Bangladesh disaster: Can US brands repair their reputations?

Global clothing brands scramble to protect their reputations after the Bangladesh disaster: Some promise to make amends, while others lie about their connection to the factory whose collapse killed over 600 people.

Global clothing brands involved in Bangladesh's troubled garment industry responded in starkly different ways to the building collapse that killed more than 600 people. Some quickly acknowledged their links to the tragedy and promised compensation. Others denied they authorized work at factories in the building even when their labels were found in the rubble.

The first approach seems to deserve plaudits for honesty and compassion. The second seems calculated to minimize damage to a brand by maximizing distance from the disaster. Communications professionals say both are public relations strategies and neither may be enough to protect companies from the stain of doing business in Bangladesh.

Such experts say that with several deadly disasters and fires in Bangladesh's $20 billion garment industry in the past six months, possibly the only way retailers and clothing brands can protect their reputations is to visibly and genuinely work to overhaul safety in Bangladesh's garment factories. A factory fire killed 112 workers in November and a January blaze killed seven.

"Just public relations is not going to do it," said Caroline Sapriel, managing director of CS&A, a firm that specializes in reputation management in crisis situations.

Over the past decade, major players in the fashion industry have flocked to Bangladesh, where a minimum wage of about $38 a month has helped boost profits in a global business worth $1 trillion a year. Clothing and textiles are 80 percent of Bangladesh's exports and employ several million people.

Yet the country's worker safety record has become so notorious that the reputational risks of doing business there may have become too great even for retailers and brands that didn't work with factories in the collapsed Rana Plaza building or the Tazreen Fashions factory that burned late last year.

"I don't think it's enough anymore to say 'We're not involved in these particular factories,'" Sapriel said.

Many clothing brands were quick to distance themselves from the five factories that were housed in Rana Plaza. The building, which was not designed for industrial use and had three illegally added levels, collapsed April 24.

Benetton said none of the factories were its authorized suppliers, although Benetton labels were found in the rubble. Spain's Mango said it hadn't bought clothing from Rana Plaza factories but acknowledged it had been in talks with one factory to produce a test batch of clothing.

German clothing company KiK said it was "surprised, shocked and appalled" to learn its T-shirts and tops were found in the rubble. The company said it stopped doing business with the Rana Plaza factories in 2008. It promised an investigation.

Wal-Mart said there was no authorized production of its clothing lines at Rana Plaza but it was investigating whether there was unapproved subcontracting. Swedish retailer H&M, the single largest customer of Bangladeshi garment factories, said none of its clothes were produced there.

The Walt Disney Co. in March responded to publicity from last year's fire at the Tazreen factory, where its branded clothing was found, by pulling out of Bangladesh production altogether.

Only a few companies, including Britain's Primark and Canada's Loblaw Inc., which owns the Joe Fresh clothing line, have acknowledged production at Rana Plaza and promised compensation. Loblaw's CEO said there were 28 other brands and retailers using the five factories and urged them to end their "deafening silence."

Companies that are downplaying involvement in Bangladesh's factory safety problems may be counting on the short memories of Western consumers, who tend to focus on price and may not even check where a piece of clothing has been made. But that's a risky strategy, said Rahul Sharma, public affairs executive with the India-based public relations firm Genesis Burston-Marsteller.

"Reputation is built over a long period of time. But to lose it, it can take seconds," Sharma said. Even companies that do make efforts to ensure they use only factories with good safety records are now at risk of being lumped in with the problems that are rife in Bangladesh's garment industry, he said.

Sharma said that if he were advising any retailer doing business in Bangladesh, he would recommend swift action in the form of a concrete plan to overhaul the entire industry, working with government, factory owners and labor unions.

"They need to send out the message that they are addressing this problem — and then they need to actually do it," he said.

In the wake of the Rana Plaza collapse, there have been tentative moves to do that. Last week, the Bangladeshi garment association met with representatives of 40 garment buyers including H&M, JC Penney, Gap, Nike, Li & Fung, and Tesco.

Others have called for retailers and brands to now embrace a union-proposed plan for all retailers to fund factory upgrades and independent inspections that would cover the entire industry in Bangladesh.

That plan has previously been rejected by all but two major brands as too expensive for the corporations and Bangladesh's responsibility to fix its own problems. PVH, the parent company of Calvin Klein and Tommy Hilfiger brands, and German retailer Tchibo were willing to sign up.

But with the latest disaster, a potential loss of reputation could be far more expensive in the long run.

"There is a perception when something terrible like this happens, that crisis communication is going to fix it," Sapriel said. "But no, no. You have to go and fix the problem. And then, only then, can you can communicate that you've done something to fix the problem."