H&M says Myanmar exit from garment factory follows responsible withdrawal policy

H&M Group says its withdrawal from a Myanmar garment factory employing more than 2,000 workers is being carried out under a policy designed to minimise the impact on workers and suppliers, as the country’s struggling garment industry faces further closures. The Teng Hui Myanmar garment factory in Yangon Region’s Htantabin Township, which produces clothing for H&M under the cut-make-pack (CMP) system, is expected to close by the end of September after the factory said it could no longer operate because of a lack of orders. H&M said its departure was consistent with the “ACT Responsible Exit Policy,” a framework used by members of the Action, Collaboration, Transformation initiative to guide companies when ending business relationships with suppliers. Pernille Skanvig Schønau, a media relations officer for H&M Group, said in an email to Myanmar Now that the company was working with its partner factories to ensure they comply with applicable regulations, including legal requirements for wage payments when workers are laid off. “Throughout this process, there have been close discussions with those making the garments,” Schønau said. “The situation in Myanmar remains extremely complex. So, future conditions cannot be predicted.” H&M announced in 2023 that it would gradually withdraw from Myanmar and halt production under the CMP system after a report documented alleged human and labour rights violations at garment factories operating under the country’s military junta. According to H&M Group data, the company had 16 contracted garment factories in Myanmar as of May 2026, employing between 25,000 and 35,000 workers. Fifteen of the factories were in Yangon Region and one was in Bago Region. Most of the workers were women. The closure of Teng Hui Myanmar was announced to workers in a video circulated on TikTok last week. A female factory official said the company had been informed that H&M could no longer continue placing orders, citing protests and demands from labour rights groups based overseas. “H&M has many operations. They cannot allow this single matter to impact their other businesses,” the official said in the video. “Because of that, in the end, inevitably, they will leave Myanmar.” A Yangon garment entrepreneur familiar with the factory’s operations said Teng Hui Myanmar had previously employed about 7,000 workers at a large factory compound. As orders from H&M declined, the company reduced its workforce to fewer than 3,000 workers in an effort to remain open, but eventually became unable to sustain operations. The entrepreneur said garment manufacturers are facing a combination of declining orders, difficulties importing machinery, and regime restrictions affecting foreign currency and export earnings. H&M had continued placing orders with the factory, including contracts covering an entire year, the entrepreneur said. But increasing restrictions on imports and foreign exchange, along with other external pressures, have made it increasingly difficult for manufacturers to operate. The entrepreneur said 17 garment factories in Yangon Region operating with approval from the Myanmar Investment Commission are also preparing to close because of difficulties across the sector. Applications for some of the closures, including Teng Hui Myanmar’s, had been submitted as early as last year, he said. Although closures are subject to official approval and workers are entitled to compensation based on applicable employment and service regulations, the closures could affect at least 20,000 workers across the 17 factories, according to the entrepreneur. He said the junta should focus on easing restrictions on trade, commerce, exports, and foreign currency rather than relying primarily on new foreign investment. “If they don’t do that, the factories will gradually all close down,” he said. “Why? Because surviving has become harder than making a profit. That’s all. This is coming, one after another.” Myanmar labour activists and trade unions have accused garment factories under military rule of widespread labour rights abuses, including forced labour, wage exploitation, denial of legally required benefits, restrictions on freedom of expression and association, and suppression of labour unions. Phyo Sandar Soe, assistant general secretary of the Confederation of Trade Unions Myanmar, said international brands and their suppliers have a responsibility to respect human and labour rights and comply with international standards. She rejected the suggestion that workers’ efforts to demand their rights were responsible for international companies leaving Myanmar. “The reasons behind the departure of brands are not solely due to this single issue. It is also necessary to look at other circumstances and the environment for doing business,” she told Myanmar Now. “So, is it a fault for workers to try and seek justice and remedy for labour rights violations? It feels like we are living in a society that blames those who suffer losses,” she said. Phyo Sandar Soe said labour unions were not calling for international brands to abruptly sever ties with Myanmar because of rights violations. Instead, they want companies that leave to do so responsibly and in a way that protects workers. The departure of international brands remains controversial among labour activists, with some warning that factory closures will eliminate jobs and harm workers and their families, while others argue that continued operations without meaningful protections could expose workers to further abuses. The garment industry is one of Myanmar’s largest export-earning sectors. Finished-garment exports generated about US$3.6 billion in 2020-21, a figure critics say represents a significant source of foreign currency for the military junta. Domestic labour activists, however, argue that the headline export figures overstate the industry’s economic benefits to Myanmar because most factories operate under the CMP model. Under the system, foreign brands supply the raw materials and accessories, while Myanmar factories perform manufacturing and assembly for a service fee. According to the Myanmar Garment Manufacturers Association, more than 700,000 people work in CMP factories, with roughly twice that number employed in related industries. The association estimates that about four times as many people depend on those workers as family members. The association says about 60% of garments produced by its members are exported to Europe, 20% to Japan, and 20% to other markets. CMP operations also include bag manufacturing, footwear assembly, and electrical equipment assembly. Under the system, international brands purchase and ship raw materials to Myanmar factories, which manufacture the products and return the finished goods to the buyers. Myanmar manufacturers receive only about 10% of the finished product’s value as a CMP service fee.

H&M says Myanmar exit from garment factory follows responsible withdrawal policy

The international fashion brand announced three years ago that it was pulling out of the country amid reports of human and labour rights violations

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