Apr 15, 2014
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H&M CEO warns rising Bangladeshi wages may spook some firms: paper

Apr 15, 2014

Frankfurt, Germany - Hennes & Mauritz (H&M), the world's second-biggest fashion retailer, supports higher wages for textile workers in Bangladesh, its chief executive said, but warned that higher costs could also prompt some companies to go elsewhere.

"After all, many companies source from Bangladesh, not just us. The country needs to take into account that jobs could be lost to other countries," German daily newspaper Die Welt cited CEO Karl-Johan Persson as saying in an interview published on its website on Tuesday.

"In Bangladesh, the clothing industry offers 4 million jobs that are relatively well paid compared with others. Textile workers earn about as much as teachers," Persson said.

Faced with growing competition from even cheaper rivals such as Britain's Primark and U.S. chain Forever 21, H&M has been seeking to differentiate itself by stressing a commitment to sustainability, including using more recycled materials and organic cotton as well as campaigning for better wages.

It said last week that Bangladesh needed to speed up inspections of its garment industry, almost a year after the collapse of a factory that killed more than 1,100 people. It has also been lobbying officials in Cambodia to raise minimum wages.

Persson told Die Welt that the Swedish government and labor groups were also encouraging H&M to source more from Africa.

"We are testing countries like Kenya and Ethiopia. But those are still very small orders," Persson said.

H&M has said a drive to increase wages for Asian clothing workers was likely to dent its profitability as weak consumer demand and stiff competition made it hard to pass on costs to shoppers.

It has been responding to competition by broadening its product offering, rolling out new mid-market brands such as COS and & Other Stories and investing in its online offering.

Persson told Die Welt that H&M was "very happy" with margins at COS, that the online business was "very profitable" and that the company could expand into further new market segments after recently adding home textiles.

"We have some ideas in the company. But it is too early to talk about them," he said.

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