some cases, the layers of ownership from the XPCC numbered in the dozens. “It will be hard to implement this ban practically, and it will leave fashion apparel companies searching for guidance,” said Tai Ford, chief marketing officer at Retraced, a supply-chain traceability firm. “We have found that only a few companies have a useable platform or system already in place to even begin to better understand their supply chains. It’s a real problem for the fashion industry at large.” More legislation may be coming down the pipeline, too, including the Uyghur Forced Labor Prevention Act, which passed overwhelmingly in the House of Representatives in September. It assumes that all goods manufactured in Xinjiang are made with forced labor and therefore verboten unless “clear and convincing evidence” demonstrates otherwise. If enacted into law, the act could have sweeping implications for garment and textile sourcing. Xinjiang produces 85 percent of China’s cotton, which in turn accounted for more than 22 percent of the world’s supply in fiscal year 2019. The End Uyghur Forced Labour coalition estimates that one in five cotton garments sold globally contains fiber or yarn sourced from Xinjiang, meaning that “virtually” the entire apparel industry is at least tangentially tainted by Uyghur abuses. Indeed, it’s the opacity of garment supply chains that make it difficult to peg what materials or products have been touched by forced labor. Brands and retailers have invested in traceability to promote environmental sustainability, yet visibility into labor beyond the first tier has lagged behind, Han said. In the case of Xinjiang, the persecution of Uyghurs and other Muslim minorities is not the action of a “few bad-apple suppliers,” but rather a government-mandated one, which adds to the scope and complexity of the issue. “It’s a policy. And it’s something the government is standing behind,” she said. The unprecedented situation has led to an unprecedented response. Over the summer, the Trump administration placed several apparel firms, including reported current or former suppliers to brands such as Ralph Lauren and Tommy Hilfiger, on a blacklist that bars them from buying U.S. products because of their alleged ties to
6 / SOURCING STATE OF THE INDUSTRY REPORT
forced-labor camps in Xinjiang. In July, the State Department led an interagency group to publish the “Xinjiang Supply Chain Business Advisory,” advising companies with potential supply-chain exposure to Xinjiang to consider the reputational, economic and legal risks of involvement with entities that may be directly or indirectly engaging in human rights abuses in the region. Because of its significant volumes, however, writing off Chinese cotton entirely is difficult, if not impossible. “[It’s] not so easily replaced,” said Nate Herman, senior vice president of policy at the AAFA. “We’re working to see if we can try and source U.S. cotton, Indian cotton, Brazilian cotton, West African cotton...there’s a lot of other sources out there, but it is hard to replace 20 percent.” Herman said the situation in China differs from that of Uzbekistan, where reports of state-sponsored cotton forced labor led hundreds of brands to unite in a boycott in 2012. The latter generates “very limited amounts of yarns and fabrics, and very small amounts of clothing,” he said. “Whereas China produces about 60 percent of the world’s textiles, and those textiles can end up anywhere in the world.” Already, brands and retailers, leery of President Trump’s tariffs and smarting from supply-chain bottlenecks at the start of the Covid-19 pandemic, when China went into extended lockdown, have been looking to diversify operations across Bangladesh, Cambodia, Vietnam and others. But though divesting from Chinese cotton may be an appealing option, Ford said it doesn’t address or put pressure on buyers to address the underlying problems. Neither does it prevent mills in these countries from buying Xinjiang or Chinese cotton. Solutions such as blockchain and DNA tagging are relatively niche and will need to be scaled up rapidly to be of value. Third-party audits, too, have limited utility under current circumstances. A number of supply-chain auditing firms, including Bureau Veritas and Worldwide Responsible Accredited Production, said they are no longer conducting inspections in Xinjiang because they’re unable to carve out the necessary amount of access to conduct a satisfactory review. For now, Retraced is building out a system where brands can connect with their
“No matter how you view it, this is a threat that impacts each and every aspect of our society. And we can’t afford to ignore it.” —Mark A. Morgan, Customs and Border Protection