Western clothing brands buy from group facing US Xinjiang sanctions

Western brands including Hugo Boss, Ralph Lauren, Brooks Brothers and Lacoste have recently taken apparel shipments from a Chinese group whose subsidiary is facing US sanctions over alleged forced labour in Xinjiang. 

Shipping records show one of the group’s companies dispatched large orders of men’s and women’s shirts, pullovers and jackets to big brands in the US as recently as last month. 

A container of woven shirts destined for Hugo Boss arrived in the US on June 15, shipped from Esquel Enterprises in Hong Kong, according to Panjiva, a global trade data company. The US imposed sanctions on Changji Esquel Textile, Esquel Group’s subsidiary in China’s western Xinjiang region, on Monday. 

Esquel is a Hong Kong-based textile manufacturer with 40,000 employees at factories in China, Vietnam and Sri Lanka.

Its cotton mill in Xinjiang was one of the 11 Chinese businesses targeted by Washington, which alleges the companies were involved in the use of forced labour of China’s oppressed Uighur ethnic minority or other human rights abuses.

“This action will ensure that our goods and technologies are not used in the Chinese Communist party’s despicable offensive against defenceless Muslim minority populations,” said Wilbur Ross, the US commerce secretary.

Many of the Chinese companies were included in a March report by the Australian Strategic Policy Institute, a think-tank, that found Uighurs were being moved from their homes and mass detention camps into factories under conditions that strongly suggested forced labour. 

Over the past three years, the Chinese government has detained some 1.8m Uighur Muslims in a system of camps in the region. While Beijing said some Uighurs had been released, analysts said many had been sent to work in factories across the country as part of government-organised labour-transfer schemes. 

Other companies on the US sanctions list included camera component maker Nanchang O-Film Tech. It is an Apple supplier with three factories in the southern city of Nanchang, according to Apple’s supplier list. 

“We urge the US to correct its mistakes, rescind the related order and stop interfering in China’s domestic affairs,” said Wang Wenbin, foreign ministry spokesperson, adding that Beijing would take measures to protect its companies.

The US has placed the companies on its entity list, which is designed to prevent them from gaining access to American technology. Experts said inclusion on the list might not have a direct impact on manufacturers such as Esquel, which is selling to US firms rather than buying from them. 

“While the entity list won’t restrict US customers from buying from these firms, it could discourage US companies from continuing to deal with them,” said Wendy Wysong, a sanctions expert at Steptoe & Johnson, a law firm. 

Esquel’s shirts for Ralph Lauren and Lacoste arrived in the US in June, while Brooks Brothers received more than 10 tonnes of cotton pullovers in May, the data from Panjiva shows.

Hugo Boss, Ralph Lauren, Brooks Brothers, Lacoste and Apple did not respond to requests for comment. John Cheh, chief executive of Esquel, called the allegations of forced labour “false” in an open letter to Mr Ross.

“Esquel does not use forced labour, and we never will use forced labour,” said Mr Cheh, who noted the company employed 420 Uighurs in its workforce of 1,343 in the region.

Xinjiang is the centre of China’s cotton production industry, contributing 85 per cent of total cotton output. Esquel has invested widely in the region and operates six companies there.

It also had a stake in a joint venture cotton farm alongside the Xinjiang Production and Construction Corps, a quasi-military organisation, until April this year.

Changji Esquel Textile was the only one of its companies in Xinjiang to be added to the US entity list.

Nian Liu contributed reporting from Beijing