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Exclusive-U.S. electronics firm struck deal to transport and hire Uyghur workers By Reuters


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© Reuters. FILEPHOTO: This is a general view showing Universal Electronics Inc’s manufacturing plant in Qinzhou (GuangxiAutonomous Region), China. It was taken on April 13, 2021. REUTERS/Thomas Peter

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By Cate Cadell

QINZHOU China (Reuters) – U.S. remote controller maker Universal Electronics (NASDAQ) Inc stated to Reuters that they had made a deal to ferry hundreds of Uyghur laborers to their plant in Qinzhou. It is the first time an American company participated in a transfer program, which some rights groups have called forced labor.

Nasdaq listed firm has already sold its equipment, software and other assets to Sony (NYSE:), Samsung(KS:), LG and Microsoft have employed more than 400 Uyghurs from the western region of Xinjiang in a worker-transfer agreement. This is according to local officials in Qinzhou, Xinjiang and state media.

According to officials from Qinzhou, Hotan, at least one charter flight was paid by Xinjiang to transport the Uyghur workers to the UEI. Also, the transfer was described in an announcement posted by Qinzhou police on a Qinzhou social media account. This notice dates back to February 2020.

A spokeswoman for UEI stated that the Qinzhou factory currently has 365 Uyghur employees. They were treated the same way as Chinese workers and they weren’t considered forced labor.

Sony Group Corp., Samsung Electronics (OTC 🙂 Co Ltd., LG Corp. Microsoft Corp (NASDAQ:) Each company states in its social responsibility reports that they have banned forced labor from their supply chains, and are working to eliminate it.

Sony refused to provide details about specific suppliers. Sony stated to Reuters that if any supplier was found to have violated its code of conduct (which prohibits forced labor), then it would take the appropriate countermeasures, including asking for corrective action and terminating business relations with this supplier.

Microsoft spokesperson stated that it takes appropriate action against any supplier who breaches its code, including termination of the business relationship. However, UEI had stopped being an active supplier. The spokesperson stated that the company has not purchased hardware from this supplier since 2016, and had never been associated with the factory.

Samsung spokesmen said they prohibit suppliers using forced labor. They also require that employees choose the employment. He refused to speak on UEI.

LG has not responded to any requests for comment.

A spokeswoman for UEI stated that the company pays the costs of transporting workers from Guangxi to Qinzhou. Qinzhou lies in the Guangxi region. The company doesn’t know where the workers train in Xinjiang, or who will pay for transport to Guangxi.

Reuters could not interview the workers of plant and was therefore unable to establish whether or not they were being forced to work for UEI. However, the conditions in which they are working bear all of the hallmarks of forced labor. They work alone, with limited freedom of movement, and under guard.

UEI’s Uyghur employees are monitored by the police throughout their transport and at work. They eat and sleep in separate quarters according to Qinzhou state media and government notices.

These programs have helped thousands of Uyghur workers to find jobs in factories across Xinjiang. Human Rights Watch, Amnesty International and Human Rights Watch, among others, claim that these programs are coercive. They also cite leaked documents from China and witness statements by detainees who claimed they were forced to take such jobs.

Reuters asked China’s Ministry of Foreign Affairs if they had any questions about employment at UEI. However, it denied that forced labor existed anywhere else in China.

The ministry stated in a statement that “this so-called forced labor” is completely false.” The law gives Xinjiang migrant workers the same rights as all other workers to work in China. Right to enter into a labor agreement, to receive labor remuneration and rest, as well as the rights to protection and safety, and to claim insurance, welfare and other legal rights.

Xinjiang officials did not reply to our requests for comment.

U.S. Department of State has criticized China, and many other governments, for condoning forced work. The United States said it has “credible reports of state sponsored forced labor practices used by the (Chinese] government in Xinjiang as well as instances of forced labour involving members of these organizations outside Xinjiang.”

While a spokesperson for the State Department declined to discuss UEI, she said that wittingly benefiting in forced labor in the United States is a crime according the U.S. Constitution. Trafficking Victims Protection Act.

