H&M group will encourage suppliers to pay workers digitally for the benefit of nearly 2 million workers
The Swedish fashion company H&M group announced today that it will encourage its suppliers to pay their workers through mobile money or other digital forms to improve the livelihoods of its workforce, enhance transparency and cut factory costs.
This effort comes as the company officially joins the Better Than Cash Alliance, a United Nations-based partnership of governments, companies and international organizations accelerating the transition from cash to digital payments.
“Digital payments are an efficient and scalable way to improve the lives of the employees of our suppliers. They offer a faster, safer and more transparent way to receive their salary, increase financial inclusion and support women’s economic independence,” said Gustav Loven, Social Sustainability Manager at H&M group. “Also, for our suppliers, paying wages digitally can generate savings, increase security and provide more accurate data on wages.”
Sixty-five percent of the 1.6 million people employed along H&M group’s supply chain are women, many of them with limited access to the financial services they need to create a better life for themselves and their families. Many factory workers worldwide are paid entirely in cash, which entails cumbersome, expensive and dangerous processes for both factories and workers. Encouraging suppliers to pay wages through digital channels, such as bank accounts, cards or mobile money, will build on H&M group’s sustainability commitment to work with its business partners to promote good working conditions, fair living wages and sustainable economic growth.
As the majority of the benefits will be realized by female workers, this move is a prime example of a corporation working to achieve the Sustainable Development Goals on Gender Equality (SDG 5) and Decent Work and Economic Growth (SDG 8).
“H&M group is taking a bold step in recognizing how cash-heavy supply chains limit efforts to empower workers and prevent companies from increasing transparency. And, it’s inefficient,” said Dr Ruth Goodwin-Groen, Managing Director of the Better Than Cash Alliance. “H&M group’s leadership will help inspire other companies in the industry, and beyond, to make the shift to digital payments and contribute to inclusive growth, as well as to the Sustainable Development Goals, in emerging markets.”
In addition, H&M group is one of the leading users of organic cotton and Better Cotton in the world, and it adheres to socially and environmentally sustainable standards and actions. Expanding digital payments to the world’s cotton supply chain could potentially reach 250 million people, including smallholder farmers who currently have limited access to digital payment systems and financial services in general. Digitizing payments, when designed responsibly and responsively to consumer needs, can enable H&M group to grow its supplier base and help create a sustainable, productive agricultural sector, the promotion of which is a cornerstone of the Sustainable Development Agenda.
The Better Than Cash Alliance has published new research examining a selection of garment manufacturing factories in Bangladesh that have transitioned workers’ wage payments from cash to digital in the past five years. From a factory perspective, the analysis shows that transitioning to digital payments can save factories approximately 750 hours of production a month, due to workers spending less time away from the production line and reduce costs by more than 85 percent within two years of paying workers via a hybrid mobile money/bank account model. At the same time, moving toward a digital economy supports financial inclusion by drawing previously unbanked workers into the formal financial system and building financial skills.
H&M group joins 55 other Better Than Cash Alliance members, and will have access to the knowledge and technical expertise offered by the Alliance and its members to accelerate the shift to digital payments, helping to advance economic growth and expand financial inclusion.
The Better Than Cash Alliance is a global partnership of governments, companies, and international organizations that accelerate the transition from cash to digital payments in order to reduce poverty and drive inclusive growth. The United Nations Capital Development Fund serves as the secretariat.
H&M launches Denim United Unisex Collection
H&M is proud to announce the launch of Denim United, a unisex denim collection, available exclusively online at hm.com on March 23, 2017. With this collection, his and hers clothing are one in the same, blurring borders and challenging norms. Traditional style is revisited with menswear and womenswear, borrowing both materials and silhouettes from one another. The result is a sustainable, modern collection for everyone.
“It is very natural for us to launch a unisex collection as fashion is constantly evolving and intersecting and today we see there are no boundaries in democratic style. Fashion should always be inclusive,” says Marybeth Schmitt, H&M Spokesperson.
Oversized silhouettes and casual mix and match pieces create an effortless style with work wear jackets, overalls, and slouchy shorts, all in a range of washes. The denim pieces combined with high neck t-shirts or the oversized hoody make for the quintessential normcore look.
With this collection H&M is continuing their work towards a more sustainable fashion future and closing the loop on fashion. The garments in the Denim United
collection are all made with more sustainable materials such as organic cotton and recycled cotton.
