Was your fridge made with forced labour?
When the MSC Vega docked at the Port of Los Angeles on Nov. 12, among the thousands of shipping containers on board were more than 136 tonnes of cargo destined for The Brick, one of Canada’s largest furniture and appliance outlets.
The 31 containers in that shipment held fridges sold under The Brick’s Brada label and made by Changhong Meiling — a Chinese company on a U.S. sanctions list for allegedly using forced labour from China’s Uighur population.
It was one of nearly 400 shipments since 2018 from Chinese manufacturers accused of serious human rights violations to Canadian businesses, a joint investigation by the Toronto Star and Guelph Mercury Tribune has found.
Using international shipping records, the joint investigation tracked a range of these Chinese companies’ products flowing into Canada: kitchen appliances shipped to retailers such as Best Buy, Home Depot and Costco, as well as train and bus components sent to Bombardier and Ottawa’s public transit agency.
The investigation found an additional 405 Canada-bound shipments of clothing from companies whose supply chain traces back to a cotton manufacturer on the U.S. sanctions list. The nearly 500 tonnes of clothing was destined for Canadian subsidiaries of apparel giants including the Gap and the company behind Tommy Hilfiger and Calvin Klein.
Although at least one retailer, Home Depot, has severed ties with its supplier on the sanctions list, many of the companies said they have reviewed audits of the Chinese firms’ supply chains and found no evidence the manufacturers used forced labour.
A growing number of Chinese companies have been added to the U.S. Department of Commerce’s sanctions list, which bars American companies from selling goods to foreign firms its government alleges are implicated in the widespread repression of Uighurs in the country’s Xinjiang Uighur Autonomous Region.
Internment camps in Xinjiang are estimated to be holding up to 2 million Uighurs and other ethnic minorities. Spurred by growing accounts of human rights abuses of Uighurs — including torture, sterilization, forced labour and mass transfers of forced labourers from Xinjiang to other parts of China — a Canadian Parliamentary subcommittee in October heard numerous, persuasive witnesses say China’s actions aimed to “eradicate Uighur culture and religion.”
Tuesday the U.S. government declared the Chinese government is committing genocide and crimes against humanity through its repression of Uighurs and other ethnic minorities.
Despite mounting concerns in recent years of the mistreatment of Uighurs, products have continued to flow into Canada from companies suspected of human rights abuses.
“We are still consuming the products coming from forced labour without any hesitation… That is shocking,” Mehmet Tohti, executive director of the Uyghur Rights Advocacy Project, said after being told of the Star-Mercury Tribune’s findings.
“Morally that is not acceptable behaviour for Canadians.”
This month the federal government announced new measures meant to discourage Canadian companies from importing goods made with forced labour, including its “Xinjiang integrity declaration” ensuring goods weren’t manufactured as part of human rights abuses.
The initiative came months after Canada amended its Customs Tariff to prohibit the importation of goods made with forced labour, which was implemented last July.
On Tuesday Prime Minister Justin Trudeau told reporters in Ottawa the government is concerned about the situation in Xinjiang and pointed to the new measures as part of a push to counter the human rights abuses.
“We are working with Canadian companies, all Canadian companies, to ensure that they are not benefitting from or profiting from these human rights abuses,” Trudeau said.
But some say Ottawa’s measures don’t go far enough. Liberal MP John McKay, a vocal critic of China’s human rights record, called the new measures a “tiny step in the right direction.”
McKay said he’d rather see the government get behind a bill currently before the Senate aiming to impose stricter standards for preventing items made by forced labour from getting into the country.
McKay said Canada is China’s customer and should be demanding better standards in the production of goods Canadian companies buy to make certain they are free of forced labour and slavery.
“It is my belief, given the belligerence and arrogance and downright ignorance of the Chinese government, that all products need to be substantially reviewed for these kinds of human rights abuses,” McKay said. “And it needs to hurt China.”
The Star-Mercury Tribune reviewed thousands of bills of lading — essentially a receipt for a shipment of goods — through software provided by cargo tracking companies Panjiva and Import Genius.
The investigation discovered 20 Canadian businesses or organizations received shipments from companies on the U.S. sanctions list since 2018. One of the largest Canadian customers was Guelph-based appliance brand Danby, which shipping records show received 136 containers of refrigerators or freezers from one of the Chinese manufacturers in 2018 and 2019.
Every container crossed the Pacific Ocean and docked in ports in Washington, shipping records show, before continuing on to Danby’s Ohio or Canadian operations.
In an emailed statement, Jim Estill, Danby’s CEO, said the company “takes very seriously the working conditions and safety of everyone who works in our supply chain. We would never knowingly use factories that use forced labour.”
Costco Canada imported an additional 65 containers filled with fridges, freezers, air conditioners and dehumidifiers. Bills of lading show Danby was the cargo’s shipper, and the appliances originated from an address in China for one of the blacklisted companies. Costco did not respond to repeated requests for comment.
The data collected by this investigation provides only a glimpse of a likely much larger flow of products from besmirched Chinese manufacturers directly into Canada. That’s because the data is gleaned only from shipments coming through the United States before they continued on to Canada.