The law criminalizes participation in ventures where defendant knew or recklessly disregard the fact that they engaged in forced labor. It imposes criminal liability upon individuals and entities that are present in the United States.

The State Department referred Reuters, in order to get further information on UEI, to the Justice Department; Justice declined to respond.

Section 307 of The Tariff Act of 1930 also makes it a crime to import goods into the United States that were made entirely or partially by forced labor. UEI said that “very few” products from its Qinzhou plant are exported to America. The company did not say who purchased the products.

U.S. Customs and Border Protection enforces the law. They can seize imported goods and launch criminal investigations of importers. Customs stated that it doesn’t comment on the specific investigations of any entities.

Reuters has heard from legal experts that the United States has seen very few cases of forced labor indictments for overseas abuses due to difficulty in proving the offense. David McKean, the deputy director of International Corporate Accountability Roundtable (a coalition of rights-oriented groups), stated, “As the law stands now, there’s not much that the U.S. Government can do to hold American corporations accountable when they create, manage, and profit from supply chain that engage in forced labour and other human rights violations outside of the United States.”

Uyghur Forced Labor Prevention Act was a bill that passed before Congress. This legislation is designed to increase restrictions and create the legal presumption in Xinjiang that all products are the product of forced labor. The burden then falls on the importers to prove otherwise. Although the Senate passed the latest version of this legislation, it has not yet been adopted by the House of Representatives.

Reuters was told by a spokeswoman for UEI that the company doesn’t conduct independent due diligence about where its employees are being trained in Xinjiang. According to her, the agreement is vetted through a third-party agent connected with the Xinjiang administration. The agent she identified was not available for comment. Reuters was unable to determine if the agent worked independently or for the Xinjiang administration.

Vocational Internment CAMPS

According to UN experts and researchers, China has held over 1,000,000 Uyghurs at a network of camps in China since 2017. This is part of an “anti-extremism” campaign. China calls the camps of internment in this region vocational training and education centers, and denies any allegations of rights violations.

State media reports and notices from that time point out that organized transfers of Uyghur laborers into other parts of China go back to at least the early 2000s. Officials from Xinjiang said that the program had expanded significantly since 2016, which was around when the mass internment program started.

Xinjiang officials stated to reporters during a Beijing media conference late July that workers are free and openly transferred outside of Xinjiang. Xu Guixiang (a spokesperson for the province government) stated that there are many industries that require labor and they fit well with the skill set of people from Xinjiang. They go wherever the market requires them.

Some U.S. suppliers were accused last year of employing forced laborers from Xinjiang. Australian Strategic Policy Institute, an Australian think-tank, published last year a report that identified 83 brands related to Uyghur labor-transfer programs. The report included Chinese-language documents, analysis of satellite imagery, and media reports. The transfers were not carried out by any of the U.S.-based companies.

UEI makes remote-control technology and home security products. The company employs more than 3,800 people in over 30 countries. It has an estimated market worth of approximately $670 millions. The company’s headquarters is in Scottsdale, Arizona. However, it has no American plants.

Funds managed by BlackRock Inc (NYSE 🙂 and Eagle Asset Management, a Carillon Tower Advisers affiliate, are the company’s largest investors.

BlackRock did not respond to our request for comment. Eagle Asset Management spokesmen said, “Since we became aware of labor issues involving one our investments, they immediately approached their senior leadership. They have assured us that labor is being paid, treated humanely, and used at-will.” If we find out, we’ll take corrective action.

GOVERNMENT FUNDING

According to Qinzhou government notifications, six workers groups were transferred from Xinjiang, China, to the UEI facility between February 2019 and February 2020. This was confirmed by Guangxi government officials.

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. According to Chinese state media, Economic Daily (February 2020), they were dispatched to help alleviate labor shortages in the country and get factories running again.

According to Qinzhou government notices as well as an official from Hotan, who spoke to Reuters May 2, the Xinjiang government paid for police-escorted charter flight.

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. It was part of a series of transfers that were made in accordance with an agreement signed nine months ago between UEI officials and Xinjiang government. Reuters couldn’t determine where exactly the workers were from.

