the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and LPP S.A. The statement was signed by BGMEA President Mahmud Hasan Khan and LPP S.A. Director Dorota Jankowska-Tomkowska. BGMEA formally informed the media about the decision on Tuesday.

According to the statement, BGMEA and LPP have agreed to ensure that the business relationship between LPP and more than 350 Bangladeshi garment suppliers is not affected by a dispute involving a third party.
LPP said it is not legally responsible for settling FES Retail’s outstanding debts. However, while maintaining its legal position, LPP will facilitate constructive dialogue on the settlement of the buyer’s liabilities.

The two sides acknowledged that the affected factories are facing difficult commercial circumstances and agreed that any discussions over the outstanding payments should be held with the legally responsible parties.

They also stressed the importance of avoiding misleading or sweeping statements that could inadvertently harm other manufacturers, workers or the long-standing business relationship between LPP and Bangladesh.
LPP said its recent review of sourcing operations in Bangladesh was primarily aimed at protecting local employees and ensuring legal certainty as well as a stable, predictable and fair business environment. The review was not directed against manufacturers and would not affect LPP’s commitment to fulfilling its direct contractual obligations.

FES Retail has reportedly owed around $40 million to 40 Bangladeshi exporters for a long time.

LPP had earlier decided to gradually reduce orders from Bangladesh and temporarily halt new orders and product development. The company’s suppliers said LPP purchased garments worth around $700 million from Bangladesh in the last fiscal year and planned to import garments worth $770 million in the current fiscal year.