US electronics firm struck deal to transport and hire Uyghur workers

Universal Electronics

08/10/2021 24:56

(Repeats story first carried late on Thursday)
    By Cate Cadell
    QINZHOU, China, Oct 7 (Reuters) - U.S. remote-control maker
Universal Electronics Inc  UEIC.O  told Reuters it struck a deal
with authorities in Xinjiang to transport hundreds of Uyghur
workers to its plant in the southern Chinese city of Qinzhou,
the first confirmed instance of an American company
participating in a transfer program described by some rights
groups as forced labor.
    The Nasdaq-listed firm, which has sold its equipment and
software to Sony, Samsung, LG, Microsoft and other tech and
broadcast companies, has employed at least 400 Uyghur workers
from the far-western region of Xinjiang as part of an ongoing
worker-transfer agreement, according to the company and local
officials in Qinzhou and Xinjiang, government notices and local
state media.
    In at least one instance, Xinjiang authorities paid for a
charter flight that delivered the Uyghur workers under police
escort from Xinjiang's Hotan city -  where the workers are from
- to the UEI plant, according to officials in Qinzhou and Hotan
interviewed by Reuters. The transfer is also described in a
notice posted on an official Qinzhou police social media account
in February 2020 at the time of the transfer.
    Responding to Reuters' questions about the transfer, a UEI
spokeswoman said the company currently employs 365 Uyghur
workers at the Qinzhou plant. It said it treated them the same
as other workers in China and said it did not regard any of its
employees as forced labor. 
    Sony Group Corp  6758.T , Samsung Electronics Co Ltd
 005930.KS , LG Corp  003550.KS  and Microsoft Corp  MSFT.O 
each say in social responsibility reports they prohibit the use
of forced labor in their supply chains and are taking steps to
prevent it. 
    Sony declined to comment on specific suppliers. In a
statement to Reuters, it said if any supplier is confirmed to
have committed a major violation of its code of conduct, which
prohibits the use of forced labor, then "Sony will take
appropriate countermeasures including request for implementing
corrective actions and termination of business with such
supplier."
    A Microsoft spokesperson said the company takes action
against any supplier that violates its code of conduct, up to
termination of its business relationship, but that UEI was no
longer an active supplier. "We have not used hardware from the
supplier since 2016 and have had no association with the factory
in question," the spokesperson said.
    A Samsung spokesman said the company prohibits its suppliers
from using all forms of forced labor and requires that all
employment be freely chosen. He declined to comment on UEI. 
    LG did not reply to requests for comment. 
    The UEI spokeswoman said the company covers the cost of the
transfer of workers to its Qinzhou plant from a local airport or
train station in Guangxi, the region in which Qinzhou is
located. She said the company does not know how the workers are
trained in Xinjiang or who pays for their transport to Guangxi.
    Reuters was unable to interview plant workers and therefore
was not able to determine whether they are being compelled to
work at UEI. The conditions they face, however, bear hallmarks
of standard definitions of forced labor, such as working in
isolation, under police guard and with restricted freedom of
movement.
    UEI's Uyghur workers are under surveillance by police during
their transportation and life at the factory, where they eat and
sleep in segregated quarters, according to details in Qinzhou
government notices and local state media.
    Programs like this have transferred thousands of Uyghur
laborers to factories in Xinjiang and elsewhere. Amnesty
International, Human Rights Watch and other rights groups,
citing leaked Chinese government documents and testimony from
detainees who say they were forced into such jobs, say the
programs are coercive and part of China's overall plan to
control the majority-Uyghur population in the region. 
    In response to Reuters' questions, China's Ministry of
Foreign Affairs did not address employment at UEI, but denied
forced labor exists anywhere in the country.
    "This so-called 'forced labor' is a completely fabricated
lie," the ministry said in a statement. "Xinjiang migrant
workers in other parts of China, like all workers, enjoy the
right to employment in accordance with the law. The right to
sign a labor contract, the right to labor remuneration, the
right to rest and vacation, the right to labor safety and health
protection, the right to obtain insurance and welfare rights and
other legal rights."
    Xinjiang authorities did not respond to requests for
comment.
    The U.S. Department of State, which has criticized China and
several other governments for condoning forced labor, said the
United States has found "credible reports of state-sponsored
forced labor practices employed by the (Chinese) government in
Xinjiang, as well as situations of forced labor involving
members of these groups outside Xinjiang."
    A State Department spokesperson declined to comment on UEI,
but said wittingly benefiting from forced labor in the United
States was a crime under the U.S. Trafficking Victims Protection
Act.
    That law "criminalizes the act of knowingly benefiting,
financially or by receiving anything of value, from
participation in a venture, where the defendant knew or
recklessly disregarded the fact that the venture engaged in
forced labor," the spokesperson said in a statement. The law
imposes criminal liability on individuals or entities present in
the United States, the statement added, even when the forced
labor occurs in another country.
    The State Department referred Reuters to the Justice
Department for further comment on UEI; Justice did not respond.
    The import of goods into the United States made wholly or in
part by forced labor is also a crime under Section 307 of the
Tariff Act of 1930. UEI told Reuters "a very small quantity" of
products made at its Qinzhou factory are exported to the United
States. It did not specify who purchases the goods.
    The law is enforced by U.S. Customs and Border Protection,
which can seize imports and start a criminal investigation of
the importer. Customs said it does not comment on whether
specific entities are under investigation. 
    Legal experts told Reuters there have been very few forced
labor prosecutions in the United States over abuses overseas,
given the difficulty of proving an offense. "As the law
currently stands, there's very little that the U.S. government
can do to hold American companies accountable when they build,
manage and profit from supply chains that engage in forced labor
and other human rights abuses outside the United States," said
David McKean, deputy director of the International Corporate
Accountability Roundtable, a coalition of rights groups. 
    Legislation before the U.S. Congress, called the Uyghur
Forced Labor Prevention Act, was designed to toughen up
restrictions by creating the legal presumption that any products
made in Xinjiang are the result of forced labor, putting the
burden on importers to prove they are not. The latest version of
the legislation was passed by the Senate this year but has yet
to pass the House of Representatives.
    The UEI spokeswoman told Reuters the company does not
conduct independent due diligence on where and how its workers
are trained in Xinjiang. She said the arrangement is vetted by a
third-party agent working with the Xinjiang government, who
brokered the deal. She declined to identify that agent. Reuters
could not determine if the agent is independent or works for the
Xinjiang government. 
    
