Wednesday, September 2, 2020

Correcting the Record About Esquel’s Presence and Operations in Xinjiang

Introduction to Esquel Group and our Values

Esquel Group is a leading textile and apparel manufacturer producing more than 100 million shirts a year for global fashion brands. Founded in 1978 in Hong Kong, Esquel remains a family-owned business with a team of over 40,000 employees across a global manufacturing operation.

Quality, sustainability and ethical business practices have been the cornerstones of Esquel since it was founded 42 years ago. This is captured in our eCulture—Ethics, Environment, Exploration, Excellence and Education. The eCulture forms the foundation of our approach and guides how we make decisions.

All Esquel facilities adhere to fair labor and human rights practices, which safeguard employees’ fundamental freedom to choose to work for a fair and honest wage. Our ethical employment practices prohibit the use of any form of compulsory or other forced labor conditions in our facilities.  

Esquel’s Presence in Xinjiang

Esquel established its presence in Xinjiang 25 years ago as part of our effort to deliver consistently high-quality woven shirts. Our value stream starts with research on cotton and cotton seeds, moving to ginning of Extra Long Staple (ELS) cotton, continuing with spinning, weaving, dyeing and finishing, concluding with garment manufacturing. Esquel’s operations and its team on the ground in Xinjiang have been an important part of the company’s success including sustainability. As a textile manufacturer committed to investing in technology and innovative processes, Esquel also introduced highly automated spinning mill in Xinjiang to improve efficiency and enhance quality.[1]

We established our first spinning mill in Turpan in 1995, followed by a second mill in Urumqi in 1998 and a third mill in Changji in 2009. By the end of 2019, we were a team of more than 1,300 in Xinjiang including more than 400 Uyghur and close to 200 ethnic minorities team members. Nearly 15 percent of our Uyghur team members have worked at Esquel for more than 10 years.

The False Allegation Against Esquel

The allegation that Esquel Group uses forced or any other form of compulsory labor in Xinjiang is false

This inaccurate allegation stems from a Wall Street Journal article[2] published on May 16, 2019 that noted Esquel had hired 34 Uyghurs from Xinjiang over the previous two years and a report published by the Australian Strategic Policy Institute (ASPI) on March 1, 2020 titled “Uyghurs for Sale”[3] citing our attendance at a job fair in Mongolküre County in Xinjiang in late 2019.

Regarding details discussed in these two reports, our responses are:

A. On the mischaracterization in the WSJ article:

The Wall Street Journal article published on May 16, 2019 stated that: “in 2017 officials began offering the company Uighurs from southern Xinjiang as workers. Esquel took 34 in total the past two years, with all hiring decisions and training made independently of the government, Mr. Cheh said: “We were in no way forced to employ anyone.”

The facts are:

  • Throughout the global Esquel network, we implement competitive recruitment and interview processes at all of our facilities as our jobs demand good technical know-how and specialized skills to operate on the highly automated and computerized machines.[4]
  • The 34 candidates who were recruited were not “offered” to Esquel or coerced to join, nor is it correct to state that Esquel “took” these new employees. The 34 candidates were hired by Esquel over a two-year period following our standard recruitment process. Each employee across Esquel is paid and respected for their work.
  • Based on these applicants’ resumes and the company’s hiring process, Esquel was able to ascertain that none of the 34 people hired at that time came from any vocational education and training center. Moreover, the 34 employees have performed well after their hire, with 15 leaving the company up to now with each citing personal reasons.
  • The article inaccurately captures facts that were openly shared with WSJ by Esquel. To be clear, the WSJ makes no statements in the article that Esquel uses forced labor. However, by inference from the wording (“offering” and “took”) and being included in an article about forced labor strongly suggested that Esquel participated in forced labor programs.
  • As a result, other publications, non-governmental organizations and the U.S. Congress have amplified the WSJ inference that Esquel uses forced labor.

B. Regarding the mischaracterization in the ASPI Report

The report published on March 1, 2020 by ASPI stated that (1) “according to an official notice, in late 2019, Mongolküre county held a ‘job fair’ to organize labor transfers. Changji Esquel Textile Co. Ltd was among the participating companies.” And (2) “Esquel set up three spinning mills in Xinjiang to be close to the region’s cotton fields. In May 2019, Esquel’s CEO told the Wall Street Journal that in 2017, officials began offering the company Uyghur workers from southern Xinjiang and Esquel took 34 in total in 2 years.”

The facts are:

  • At the specific job fair cited in the report, out of about 100 job applicants that attended the job fair, Esquel interviewed 10 individuals. All the job seekers were from the local community, lived in private homes, and were of different ethnic backgrounds. They arrived on their own and were not presented by the local government as candidates. They attended the job fair voluntarily to look for jobs.
  • Esquel offered jobs to three individuals who attended the fair: two of them were Uyghurs and one was Kazak. Both Uyghur employees resigned in December 2019 for personal reasons. The Kazak team member remains employed with Esquel.
  • The locations of our factories in Xinjiang are in cities where a significant percentage of the population is Uyghur, and because we do not discriminate based on race, gender, religion or ethnicity, our team in Xinjiang has always included Uyghurs. Our hiring process is based on fair and rigorous employment criteria and free from the influence of forced or compulsory labor in any form.
  • Esquel has participated in local job fairs in the region. These job fairs are normal activities run by localities to help residents, regardless of ethnic background, find jobs outside of agricultural work.
  • The ASPI report claims Esquel’s CEO “told the Wall Street Journal that in 2017, officials began offering the company Uyghur workers from southern Xinjiang and Esquel took 34 in total in 2 years”. This is false and not what Esquel’s CEO said. He stated to the WSJ that “we went through our company’s own selection process to determine if the candidates were suitable for meeting the job requirements and made hiring decisions accordingly. ” When ASPI referenced the May 2019 WSJ article it failed to mention that all Esquel hiring decisions and training are made independently of the government.
  • Esquel has never hired any Uyghurs to work in its factories outside of Xinjiang.

