Polish apparel giant LPP has halted new garment orders from Bangladesh as a $40 million payment dispute deepens, affecting roughly 40 local manufacturers and buying houses.
Suspension announced amid legal actions
In a letter dated 30 July, LPP told Bangladeshi suppliers it was “suspending the placement of new orders and the submission of new developments” while it reviews its future sourcing strategy. The company added that it would also assess sourcing options and production capabilities in other countries during the pause.
The suspension follows legal proceedings launched by exporters who claim they have not received payment for goods intended for Russian retailer FES Retail. According to the exporters, LPP redirected its ordering and payment flows through FES Retail after the Russia‑Ukraine war complicated direct shipments to Russia. While invoices were initially settled, payments stopped about 18 months ago, leaving factories with unpaid goods.
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Exporters say the unpaid amount totals $40 million, a figure that represents a fraction of the more than $700 million LPP historically sourced each year from Bangladesh. The dispute has prompted the Bangladesh Garment Manufacturers and Exporters Association to convene a meeting with affected parties to explore possible resolutions.
Industry reaction and possible repercussions
Mohammad Hatem, president of the Bangladesh Knitwear Manufacturers and Exporters Association, confirmed receipt of LPP’s suspension letter. “Whether they continue sourcing from Bangladesh is their business,” he said, adding that failure to settle outstanding dues could lead to the buyer being blacklisted in the country.
Abdul Hamid, head of the Bangladesh Garment Buying House Association, expressed concern about losing a buyer that previously accounted for a large share of the market. He noted that LPP had once offered a 50 percent discount on the disputed sums, a proposal many exporters deem unsustainable.
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From a broader perspective, this episode echoes previous supply‑chain disruptions where geopolitical tensions forced Western brands to rely on intermediary buyers. In those cases, delays often led to similar stand‑offs, highlighting the risks of shifting payment responsibilities to third parties.
While LPP evaluates alternative sourcing destinations, the immediate effect is a pause on new orders that could affect Bangladesh’s garment export volumes. The country’s industry bodies have warned that continued non‑payment could erode confidence among suppliers, potentially prompting a shift toward other sourcing hubs.
The dispute remains unresolved.