Esquel Group Seeks To Overturn US Sanction On Its Xinjiang Plant

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  • Esquel Group, which has three cotton mills in Xinjiang region with the capacity to produce 200,000 spindles of cotton a year, or 1% of the region’s capacity, said it has never used forced labour
  • The company, which has invested US$ 160 million in Xinjiang since 1995, said 14% of its 420 ethnic-Uygur employees have been with Esquel for more than 10 years, and 16 of them have been on staff for two decades.

Esquel Group, one of the world’s largest garment producers and supplier for such brands as Tommy Hilfiger, Patagonia and Nike, said it has written to the US Commerce Secretary Wilbur Ross to appeal against the decision by his office to put it on a sanctions list for hiring forced labour in Xinjiang.

“Esquel has been falsely associated with forced labour,” vice-chairman John Cheh said in a July 20 letter, adding that the Hong Kong-based company would lodge a detailed, formal submission to the End-User Review Committee for Esquel’s Changji mill in Xinjiang to be removed from the US sanctions list immediately, as required by section 744.16(e) of the Export Administration Regulations.

Esquel Changji, a unit of the garment producer in a county about 40 kilometres west of Xinjiang’s provincial capital of Urumqi, is one of the 11 companies slapped with sanctions, for their alleged mistreatment of ethnic Uygurs in western China, including claims of the use of forced labour.

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“Let me be clear: Esquel does not use forced labour, and we never will use forced labour. We absolutely and categorically oppose forced labour. It is abhorrent and completely antithetical to Esquel’s principles and business practices,” Cheh said in his letter to Ross.

The appeal against the sanction is crucial for Esquel, which exports a third of the 100 million pieces of garments it makes every year to the US. Sanctioned firms are banned from buying components, or procuring services from any US suppliers without US government approval.

There is no evidence “to support the allegations” of forced labour, Chen said. Instead, “there is ample evidence that we do not use forced labour and in fact treat our Uygur employees – as we do all employees – very well,” he said, adding that 14% of the 420 Uygur employees on staff in Changji have been with the company for 10 years, while 16 of them have worked for more than two decades.

The April 2017 Uygur Human Rights Project Report recognised Esquel as “perhaps the only overseas company that has attested to follow through to corporate pledges to hire Uygurs,” Cheh said. “The company makes a concerted effort not only to hire Uygur graduates in its local operation, but also maintains a foundation to support Uygur schools,” he said, citing the report.

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Esquel has three spinning mills in Xinjiang, starting with the Turpan plant in 1995, followed by the Urumqi facility in 1998 and with the most recent in Changji in 2009. It also has two cotton ginning mills built in 2003, which separate raw cotton fibre from seed parts. Over the years, the company has invested about US$160 million in the region, with the capacity to produce 200,000 spindles of cotton, or 1% of the region’s capacity.

Those are not the largest manufacturing bases among the company’s production facilities. Other plants in Foshan in southern China, and in Vietnam are bigger in terms of investment scale and total number of workers. But Xinjiang has its strategic positioning for Esquel, whose shares are closely held and unlisted on any stock exchange.

Xinjiang produces extra long staple cotton, a high-quality material used to produce fabric for dress shirts for global brands and for its own brand Pye. No agency of any government nor any non-governmental organisation has presented such evidence to the allegation and no one from the Commerce Department spoke with anyone at Esquel about the allegations of using forced labour, Cheh said.

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An independent audit of three spinning mills in Xinjiang, including Changji, by a leading global audit firm, ELEVATE, commissioned by one of its US customers, was carried out in May 2019, Esquel said. “ELEVATE rated all three spinning mills with scores of 85 or above and confirmed that there was no forced labour of any kind,” Cheh said, without naming the customer that commissioned the study.

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