In an effort to sanction the Chinese Communist Party for human rights abuses and forced labor in the Xinjiang region, the U.S. Trump administration last month banned imports of cotton and other products from China’s Xinjiang region, which has had a huge impact on the world’s apparel industry.
Multi-billion dollar fashion supply chain breaks down
Last month, Chinese cotton yarn producer Xinjiang Huafu Fashion Co. issued a warning to investors, the WaPo reported Feb. 22. The company said in a Shenzhen Stock Exchange filing that “several U.S. brands have canceled orders. Huafu lost at least $54.3 million last year, compared with the company’s net profit of $62.5 million in 2019. Waffer is one of the few suppliers to publicly acknowledge the impact of the sanctions.
Thousands of companies worldwide were affected when the U.S. blacklisted 87 percent of China’s cotton production (produced in the Xinjiang region, which accounts for one-fifth of the world’s supply) on Jan. 13 of this year.
Under the ban, U.S. Customs (CBP) officials can prohibit the import of products they suspect are made from raw materials from Xinjiang, whether they enter the U.S. directly from China or are imported from other countries. “Companies can no longer cite ‘lack of knowledge,'” Customs said in a statement to WaPo. “Customs is sending a very clear message to the trade community: please know your supply chain.”
And so there was a rare scene in the history of global trade for the fashion industry: a multibillion-dollar supply chain collapsed almost overnight over human rights issues.
To sanction the Chinese Communist Party for human rights abuses and forced labor in the Xinjiang region, last month the U.S. Trump Administration banned imports of cotton and other products from Xinjiang, China. Photo of cotton fields in China’s Xinjiang region.
World fashion brands are pulling out of mainland China
Companies in the U.S., U.K., Australia, Japan and other countries have been imposing import restrictions on cotton and other products from Xinjiang. Nate Herman, senior vice president of the American Apparel and Footwear Association, said various U.S. fashion brands are working to remove cotton from Xinjiang from their supply chains, and while the process has been slowed by the outbreak, “we’re getting closer to our goal.”
Patagonia, for example, announced last July that it was “actively exiting the Xinjiang region,” while Gap, which owns the Old Navy and Banana Republic brands, said it had banned suppliers from directly or indirectly sourcing products, components or materials from Xinjiang.
Swedish brand “Ikea” (Ikea) said they “stopped all shipments to the U.S. containing Xinjiang cotton” after the U.S. customs ban was issued, and both Ikea and H&M said suppliers have stopped sourcing new cotton from Xinjiang.
Nike said it had confirmed that its suppliers were not using textiles or staple yarn from Xinjiang and had communicated the new requirements to them.
The Vietnam Investment Review, a Vietnamese media outlet, reported that Hong Kong-based yarn giant Texhong, which has a branch in Xinjiang, is shifting some of its production to Vietnam because of U.S. sanctions, but the report did not directly mention the sanctions, instead vaguely referring to “the uncertainty caused by the escalating tensions between the U.S. and China. Uncertainty”.
China Increases Cotton Imports
The WaPo reported that Justin Huang, president of the Taiwan Textile Federation, said that Taiwanese textile manufacturers received notices from Western brand owners last September asking for confirmation of their cotton sources. He said U.S. businessmen simply did not want any cotton from China because it was difficult to confirm exactly which region of China it came from.
Mr. Huang said the U.S. businessmen were so sensitive that they had already started moving their production lines before the government announced the news.
Bayard Winthrop, founder of the American Giant brand, said that when Western brands order clothing in China, they usually only deal with the final sewing factory and don’t have to investigate where the factory is sourcing fabric or yarn. But if a factory buys yarn from China, it’s “almost certainly made from Xinjiang cotton.
Official trade figures from the Communist Party reflect the impact of the sanctions. China’s cotton imports rose 16.7 percent last year, with the United States, Brazil and India being the largest suppliers. And while China’s apparel exports fell 6.4 percent year-on-year, exports of all textiles rose 9.6 percent. A report in the Communist Party’s official media, China Textile Times, said last September that China had increased cotton imports to “reduce the risk of textile exports to the United States.
Recent Comments