    'VOCATIONAL' INTERNMENT CAMPS
    China has detained over 1 million Uyghurs in a system of
camps since 2017 as part of what it calls an anti-extremism
campaign, according to estimates by researchers and United
Nations experts. China describes internment camps in the region
as vocational education and training centers and denies
accusations of rights abuses. 
    Organized transfers of Uyghur laborers to other parts of
China date back to the early 2000s, according to state media and
government notices from the time. The program has expanded since
about 2016, Xinjiang officials said in late July, around the
time the mass internment program began.
    Xinjiang officials told reporters at a Beijing media
conference in late July that transfers of workers outside of
Xinjiang are common and voluntary. "There are many
labor-intensive industries that fit the skills of people in
Xinjiang," said Xu Guixiang, a spokesman for the provincial
government. "They go where the market needs them." 
    Suppliers for some U.S. companies have been accused of using
forced laborers transported from Xinjiang. The Australian
Strategic Policy Institute (ASPI), a think tank, last year
released a report identifying 83 brands linked to Uyghur labor
transfer programs, citing Chinese-language documents,
satellite-imagery analysis and media reports. None of the U.S.
companies were directly involved in the transfers, however.
    Aside from remote-control technology, UEI also makes home
security products under the Ecolink brand. It has more than
3,800 employees in 30 countries and a market value of about $670
million. Its headquarters are in Scottsdale, Arizona, but the
company has no plants in the United States.
    The company's two largest investors are funds run by
BlackRock Inc and Eagle Asset Management, an affiliate of
Carillon Tower Advisers.
    BlackRock declined to comment. A spokesman for Eagle Asset
Management said: "Since becoming aware of purported labor issues
involving one of our investments, we immediately approached the
company's senior leadership and they have provided assurances
that labor is paid, treated humanely and employed at-will.
Should we learn otherwise, we will take appropriate action."