It must be noted that there is not a single direct source, witness testimony, or document that links Esquel to forced labor in these reports. Moreover, to our knowledge, ASPI has not undertaken any independent investigation or confirmation of the information it presented in its report. Instead, ASPI apparently chose to publish without verification of open-source Chinese-language documents, satellite imagery analysis, academic research and on-the-ground media reporting.[5] ASPI never contacted Esquel management to discuss our presence in the region, our hiring practices, or the actual employment conditions of our team prior to the publication of the report.

For reference, the spinning mill in Changji is an advanced state-of-the-art, highly automated factory. Given the highly automated nature of CJE, only 45 technicians control 30,000 spindles, whereas a traditional mill of the same size would normally require approximately 150 employees to do so. Staffing by educated technical employees means it is both unlikely and impractical that this facility can operate with anyone not meeting the company’s recruitment guidelines.

Esquel’s Responses to the Allegations

Esquel has been proactive and transparent in responding to the allegations since they were made. As stated, these claims undermine the core values of Esquel and how it has operated for 42 years everywhere and for the last 25 years in Xinjiang. The allegation that Esquel Group uses forced labor in Xinjiang is false.

Multiple statements have been issued that directly addressed the allegations and they are accessible on our website (see statement released on April 24, 2020[6] and July 21, 2020[7]). In light of the concerns raised by the U.S. authorities, we have reached out to relevant U.S. regulators and lawmakers as well as reputable media[8] to respond to the allegations and provided a detailed description of our operation in the region.

Following the announcement of Changji Esquel Textile’s addition to the U.S. Commerce Department’s Entity List, we have also submitted evidence to U.S. Secretary of Commerce Wilbur Ross, demonstrating no forced labor has been used by Esquel and also highlighting our work to support the local Uyghur community over the past 25 years.

Esquel and our Customers

Since the allegations came out, we have been in active dialogue with customers. Many of our customers who have known us for many years have voiced support. Some have gone on record, including Bestseller which stated that Esquel “is a partner (they) are very proud of” and they “will continue to further develop (their) partnership with Esquel”[9].

Independent Third-Party Audits

In May 2019, Esquel’s customers selected a reputable and experienced third-party auditor to conduct an independent audit at our three spinning mills in Xinjiang. The investigation was based on general international labor standards and Chinese Labor Law. From this audit, the third-party auditor rated all three mills with scores of 85 or above out of 100, and concluded that there was no forced labor or harassment at these facilities. In fact, the spinning mills received positive ratings for most areas of our business practices, including and not limited to our social responsibility management systems and additional benefits that exceeded mandatory requirements. Key conclusions from these audits include:

  • There was no evidence of forced, bonded or prison labor at these Esquel facilities.
  • Nor was there evidence suggesting forced labor, and no conflicting information or high-risk areas were identified.
  • All employees appeared to be recruited through legitimate channels that are not affiliated with any government agency linked to a vocational education and training center.
  • Terms and conditions of employment were the same between majority and minority populations at the facilities.

Committed to Xinjiang and Our Team

At Esquel, we are committed to delivering our corporate vision “Making a Difference” in Xinjiang as well as in the rest of the world where we operate. We will continue to focus on creating local value, supporting local development and transforming life in Xinjiang as we have done for 25 years. We will not walk away from that responsibility and commitment.

We would like to reiterate that:

  • Esquel has not received any government subsidies for hiring Uyghurs or any ethnic minorities, nor do we recruit workers from any vocational education and training centers.
  • We do not discriminate based on race, religion, ethnicity, or gender. We do not pursue nor disqualify a job candidate for their race, ethnicity, and religion.
  • Esquel employees of every race, religion, ethnicity and gender are treated and paid according to their skill levels; this includes Uyghurs or any other ethnic group in Xinjiang.
  • In Xinjiang, our employees, Uyghurs and other ethnic groups alike, earn two to three times the minimum wage, receive equal benefits and development opportunities, and enjoy good working conditions. Our canteens serve food to meet the different ethnic requirements of our workers.
  • All employees may end their employment with us at any time of their own volition. The average turnover rate for employees of ethnic minority is similar to that of the overall employees in Xinjiang.
  • The allegation that Esquel Group uses forced labor in Xinjiang is false.

 


[1] Automated spinning mill in Changji Esquel (https://www.youtube.com/watch?v=rxbsPKq5_oM)

[2] Western Companies Get Tangled in China’s Muslim Clampdown,” Wall Street Journal, May 16, 2019 (https://www.wsj.com/articles/western-companies-get-tangled-in-chinas-muslim-clampdown-11558017472)

[3] “Uyghurs for Sale,” ASPI, March 1, 2020 (https://www.aspi.org.au/report/uyghurs-sale)

[4] Esquel’s recruitment in China involves multiple channels, including internal referral, online job websites and WeChat, recruitment notice boards located at factories, the re-hire of ex-Esquel employees, recruitment from universities and colleges, and recruitment at job fairs.

[5] ASPI, in its report, states: “This research report draws on open-source Chinese-language documents, satellite imagery analysis, academic research and on-the-ground media reporting.”

[8] South China Morning Post, July 13 2020, Caught in US cross hairs over Uygur forced labour accusations, Hong Kong textile firm Esquel to keep its Xinjiang factories open and Ming Pao, July 13 2020, Esquel’s CEO responsed to the accusation on Forced labour  (article in Chinese, title being summarized in English for reference).