This is an excerpt from Thursday’s Point of Sale retail supply chain newsletter.
The western Chinese region of Xinjiang is a major source of coal, chemicals, sugar, tomatoes and polysilicon, but the area is most notably the country’s primary producer of cotton. In fact, 85% of China’s cotton can be traced to the region and China accounts for ~20% of the world’s cotton production.
After months of increasing restrictions, the Trump Administration announced a blanket import ban on all cotton and tomato products from China’s western Xinjiang region over allegations they are made with forced labor from detained Uighur Muslims.
U.S. Customs and Border Protection (CBP) said the order applies to raw fibers, apparel and textiles made from Xinjiang-grown cotton, as well as canned tomatoes, sauces, seeds and other tomato products from the region, even if processed or manufactured outside of China.
The ban allows customs officials to stop imports that they suspect are made with raw materials from Xinjiang, regardless of whether they travel into the United States directly from China or through another country.
Scott Nova, the executive director of the Workers Rights Consortium, a labor rights group said, “This ban will redefine how the apparel industry — from Amazon to Nike to Zara — sources its materials and labor. Any global apparel brand that is not either out of Xinjiang already or plotting a very swift exit is courting legal and reputational disaster.”
The Workers Rights Consortium estimates that American brands and retailers import more than 1.5 billion garments that use Xinjiang materials every year, representing more than $20 billion in retail sales.
Independent researchers and media reports have linked dozens of the world’s most prominent multinational companies to workers or products from Xinjiang, including Apple, Nike, Kraft Heinz and Campbell Soup. Several firms have severed ties with Xinjiang in attempts to distance themselves from the atrocities of the region. But many companies have found it difficult to trace the origins of its products, given the lack of visibility from their Chinese suppliers.
For this reason, the U.S. apparel industry had previously criticized broad bans as impossible to enforce. Even groups in support of the cause, like the American Apparel & Footwear Association, cautioned that implementation will be difficult due to lack of supply chain visibility.
Final Thoughts. This ban is much bigger than just cotton and tomatoes. It is a call to action for all retailers to better understand their sourcing practices. Mark Morgan, the acting commissioner for the CBP said the order will “send a crystal-clear message to the trade community: know your supply chains”.
The call doesn’t end with the CBP—consumers want transparency from retailers as well. According to a survey from BBMG, 87% of consumers prefer to buy from companies that support fair labor and trade practices. It’s a win-win-win scenario for retailers able to shift their supply chains away from Xinjiang. While meeting expectations of socially conscious consumers, brands can also gain better insight into their sourcing and supply chain. Additionally, brands can lean into ESG themes and potentially make a positive impact by reducing China’s use of forced labor.
Want more retail supply chain insights? Try Point of Sale, my twice weekly newsletter on the consumer, retail, and the rapidly evolving retail supply chain: https://web.freightwaves.com/point-of-sale