H&M factory in Myanmar vandalised
A factory in Myanmar making clothes for Swedish fashion retailer H&M has been vandalised. Hundreds of workers stormed the factory and damaged facilities including textile machinery, computers and surveillance cameras. They were demanding better conditions and benefits. Production at the factory has been halted since February 9. The dispute started with a strike in late January following the sacking of a local labour union leader. Workers demanded better performance review system and health care coverage.
It turned violent on February 9, prompting the factory’s closure. The Chinese company makes garments such as skirts and shirts exclusively for H&M. H&M sources the bulk of its clothes in Asian low-cost countries such as Bangladesh, Cambodia and Myanmar. Ironically H&M is widely seen as being at the forefront among large apparel companies in promoting workers’ rights and fair wages. The company has called on sourcing countries such as Cambodia and Bangladesh to ensure fair pay for workers.
Myanmar’s fast growing textile industry, which employs more than 300000 workers, has become attractive to global apparel brands such as H&M and Gap following the easing of economic sanctions by the United States and the European Union. But the country is a latecomer and it has some way to go in terms of well-defined labour laws.
Affordable fashion brands make inroad in Vietnam
More and more affordable international fashion brands enter Vietnam, heating up competition and bringing more choices for Vietnamese customers
Competition heating up
In early February, H&M Vietnam has announced opening its first store in Hanoi. According to Inside Retail Asia, the Swedish brand has already begun recruiting staff.
The recruitment advertisement revealed that the store has an area of 2,000 square metres and will need about 100 employees who will be trained abroad for three to five months before officially starting in Vietnam.
H&M also scheduled to recruit in Ho Chi Minh City for its second showroom, which will be located in Vincom Thao Dien (District 2). H&M’s upcoming arrival was predictable, as they have been preceded by most brands of the same tier.
Of its international rivals, Mango has been in Vietnam for the longest time. It opened its first store in Ho Chi Minh City in 2004. In 2015, Mango Mega Store chain with international standards appeared.
Each Mango store has an area of at least 1000 square metres, including three major product lines: Mango Women, Mango Men, and Mango Kids. Currently, there are eleven Mango stores in Vietnam, including four Mango Mega Stores in Ha Noi and Ho Chi Minh City.
Affordable UK fashion brand Topshop joined the Vietnamese market in 2013. Topshop-Topman is a street-style fashion brand for youngsters.
The first Topshop-Topman showroom was opened in Bitexco Financial Tower (Ho Chi Minh City). Topshop’s second store was opened in Hanoi, and at the present, there are altogether four Topshop-Topman stores in Hanoi and Ho Chi Minh City.
Half a year ago, in September 2016, fast fashion brand Zara opened its first store in Vietnam with an area of over 2400 square metres in Vincom Dong Khoi (Ho Chi Minh City). Zara reported a revenue of VND5.5 billion (USD 241000) on the first day opening.
As living standards in urban areas are improving, so is the demand for clothing picking up. Additionally, young people are quick to catch up to the newest international trends, which may mean good prospect for the brands.
However, the appearance of more brands means more competition. There is one certain thing though: Vietnamese customers will benefit from this battle, and as these brands widen their product range in the country, they will replace single or small intermediaries who import their products from abroad.
From affordable to luxury
Some domestic fashion brands may worry about being dominated by these famous brands as youngsters in Vietnam may prefer foreign labels to catch up with the latest trends in the world. However, the price is still a barrier for these famous brands when approaching Vietnamese customers.
Affordable prices have always been the pride of H&M, Zara, Mango or Topshop, as they offer more than reasonable prices in more developed countries.
In Vietnam, many items have to be sold cheaper compared to some other countries.
For example, some of Zara’s skirts in Vietnam may be VND100000-200000 (USD 4.5-USD 9) cheaper than in Thailand.
Nevertheless, prices are still high. When entering Vietnam, somehow these affordable brands have turned into luxury fashion labels.
The middle class segment—the target customers of these brands in every country—has a lower income in Vietnam, and there are already numerous established clothing stores and brands with various styles at much more reasonable price in this segment.
For instance, in Daisy shops, a well-known chain of clothing stores for young women, the most expensive items are the overcoats which are priced at VND1.3 million (USD 56), while similar articles in Zara or Mango go for VND2-3 million (USD 87- USD 131).
Besides, these foreign brands are confronted with counterfeit Chinese products. As Vietnam has been repeatedly called to strengthen copyright protection, the design of numerous brands may be copied and sold at a lower price.
Looking through these duplications, it is difficult to recognize that they are fakes. This remarkably influences sales and the reputation of the genuine products.
It would be great news for Vietnamese customers if following in H&M’s steps more and more affordable fashion brands, such as Forever 21, would join the Vietnamese market. However, these brands still have significant barriers to overcome in order to make their way here.