H&M has begun ending business relationships with several garment suppliers in Bangladesh, marking a significant development for the country’s export-oriented apparel sector and signaling a deeper shift in global sourcing strategies.
The retailer, one of Bangladesh’s largest apparel buyers, has already notified more than half a dozen factories that it will terminate sourcing arrangements, according to industry sources. The move has raised concerns among manufacturers who rely heavily on long-term partnerships with global brands to sustain production capacity and employment.
A managing director of a composite knit textile factory in Bhaluka said his company received an official email from H&M about a week ago, confirming that the retailer would no longer place future orders. The factory, which has supplied garments to H&M for more than 20 years, will continue delivering ongoing orders for the current and upcoming seasons before the relationship is phased out.
“We have worked with H&M for over two decades, and now they have informed us that they will no longer source from us,” the factory owner said, adding that no explanation was provided for the decision.
The lack of clarity has intensified uncertainty for affected suppliers. Many factories have built production lines, workforce structures and compliance systems around specific buyers, making sudden disengagements particularly disruptive. The Bhaluka-based manufacturer said a substantial share of his factory’s capacity had been dedicated to H&M, and the withdrawal could push operations into a difficult transition phase.
“We have maintained a strong business relationship for 21 years. Losing such a major buyer will put us in a dire situation,” he said, noting that attempts to seek clarification from H&M had not yielded any response so far.
Officials at H&M’s Bangladesh office could not be reached for comment.
Also Read: Why H&M’s Supplier Shift Signals a Bigger Transformation in Global Apparel Trade
Industry insiders believe the move is part of a broader strategic recalibration by the Swedish retailer, which has been restructuring both its retail footprint and sourcing network globally. The company has been focusing on cost optimisation, supplier consolidation and diversification of sourcing destinations, amid evolving consumer demand and tightening regulatory requirements in key markets.
Bangladesh, the world’s second-largest apparel exporter, has long been a cornerstone of H&M’s supply chain due to its scale and cost competitiveness. The country exported more than $39 billion worth of garments in the last fiscal year, with H&M accounting for an estimated 2 to 7 percent of total shipments.
However, rising operational costs, energy constraints, compliance investments and increasing competition from emerging sourcing hubs have gradually altered the landscape. Analysts say global brands are now placing greater emphasis on agility, sustainability and geopolitical risk diversification when selecting suppliers.
The immediate impact of H&M’s decision is expected to be uneven but potentially far-reaching. Around 250 factories in Bangladesh are believed to supply directly to the retailer, while over 1,000 more are indirectly connected through subcontracting networks. Even a limited reduction in orders could ripple across the sector, affecting smaller units and workers who depend on stable production flows.
The development also comes as Bangladesh explores new avenues to diversify its export markets and reduce dependence on a handful of large buyers. Recent initiatives to strengthen trade ties with non-traditional partners reflect a growing awareness within the industry that long-term resilience will depend on broader market access and upgraded capabilities.
Executives in the sector say the H&M move underscores a structural shift rather than a temporary adjustment. “This is not just about one buyer or a few factories. It reflects how global sourcing is evolving,” said a senior industry official, adding that manufacturers must adapt quickly to remain competitive.
For Bangladesh’s garment industry, which accounts for more than 80 percent of national export earnings, the stakes are high. While existing orders from H&M will continue in the near term, the termination of long-standing supplier relationships highlights the fragility of buyer dependence in an increasingly dynamic global market.
As sourcing patterns continue to evolve, industry stakeholders say the focus must shift toward value addition, compliance excellence and diversification to cushion against similar shocks in the future.