Canadian import data is not publicly available, so it’s unclear how much of the tens of billions of dollars in merchandise Canada imports annually from China came from Xinjiang or which Canadian firms received it.
The U.S. sanctions only bar American companies from exporting products to Chinese entities on the list, though a U.S. congressman is now planning to re-introduce a bill that would ban all items made in Xinjiang from entering the country.
The sanctions list alone has done little to abate the stream of products. Since 11 companies were added to the list in July 2020, this investigation found nearly 160 cargo shipments into U.S. ports destined for Canadian businesses.
Amy Lehr, director of the Washington, D.C.-based Human Rights Initiative at the Center for Strategic and International Studies, told a Canadian parliamentary subcommittee last July that forced labour is part of the Chinese government’s oppression of Uighurs and its re-education and poverty alleviation effort in the region.
The government, Lehr said, has quotas local officials must meet for Uighurs to be “transferred to work” from their rural villages to manufacturing centres. The government also provides financial incentives for companies to employ them.
“Our research and interviews indicate that at least some of those transferred to work are not doing so willingly, and are often significantly underpaid,” Lehr said. “This, in turn, raises serious forced labour concerns.”
Changhong Meiling, a home appliances manufacturer, was one of several Chinese manufacturers named in a February 2020 report from the Australian Strategic Policy Institute (ASPI), titled Uyghurs for Sale, alleging it had used forced Uighur labour. It was also put on the U.S. sanctions list in July.
The company, which previously went by Hefei Meiling, has exported its appliances to at least six Canadian customers, including The Brick, Best Buy, Home Depot and Danby.
The Brick, whose website boasts that it is proudly based in Edmonton, has imported 134 shipping containers from the Chinese manufacturer since May 2019, totalling thousands of appliances, according to shipping records.
Greg Nakonechny, the company’s vice-president for legal and corporate secretary, said The Brick “has in place a program, including audits, to ensure vendors comply with its standards, including a prohibition against forced labour.”
The Brick “has conducted audits or has reviewed third party audits” of Changhong Meiling, he said, the most recent one completed Nov. 20. Nakonechny said the company “is satisfied that no forced labour is used in the production of Brick product.”
A spokesperson from Home Depot said the company is aware of the allegations against the Chinese manufacturer and it no longer works with the supplier. “We have strict responsible sourcing standards and conduct regular audits around the world to ensure compliance,” the spokesperson said.
The spokesperson would not specify exactly why the company cut ties with Changhong Meiling.
Best Buy would not comment on its shipments from Changhong Meiling, but said in a statement that it has “multiple processes in place to make sure our partners are behaving ethically.”
KTK Group, another Chinese firm accused of using forced labour by both the Australian think tank ASPI and the U.S. government, sent train component parts to several Canadian businesses.
Canadian transport company Bombardier imported seat shells to Quebec in 2018, along with three shipments of handrails to its Pennsylvania rail operation in 2020 and 22 shipments of passenger seats and seat shells to its operations in New York in 2018 and 2019, according to bills of lading.
Bombardier said that after the Australian think tank’s report was released last year, it conducted its own investigation and found no evidence supporting the think tank’s allegations. It also said it confronted KTK Group about the allegations to ensure they were complying with the Bombardier’s supplier code of conduct.
“Following our request for clarification, with reference to the allegation contained in the ASPI report, Bombardier Transportation was satisfied with the responses received from KTK,” the company said in a written response.
Bombardier said it is “actively monitoring” after the U.S. government’s decision to put the KTK Group on the sanctions list.
KTK Group has also been used by a contractor on a project for OC Transpo, Ottawa’s public transit agency, shipping records show.
The City of Ottawa said it has ethical guidelines to which it expects contractors to adhere. The city said it monitors compliance on a complaints-based system.
“The City does not have any contracts with KTK Group,” a statement from the city’s chief procurement officer, Will McDonald, reads. “As the City is not a party to sub-contractor agreements, the onus is on the City’s contractors to ensure their sub-contractors adhere to the Ethical Purchasing Policy and Supplier Code of Conduct.”
Andrew Crane, a professor of business and society at England’s University of Bath and a member of a group advising the United Kingdom’s Home Office on supply chain transparency, said that when it comes to forced labour, just about any multinational company will likely have it somewhere in its supply chain.
But companies must still take the initiative to root it out, he said.
“These things don’t happen randomly. They happen in places where there are conditions that give rise to these sorts of practices,” he said, pointing to places where there may be a group of vulnerable workers.
In a recent advisory for companies doing business with firms in Xinjiang, the Canadian government warned that, “third-party audits are an important part of due diligence, but may not be a sufficient source of information.”
The Star-Mercury Tribune investigation found more than 400 shipments of clothing to popular Canadian retailers from manufacturers whose supply chain leads back to a cotton producer — Changji Esquel Textile — accused by U.S. officials of using forced Uighur labour in the Xinjiang region.