UEI’s operation underscores the role played by agents in supplying companies with Uyghur workers.

After being approached by the agent from a third party, UEI confirmed that the company had entered into an agreement in 2019 with Xinjiang officials. UEI claimed that workers are hired by and pay the same agent, and that UEI has not signed individual contracts.

A spokeswoman for Uyghur workers declined to reveal their salaries, except that it is the same as other employees at the facility. It is also “higher” than Qinzhou’s local minimum wage.

According to the Economic Daily, workers sending in UEI’s February 2020 transfer will be earning around 3,000 yuan ($465) per 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 staff are part of a bigger system. Hotan authorities and Kashgar authority in Xinjiang employed two labor agents who told Reuters they each had been given targets to place as many Uyghurs as possible with businesses outside of the region.

The agents showed Reuters copies to one another of three agreements for transfers that were already in place this year. They included a January contract for 1,000 workers to be transported to an auto parts plant in Xiagan, Hubei Province. This transfer had to pass “political screening”.

Reuters received information from the three agents that they believed separate dormitories and police escorts were routine components of such transfers. They also said that third-party agents oversee payments.

One agent told Reuters that Uyghur workers were the best workers for businesses. Everything is controlled by the government.

The Uyghurs at UEI are closely monitored throughout this supply-chain.

Photos published online by Qinzhou Police and Economic Daily on February 28, 2020 show workers lined up outside Hotan Airport before the dawn to take the flight.

According to an online account by Qinzhou Daily, a manager from Xinjiang told the workers to “get to work fast and become rich through hard work using both your hands,” according to Xinjiang officials. Photos accompanying the captions show workers wearing blue-and red uniforms.

According to reports on the Qinzhou government’s social media accounts, more than 12 uniformed officers of police escorted them through Nanning Wuxu Airport and onto the buses. They then escorted them by police cars to Qinzhou’s UEI plant, which is 75 miles (120km).

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 labourers aren’t subject to this monitoring. According to local media reports, state media and officials speaking to Reuters, the managers are there for their entire employment.

UEI stated that the canteens were set up to serve Uyghur food and allows Xinjiang workers “to share their dormitories as they choose.”

As part of the Uyghur agreement with the U.S. firm, they must take part in the “education activities” conducted by Qinzhou’s police and judicial officials within the UEI facility. These notices can be found on Qinzhou’s government website.

Reuters couldn’t determine the nature of these activities. Beijing claims that legal education is a major component of the training programs at Xinjiang camps. The education activities in UEI’s factory only apply to the Uyghur workers, according to two Qinzhou government notices.

A spokeswoman for UEI stated that UEI was unaware of any specific legal education programs Uyghurs participate in at their plant.

‘TERRORISTS, XINJIANG PEOPLE AND MENTAL PATIENTS’

In April, two Reuters journalists visited Qinzhou’s factory during a public holiday. The plant wasn’t running at the time. Inside the compound, women in Uyghur dress could be seen.

A delegation from Qinzhou Foreign Affairs Office officials and half a dozen police officers arrived to assist them. According to the officials, Uyghur labourers were employed in the factory. It is managed by Gemstar Technology, UEI’s China wholly-owned China subsidiary. Gemstar Technology was the one who had initiated the May 2019 transfer worker agreement. Reuters was not allowed to photograph Uyghurs inside the factory, according to officials.

Uyghurs are being monitored in Qinzhou, where UEI is situated. These surveillance measures predate transfers. Reuters obtained a June 2018 procurement record that showed police purchased a 4.3 million yuan (or $670,000) system to create blacklists for “high risk” individuals. This includes “terrorists”, Xinjiang persons and mental patents.

This document lists a need for automatic alarms, which is a system that alerts police via internal messaging to send an alert when Uyghurs are found in the region.

A March 2020 posting on Qinzhou’s official police website stated that UEI had agreed to give daily updates on workers to the police.



Mike Robinson
Mike covers the financial, utilities and biotechnology sectors for Street Register. He has been writing about investment and personal finance topics for almost 12 years. Mike has an MBA in Finance from Wake Forest University.