    GOVERNMENT FUNDING 
    Six groups of workers were transported from Xinjiang to the
UEI factory between May 2019 and February 2020, according to
Qinzhou government notices, confirmed to Reuters by government
officials in Xinjiang and Guangxi. 
    In early 2020, as the new coronavirus began to spread in
China and lockdowns crippled manufacturing, about 1,300 Uyghurs
were transported from Xinjiang’s southern Hotan region. They
were sent to factories around the country to alleviate labor
shortages and help get them running again, according to
officials cited by Chinese state media outlet Economic Daily in
February 2020. 
    The police-escorted charter flights were funded by the
Xinjiang government, according to Qinzhou government notices and
an official in Hotan who spoke to Reuters in May.
    UEI’s Qinzhou factory took more than 100 workers in the
February 2020 transfer, according to notices on the Qinzhou
government website, state media and Qinzhou officials. That was
one of several transfers made under an agreement struck some
nine months earlier between UEI and Xinjiang authorities.
Reuters could not determine exactly where the workers came from.
    UEI’s operation underscores the role played by agents in
supplying companies with Uyghur workers.
    The UEI spokeswoman confirmed the company entered into an
agreement with Xinjiang authorities in 2019 after being
approached by the third-party agent. UEI said the same agent
hires and pays the workers and that UEI does not sign individual
contracts with the workers. 
    The spokeswoman declined to disclose what the Uyghur workers
are paid, beyond saying that they receive the same as others at
the facility, which is "higher than Qinzhou local minimum wage."
    The Economic Daily reported that workers sent in UEI's
February 2020 transfer are expected to make around 3,000 yuan
($465) a month. That compares with the average manufacturing
wage in the province of Guangxi of 3,719 yuan, according to
China’s national bureau of statistics.
    UEI's Uyghur employees are part of a much bigger system. Two
separate labor agents hired by Hotan and Kashgar authorities in
Xinjiang told Reuters they had each been set targets of placing
as many as 20,000 Uyghurs annually with companies outside the
region.
    They, and one other agent, showed Reuters copies of three
contracts for transfers already completed this year. These
included a January contract to transport 1,000 workers to an
auto parts factory in Xiaogan, Hubei province, who had to
undergo "political screening" prior to transfer. 
    The three agents told Reuters that separate dormitories,
police escorts and payments overseen by third-party agents are
routine elements in such transfers.
    "Uyghur workers are the most convenient workers for
companies," one of the agents told Reuters. "Everything is
managed by the government."
    The Uyghurs of UEI are kept under tight watch all along this
labor-supply chain.
    Photographs published online by the Economic Daily and an
official social media account of Qinzhou police, dated Feb. 28,
2020, show the workers lining up before dawn outside the airport
in the city of Hotan before taking the flight.
    "Get to work quickly and get rich through hard work using
both hands," one manager employed by Xinjiang authorities told
the gathered workers, according to an account published online
by the Qinzhou Daily. Accompanying photos show the workers
dressed in blue and red uniforms.
    More than a dozen uniformed police officers escorted the
same workers through the Nanning Wuxu airport and onto buses,
according to posts on a social media account of a Qinzhou police
unit and a post by the Qinzhou government. The buses were then
escorted by police vehicles to the UEI factory in Qinzhou, some
75 miles (120 km) away.
    
    SEPARATE DORMS, POLICE ‘EDUCATION’
    The mostly young Uyghur laborers at UEI’s plant sleep in
separate dormitories and eat in a segregated canteen under the
watch of managers assigned by Xinjiang authorities. Non-Uyghur
laborers are not subject to such monitoring. The managers stay
with the Uyghur workers throughout their employment, according
to state media, local police notices and government officials
who spoke to Reuters. 
    UEI said the canteens were established to provide local
Uyghur food, and says it allows Xinjiang workers to share
dormitories "as they wish."
    The Uyghurs must participate in what are described as
"education activities" run by Qinzhou police and judicial
authorities within the UEI facility, as part of the agreement
between the U.S. firm and local authorities, according to
notices on the government website of the Qinzhou district where
UEI's factory is located.
    Reuters could not determine what those activities involve.
Beijing has said that legal education is a key aspect of the
training programs in Xinjiang's camps. The education activities
in UEI’s factory only apply to the Uyghur workers, according to
two Qinzhou government notices.
    The UEI spokeswoman said UEI is "not aware of specific legal
education activities" that Uyghurs take part in at its plant. 
    
    'TERRORISTS, XINJIANG PEOPLE AND MENTAL PATIENTS'
    Two Reuters journalists visited the Qinzhou factory in April
during a local public holiday when the plant was not running.
Women in Uyghur ethnic dress were visible inside the compound.  
  
    Half a dozen police arrived, followed by a delegation of
officials from the Qinzhou Foreign Affairs Office. The officials
confirmed that Uyghur laborers worked in the factory, which is
run by UEI's wholly owned China subsidiary Gemstar Technology.
The officials said Gemstar had taken the lead in setting up the
May 2019 agreement to transfer workers. The officials told
Reuters not to take photos of Uyghurs in the factory. 
    The district of Qinzhou where UEI is located has
surveillance measures targeting Uyghurs that predate the
transfers. A June 2018 procurement document seen by Reuters
shows police there purchased a 4.3 million yuan ($670,000)
system that establishes blacklists of "high-risk" people. These
include "terrorists, Xinjiang people and mental patents."
    The document also lists a specific need for "automatic
alarms" - a computer system that sends alerts via an internal
messaging system to police when Uyghurs from Xinjiang are
detected in the area.
    According to a March 2020 post on the official Qinzhou
police website, UEI agreed to provide daily reports on the
workers to police.

 (Reporting by Cate Cadell in QINZHOU, China
Editing by Reuters staff)