Changji Esquel Textile is one of five Xiniang-based cotton ginning and spinning operations owned by Esquel Group, whose website states that it has “full control of every step in the process, from cotton seed research to product retailing.”
While Changji Esquel itself does not make finished goods, Esquel’s factories in other parts of China, along with Vietnam, Sri Lanka and, until recently, Mauritius, do.
Bills of lading show several of those subsidiaries exported 60 shipments of clothing to the Canadian arm of PVH, an apparel giant who owns popular brands including Calvin Klein.
In its corporate responsibility statement on its website PVH boasts of the “the kind of business we are and the one we want to be,” and says it aims to move the fashion industry forward.
“There’s a story woven into every design and every piece we make. It’s the story of how our clothes are made: the fingers that pick the cotton, the hands that spin the fabric, and the communities where our goods are made,” it reads.
In a statement, PVH said it has stopped placing orders with Esquel “or any of its affiliates” and expects the last of outstanding orders, which are mostly from Esquel operations outside of China, to be delivered by May.
Nike Canada received six shipments of garments and apparel from Esquel’s Vietnam operation in August last year. In a statement the company said it has confirmed with its contract suppliers the items were not made from textiles or spun yarn from Xinjiang and it doesn’t import items from the region.
The Gap, whose Canadian subsidiary received more than 260 shipments of clothing from Esquel-affiliated firms in Vietnam, Sri Lanka and other countries from 2018 to 2020, said in a statement that it has “implemented a new policy that explicitly prohibits Gap Inc. vendors from directly or indirectly sourcing any products, components, or materials from Xinjiang.”
Esquel, in a statement posted on its website after it was added to the U.S. sanctions list, said it was “deeply offended by the decision,” and that “(t)here is no evidence to support the allegations against us on the use of forced labour in (Changji Esquel Textile).”
“A leading global audit firm who last came to (Changji Esquel) in 2019 confirmed we do not use forced labor, and over the years many international groups and customers have visited the site with positive reports,” the statement adds.
“We are working with all relevant authorities to resolve the situation, and we remain committed to Xinjiang as we are proud of our contribution in the region over the last 25 years.”
The outgoing Trump administration recently announced a ban on all cotton products from the Xinjiang region, citing evidence of forced labour.
The University of Bath’s Crane said supply chains need to be scrutinized to ensure an entire company’s output isn’t disparaged based on allegations against one of its subsidiaries.
“If it’s spinning cotton produced with forced labour, and then that cotton ends up in the T-shirt sold by Company A, then yes the company is still profiting from forced labour,” he said.
Companies should have more robust auditing systems to detect forced labour in their supply chains, Crane said. This means unscheduled audits take place over several days, not the single-day visits typically seen now. As well, he said those auditors also need to be able to take workers off factory grounds for interviews, as “they’re scared of talking inside” with many being told what to say by factory heads.
China denies its compounds in Xinjiang are anything more than vocational training centres.
In the U.S., a bill aims to ban all items made in the region from entering the country. The Uighur Forced Labour Prevention Act did not make it through the U.S. Senate before the change in government Jan. 20 and will need to be introduced to the new congress.
The act would put the responsibility on companies to prove items they are importing from Xinjiang were not made with forced labour.
Democratic Congressman James McGovern sponsored the bill and, in a statement, said forced labour is “widespread and systematic” in Xinjiang.
“For more than two years, global corporations have been aware of forced labor throughout the Xinjiang region,” McGovern wrote. “We want these corporations to reassess their supply chains and find alternatives that do not exploit labour and violate human rights.”
The bill says current efforts to vet supply chains for forced labour are “unreliable” due to the extent of forced labour and the mixing of “involuntary labour with voluntary labour” in the region. It says witnesses are not able to speak freely about factory conditions and government officials have incentive to cover up “government-sponsored” forced labour.
It also suggests coordination with Canada and Mexico under the three nations’ free trade agreement to address the issue.
Nury Turkel, a Commissioner of the U.S. Commission on International Religious Freedom and himself a Uighur from Xinjiang said a coordinated international effort is what’s needed to combat forced labour.
“The global supply chain cannot be cleaned up just with one country’s efforts,” said Turkel.
He said forced labour of Uighurs is not new. Going back to his childhood in Xinjiang he remembers people being forced to pick cotton or work on construction sites.
Back in Canada, Liberal MP McKay said if the country wants to help in the fight against forced labour it would “be a good start” to make import data publicly accessible to add transparency to goods coming into Canada.
His support of the Modern Slavery Act in the Senate comes after his own attempt in the house failed in 2018. But, he said, public pressure for action is starting to mount on Ottawa and he believes changes can be made.
“I think the people of Canada are actually leading the politicians and governments in their disturbance with the activities of the Chinese government and are starting to coalesce around the idea that anything coming out of China is suspect,” McKay said.
The outlook isn’t as positive from Uighur advocate Tohti.
He wants Canada to impose a ban on cotton products from the region.
But from what he has seen so far, he isn’t optimistic Ottawa will act.
“We are just taking this as the new normal,” he said.