German retail group Arcandor has said its Christmas sales will not be affected as some of its Asian suppliers face financing difficulties.
Hong Kong-based consumer goods exporter Li & Fung, which pays Asian suppliers on behalf of the retailer, does not want to continue issuing interim financing for the suppliers, as it deems it too risky in the present climate.
This has forced suppliers to wait up to three months for payment, at a time when demand is weakening and the financial crisis has dampened consumer spending.
In a joint statement, Arcandor – which owns German department store chain Karstadt and mail order business Primondo – and Li & Fung said that although payment terms of 120 days are agreed with all 2,100 Li & Fung suppliers, some Asia-based suppliers are “facing trouble” meeting these terms “due to the turmoil in the banking sector”.
However, the statement reassured that the majority of goods are on the shelves at Arcandor’s companies and that “the Christmas season is not affected at all”.
It is thought that those suppliers that cannot meet the 120-day terms account for just 0.1 per cent of Li & Fung’s Arcandor supply volume.
The companies said they are continuing to work together and that Li & Fung is working on a case by case basis to help suppliers pay on time.
This has forced suppliers to wait up to three months for payment, at a time when demand is weakening and the financial crisis has dampened consumer spending.
In a joint statement, Arcandor – which owns German department store chain Karstadt and mail order business Primondo – and Li & Fung said that although payment terms of 120 days are agreed with all 2,100 Li & Fung suppliers, some Asia-based suppliers are “facing trouble” meeting these terms “due to the turmoil in the banking sector”.
However, the statement reassured that the majority of goods are on the shelves at Arcandor’s companies and that “the Christmas season is not affected at all”.
It is thought that those suppliers that cannot meet the 120-day terms account for just 0.1 per cent of Li & Fung’s Arcandor supply volume.
The companies said they are continuing to work together and that Li & Fung is working on a case by case basis to help suppliers pay on time.
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