Kharon Warns Auto Furnishings Importers of Chinese Suppliers With Forced Labor Exposure
As Chinese auto manufacturers establish outposts in Mexico, U.S. importers will need to ensure that those Chinese manufacturers don't have ties to forced labor situations in the Xinjiang region, supply chain data visibility provider Kharon said in a recent brief.
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"Chinese auto manufacturers are increasingly setting up shop in Mexico themselves. As they do so, U.S. Customs and Border Protection reported that it detained five auto shipments from Mexico under the [Uyghur Forced Labor Prevention Act] in September, worth more than $2.4 million," Kharon said in the Nov. 26 brief.
Kharon gave as an example, Wuhan Boqi Technology, "a China-based automobile interior furnishings company that, according to its website, supplies major American, European and Japanese car manufacturers," Kharon said. Boqi is owned by Sage Automotive Interiors of South Carolina and China's Wuhan Yudahua Textile and Garment Group, and is controlled by Wuhan Yudahua, the brief said.
An executive for Sage Automotive -- also a customer of Boqi's -- was quoted in Kharon's brief as saying that the company's supply chain didn't have any connections to the Xinjiang area. But Wuhan Yudahua, which is also a "significant supplier" of raw materials to Boqi, may have had forced labor ties in the Xinjiang region, Kharon said.
"That raises the risk that red-flag textiles could be flowing through Boqi and into the cars of its global customers, at a time when auto imports have faced particular U.S. scrutiny under the Uyghur Forced Labor Prevention Act (UFLPA)," Kharon said.
Wuhan Yudahua's "network and suppliers" include "several notable touchpoints for Xinjiang cotton and fabrics," according to Kharon.
That includes Wuhan Yudahua's subsidiaries Wuhan Yutaihua Trading and Wuhan Yudahua Textile, both of which may have some exposure to forced labor by having suppliers located in a "high-risk" industrial park in Xinjiang known as the Kunyu Economic and Technological Development Zone. This industrial park is controlled by the Xinjiang Production and Construction Corps, while the Beijing Xinjiang Aid Command invested in this industrial park. Both these conditions "raise red flags for forced labor," Kharon said.
This matters for automakers because "this Xinjiang zone appears to be one potential origin point for Boqi Technology's supply chains," Kharon said.