Why global clothing retailers like H&M and Zara are exiting Myanmar

Myanmar’s political turmoil following the military coup has wide-reaching effects not just local but also towards worldwide industries. Major international labels such as Zara and H&M have made the decision to halt new orders from the country, making them among the first global retail giants to react amid growing concerns about labour rights.

Myanmar has become a significant production hub for the global clothing industry, employing hundreds of thousands to produce clothes for these well-reputed international fashion retailers. However, after the military coup, the country has been hurdling through unending violence and rampant human rights abuses, resulting in a chaotic business environment. This turmoil has triggered massive protests across the country leading to work stoppages. Worker’s rights have been under severe compromise. As such, production chains have been disturbed, and uncertainty looms large.

As major champions of human rights and proponents of ethical sourcing, these brands have a huge responsibility. Continuation of business operations in such a country might be seen as indirectly supporting the military regime, a reputation risk that brands such as Zara and H&M would be too mindful to take.

However, exiting from Myanmar doesn’t mean these global giants can smoothly shift their production elsewhere. In the post-COVID-19 world, the already beleaguered retailers are grappling with unprecedented challanges like supply chain disruptions, lockdowns, and changing consumer behaviors.

The decision to exit isn’t just about supply chain issues. It’s about ethics too. These brands have received heavy pressure from multiple human rights groups to cut ties with Myanmar. Focussing on ethical consumption has been an escalating trend among consumers and they demand transparency about the supply chain. Brands realise that failure to ensure this could lead to loss of trust, eventually impacting their bottom line.

From a business perspective, the exit may prove expensive for these clothing retailers. But in doing so, they are sending a strong message that businesses must not be complicit in human rights abuses. In an era where the consumers are becoming increasingly conscious of the ethical footprint of their purchases, their exit may not only be a necessity but a strategic step as well.

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