CPA’s take: A good rundown on the recently sanctioned Chinese companies by Ken Rapoza.
Another week, another round of sanctions against Chinese entities no one in the U.S. has heard of, but they have surely worn their T-shirts, opened their refrigerators, bought their yarn at Joann’s Fabrics & Crafts, or sat in a New York subway car equipped by them.
[Kenneth Rapoza | July 22, 2020 | Forbes]
The Department of Commerce’s Bureau of Industry and Security announced the 11 newcomers to the Entity List on Monday, slapping sanctions on them for human rights violations, among other things.
While none of these companies are household names here in the U.S., their big brand named buyers are well known.
Here we go:
Nanchang OFilm Tech
OFilm has been around since 2002. It’s not that old. But already they have made themselves the mainstay for camera modules, fingerprint modules, touch panels for phones, laptops and cars and equipment inside your Apple iPad mini. They manufacture for all of the China OEMs, including Xiaomi, oppo, vivo, ZTE, and Huawei. And in the U.S., they have manufactured for Amazon AMZN -0.6%, Microsoft MSFT +0.9%, Dell DELL +1.4%, HP and GM, according to the company.
Changji Esquel Textile Co.
They make about 5,700 tons of yarn in Xinjiang province, the infamous Western China province home to the Uighur ethnic minorities, some of which are being held in detention camps. This is what got China into this mess. But the Esquel Group says they have nothing to do with such things. Esquel said they were “deeply offended” by the sanctions. “We absolutely have not, do not, and will never use forced labor anywhere in our company,” they said in a statement on Tuesday. Swiss-based fabric testing lab USTER Technologies is a buyer.
Hefei Bitland Information Technology
A high-performance graphics card maker for laptops as well as a manufacturer of LCM modules. The main clients include Lenovo, HP and Haier.
Hefei Meiling Co.
It is unclear why this one is sanctioned. They’re mainly known for making consumer refrigerators and deep freezers. Meiling has an annual production capacity to turn out a whopping 2.5 million refrigerators, half of which are exported, including to the U.S.
KTK Group
Another one that looks innocent enough is KTK, though worth noting — the government tends to have non-public information on companies they believe to be up to no good. KTK makes ceiling panels and other components, like doors to conceal electronic components on trains. They are a supplier to Canada’s Bombardier, a company most people will associate with air travel. Bombardier is also in the subway and train manufacturing business. This latest sanction is a problem for Bombardier because they state that they pick their suppliers based on an adherence to human and labor rights. Just a hunch, but they may be supplying equipment for trains used to transport Uighur men being held in Xinjiang. KTK ceiling panels are on Bombardier’s R179 class of subway cars used in New York, and on at least two London underground trains built by Bombardier.
Hetian Haolin Hair Accessories Co.
Haolin Hair is probably the best known of the bunch. The mainstream media picked this one up because shipments of hair extensions were intercepted by U.S. Customs and Border Patrol and believed to have come from Xinjiang prison camps. Customs banned entry of Haolin extensions in May using a Withhold Release Order against Haolin based on intel that “reasonably indicates the use of forced labor.”
Hetian Taida Apparel Co.
These guys are sending containers to the U.S. at least once a month to South Carolina and California ports of entry. Inside? Polyester T-shirts, baby blankets and boys and girls pajama sets on sale at Costco.
Costco. Sanctioned Chinese companies inside? Yup. (Photo by Johnny Louis/Getty Images)
Getty Images
Two years ago, Heitan Taida made headlines in an Associated Press story about Xinjiang labor camps. They looked at container shipments from one Taida factory that was reportedly inside an internment camp, selling clothes to Badger Sportswear of Statesville, North Carolina. Badger CEO John Anton said that the company would source sportswear elsewhere after that story.
Tanyuan Technology Co.
Tanyuan makes touch screens used on handheld devices and on cars. If there’s a smart screen on it, they probably make it, be it in 2D or the 3D panels that come with a slight bend to them. Tanyuan launched in 2018 and is worth just around $10 million, according to the company. It is unclear who their principal clients are. The company is based on the east coast, far from Xinjiang.
And lastly, this company here seems to have folded:
Nanjing Synergy Textiles Co.
Synergy ran into some problems with the local government, had to sell some land, and was closing its yarn spinning business as of this spring. The company is part of a larger, Hong Kong holding company called Victory City International Holdings Limited. Victory said in a note to investors as recent as June 30 that: “Nanjing Synergy has ceased its yarn spinning production since early 2020 to cooperate with the land resumption policy of the People’s Government of Jianging” and that “the machineries in the production plant were being sold or transferred smoothly and the process is expected to complete in the second half of 2020.”
Maybe that one was a dud, but it does appear that the majority of companies have had some connection to Xinjiang.
This week’s sanctions gives those Chinese firms fresh restrictions on access to American imports, including commodities and equipment.
Since October 2019, the BIS has added 48 companies to its Entity List for – in their words – “enabling China’s repression in Xinjiang.”
China’s policy of forced labor is “tainting U.S. and other global supply chains” in textiles and electronics, Florida Senator Marco Rubio said following Monday’s announcement.
“I applaud (the) action by the Trump Administration to ensure that U.S. technology does not aid the Chinese Communist Party’s crimes against humanity,” Rubio said.
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