Xinjiang and the New Imperative for Supply Chain Visibility

February 1, 2021

The global apparel supply chain is complex, fragmented, and enormous. Many apparel brands and retailers operate decentralized supply chains and lack visibility beyond Tier 1 or Tier 2 suppliers. Transparency and traceability are not new but the events of 2020 have given rise to a renewed sense of urgency around these themes. The apparel sector operates on lean margins and historically has had little incentive to invest in nascent solutions or radically shift away from decades old processes that emphasize a maniacal focus on cost and efficiency. The coronavirus pandemic upended the retail industry in March 2020 as the world went into lockdown and non-essential businesses closed their doors indefinitely. Just as the sector was beginning to regain its footing, condemning reports on widespread, systematic forced labor in China’s Xinjiang Uyghur Autonomous Region (XUAR) made the imperative to action on supply chain visibility efforts dire and non-negotiable.

The Uyghur Human Rights Policy Act of 2020 was approved by US Congress with overwhelming support in June 2020. The bill called for an end to the arbitrary detention, torture, and harrassment of ethnic Turkic Muslims and imposed sanctions on entities responsible for human rights abuses in China’s XUAR. In July 2020, the US Government issued an advisory to caution businesses about the risks of forced labor in Xinjiang. On September 14, 2020, the United States government placed a ban on importing cotton products, apparel, and other goods manufactured in the region. This ban was fueled by various reports of forced labor of ethnic minorities in apparel and textile manufacturing plants located in the region. In early December, the US. Department of Homeland Security announced that Customs and Border Protection (CBP) personnel would detain shipments containing cotton and cotton products originating from the Xinjiang Production and Construction Corps (XPCC).  Most recently, in January 2021, the CBP issued a region-wide Withhold Release Order (WRO) encompassing cotton products produced in the XUAR region. This WRO applied to cotton grown in the region and to all products made using this cotton, regardless of where the end products are physically manufactured.

Many fashion companies now face a severe dilemma as they seek to comply with regulatory guidelines, root out forced labor in their supply chains, and secure a steady supply of cotton. The process of manufacturing apparel is highly labor intensive and thus labor has always been a key issue. However, regulatory enforcement with the potential to require verification of fiber level origination through all manufacturing steps to end products is unprecedented. 

With the pressing human rights issues in the XUAR and increased regulation as a backdrop, the relationship between consumers and apparel is also changing as the sector shifts from mass market to personalization. Consumers today are digitally savvy and interested in ensuring their purchasing power supports ethical supply chain practices. SILQ recognizes that supplier collaboration and transparency play an integral part in the successful implementation of sustainable supply chain practices. We are setting forth on this journey through powering global manufacturing with local expertise in the apparel and home textile industries. Our services include geo-specific sourcing intelligence supported by in-region experts. We get the complexity of global logistics networks and incentivize a topline market focus to build more resilient supply chains through a zero commission-based sourcing structure. There is no doubt that the apparel sector is at an inflection point and at SILQ we seek to harness the power of technology and domain expertise to shape its future.