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Are Suppliers Swerving Uyghur Workers?

Chinese factories that make goods sold in the United States by Nike and other brands are reportedly eschewing workers from the Xinjiang Uyghur Autonomous Region (XUAR) following increasing scrutiny of allegations that Uyghurs and other Turkic Muslim minorities are working under forced-labor conditions.

The Wall Street Journal wrote Tuesday that several factories, including a subsidiary of Taekwang Industrial Co. Ltd. that manufactures sneakers for Nike in China, have been “phasing out” Uyghur workers in response to burgeoning crackdowns from Western nations. A previous statement by the Just Do It company, which has since been updated, said that Taekwang laid off its Xinjiang workers in the second quarter of last year.

The current version of the statement, to which a Nike spokesperson referred Sourcing Journal, says that Taekwang stopped hiring new employees from Xinjiang at its Qingdao facility at some unspecified point. An independent third-party audit later confirmed that no one from Xinjiang is currently employed at the factory.

“We have been conducting ongoing diligence with our suppliers in China to identify and assess potential forced labor risks related to [the] employment of Uyghurs, or other ethnic minorities from XUAR, in other parts of China,” the statement read. “Based on evolving information, we strengthened our audit protocols to identify emerging risks related to potential labor transfer programs. Our ongoing diligence has not found evidence of employment of Uyghurs, or other ethnic minorities from XUAR, elsewhere in our supply chain.”

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Nike does not have relationships with Haoyuanpeng Clothing Manufacturing, Qingdao Jifa Group, Changji Esquel Textile or any of Esquel’s other facilities in Xinjiang, as was “inaccurately reported” by the Australian Strategic Policy Institute (ASPI), the Swoosh firm said, referring to a 2020 report by the Australian think tank that identified the athletic giant among dozens of brands that potentially benefited, whether directly or indirectly, from the use of Uyghur forced labor outside Xinjiang through worker-transfer programs.

These “abusive” schemes, conducted in the name of “poverty alleviation,” intentionally uproot Uyghurs from their homes and traditional way of life, only to “force the workers to endure the long working hours, poor conditions, predatory bosses and discriminatory attitudes of their Han co-workers,” the ASPI wrote at the time.

“It is extremely difficult for Uyghurs to refuse or escape these work assignments, which are enmeshed with the apparatus of detention and political indoctrination both inside and outside of Xinjiang,” it added. “In addition to constant surveillance, the threat of arbitrary detention hangs over minority citizens who refuse their government-sponsored work assignments.”

According to one leaked document meant only for Chinese officials, the labor transfer program was designed, at least in part, to “crack open the solidified [Uyghur] society,” thin its numbers and assimilate its members into mainstream Han culture. While internment camps serve as a “drastic short-term measure” to isolate “problematic” populations, the so-called “Nankai report” said, labor transfers are a long-term measure that “not only reduces Uyghur population density in Xinjiang, but also is an important method to influence, fuse and assimilate Uyghur minorities.”

The pushback from suppliers, who receive political and financial incentives for contracting Uyghur workers, is indicative of the growing pressure on brands from Western governments to purge their supply chains of modern slavery in China and elsewhere. The United States, perhaps China’s biggest critic, has lobbed import bans of cotton, tomatoes and certain solar products over the past year, sending businesses scrambling to plumb the depths of their supply chains for potential risks like never before.

Last week, the Senate unanimously passed the Uyghur Forced Labor Prevention Act, which would create a “rebuttable presumption” that assumes all products from Xinjiang are made with forced labor—and therefore banned from entering the United States under the 1930 Tariff Act—unless “clear and convincing” evidence demonstrates otherwise. The bill has to pass the House of Representatives before President Joe Biden can sign it into law, though all signs point to its approval. Mandatory due-diligence legislation, a concept that is gaining steam in Europe, could also compel brands to shape up or run afoul of the law.

“I think regulatory headwinds are picking up. And I think companies are being asked to build a new workflow that—no judgment—I just don’t think has been a priority,” Justin Dillon, CEO and founder of risk-management firm FRDM (pronounced “freedom”), previously told Sourcing Journal.

Labor advocates say that while factories opting out of the labor-transfer program is a step in the right direction, eliminating Uyghur workers altogether is discriminatory and doesn’t address the underlying cause of Beijing’s repressive policies. Brands, they say, need to achieve clear visibility into their supply chains, while specifying what they mean by “forced labor,” since not all suppliers may see the hiring of workers through the scheme as such. They should ban subcontracting and outsourcing unless they meet the same standards of ethics and transparency.

“This can get tricky as you don’t want to discriminate against Uyghurs and say ‘Don’t hire Uyghurs,’” Shelly Han, chief of staff at the Fair Labor Association, a multi-stakeholder organization whose affiliates include Adidas, Hanesbrands, Lululemon and Patagonia, told Sourcing Journal. “But you do want to address the recruitment channels that are bringing Uyghurs into the factories.”

Not all brands are distancing themselves from Uyghur labor, however.

In a statement published last month, Skechers said that multiple audits of one of its Chinese suppliers, Dongguan Lu Zhou Shoes, showed no signs of forced labor despite ASPI naming it as a suspected beneficiary of forced Uyghur labor.

While Uyghurs comprise a portion of Lu Zhou’s workforce, the footwear maker said they’re employed on the “same terms and conditions as all other factory employees and in particular with respect to working conditions, pay, promotions, etc.” and are free to leave if they no longer wanted to work there.

“Skechers, as always, will continue its aggressive enforcement of its supplier code of conduct through audits and other inquiries to ensure compliance,” said the brand, which entered the sights of the crimes against humanity unit of France’s anti-terrorism prosecutor’s office following a complaint by a Uyghur woman and the human-rights groups Sherpa, the Collectif Ethique sur l’étiquette, and the Uyghur Institute of Europe. Zara owner Inditex, Sandro and Maje owner SMCP and Uniqlo are also part of the inquiry.

“Skechers is deeply concerned by reports of forced labor and the treatment of the members of the Uyghur ethnic minority as well as other ethnic minority workers in the Xinjiang Uyghur Autonomous Region,” it added. “We fully support the proposal by industry trade associations to find a solution through state-to-state engagements and collaborative partnerships across governments, industries, labor associations and non-governmental organizations.”