Your Christmas Socks: Made in China … by a Prisoner?
WHY YOU SHOULD CARE
From peeled garlic to Christmas socks, prisoners in China are producing products exported to countries around the world.
At dawn the gates to the detention center open. A truck laden with several tons of freshly dug garlic bulbs enters, and disappears into the vast complex, which houses both prisoners and people awaiting trial. For three hours, there is no movement apart from the Chinese police practicing their morning drills. Then the same truck emerges from the complex, its load replaced with cloves of peeled garlic. It drives for two hours to a depot in the central-eastern town of Jinxiang — the world’s garlic capital — which packages peeled garlic for export to India, according to a worker inside the facility.
Prison labor is common in China, where the law states that prisoners able to work must do so — a system known as “reform through labor.” China is home to around 2.3 million prisoners and pretrial detainees, according to the Institute for Criminal Policy Research, giving it the world’s second-largest prison population after the U.S.
Exporting prison-produced goods is illegal under domestic and international trade laws. Yet evidence of prison labor is present in many of China’s supply chains, from handbags to washing machines, according to experts and ex-prisoners.
“Most of the companies set up under prison provincial administration bureaus in China look, from the outside, like ordinary companies,” says Joshua Rosenzweig of Amnesty International in Hong Kong. “Foreign corporations are in a pretty tough position to do the kind of due diligence that would be needed to identify whether their supply chains are connected to prison labor.”
We have seen companies exploiting prison labor as a way of keeping costs low.
Kenneth Kennedy, senior policy adviser, U.S. Immigration and Customs Enforcement
Forced labor is not a new phenomenon in the country, but it is becoming more prevalent as a result of higher wages in China and the decline in the working-age population. Manufacturers are under increasing pressure to stay competitive with Bangladesh and Vietnam. Li Qiang, head of the activist organization China Labor Watch, says that suppliers to U.S. retailers have told him about redirecting some of their orders to prisons in a bid to cut costs after renewed pressure on prices.
“We have seen companies exploiting prison labor as a way of keeping costs low,” says Kenneth Kennedy, senior policy adviser on forced labor at U.S. Immigration and Customs Enforcement.
A spokesperson for Walmart, the world’s biggest retailer, which uses Chinese suppliers, says: “We regularly assess factories and have systems in place to investigate complaints.”
Some manufacturers are also under pressure because local governments have started to enforce labor laws that restrict flexible hiring. This has led some subcontractors to cut corners for foreign clients, who do not always have the ability to scrutinize supply chains.
“Illegal subcontracting appears to have increased as a result of the government cracking down on the use of contract workers from 2012,” says K. Lesli Ligorner, partner at legal firm Morgan, Lewis & Bockius in Shanghai. “When companies had rush orders or a lack of labor, they appear to have decided they would rather violate their supplier contract, and farm out the work to another company, than risk breaking the labor laws and be caught out by local government.”
Companies who use forced labor reduce their wage costs to the level of paying off the prison or detention center, which keeps most, if not all, of the payment for the work, leaving workers very little, according to labor rights advocates and former convicts.
In the words of the owner of a small garlic company in Jinxiang: “It means working for nothing.”
Inside a detention center in Peixian, 90 kilometers south of Jinxiang, detainees work on a fresh shipment of garlic bulbs, according to surveillance footage acquired by a local garlic businessman, Xu Mingju. Some of the prisoners are awaiting trial. Others have been convicted and will be transferred to prisons where ex-convicts say labor conditions are better, as they are more closely regulated than detention centers.
Former prisoners say the pungent acids in the garlic can melt detainees’ fingernails, exposing stinging flesh. Those who can no longer use their hands bite off the garlic skins with their teeth.
Peixian’s detainees are only a fraction of those forced to work in China’s export supply chains. Thousands of kilometers from Jinxiang, prisoners in the south-western city of Guilin made handbags once sold in Arizona, while those in the north-eastern city of Tonghua made wreaths to be exported to South Korea, say former prisoners. Prisoners from Yantai, near Jinxiang in Shandong province, assemble the wiring that goes into household appliances sold worldwide.
In Jinxiang, prison labor is an open secret. The owners of two different shops near the Peixian detention center say that at least one or two garlic trucks enter the center every day. A detention center guard confirms that the garlic trucks arrive via the main gate. In the afternoon, a rubbish cart leaves the center filled with garlic skins, dripping gray water along the pavement.
Good relationships with the police are essential to getting access to prison labor. “This is the kind of thing you need to sort out with the officials,” says Xu, the owner of the small garlic company. “It’s not the kind of service [that just] anyone can have access to.”
Xu’s photos of workers inside the detention center show them unloading garlic bulbs and loading peeled garlic. They also show footage from a surveillance monitor, which shows detainees sitting together in cells peeling garlic. They wear blue bibs with numbers on the back. At the top of the screen, red letters display crimes against the numbers of the rooms. Cell 202: robbery, intentional bodily harm. Cell 203: kidnapping. Cell 205: theft.
The truck that we followed 90 kilometers back to Jinxiang carried an estimated 2 tons of peeled garlic, wrapped in mesh sacks. It pulled into the entrance of a depot emblazoned with the characters Jinxiang Shuanglong, or Jinxiang Double Dragon. Inside, workers using forklifts moved sacks of garlic around the warehouse, with no obvious separation of garlic from the various sources.
“Our area exports peeled garlic to many countries,” the boss of Double Dragon later told us, as we posed as garlic importers. “Foreign demand from developed countries for peeled garlic is growing bigger and bigger, because clients want to save time.” He added that the company exported peeled garlic.
But when contacted later for an official comment, a Double Dragon spokesperson said the company did not export peeled garlic and sold only to the domestic market.
A separate Jinxiang garlic company representative says that his company used to rely on labor from the local prison and detention center to peel garlic for export to Japan, but that it lacked the necessary police connections to continue. As a result, the price he charged for peeled garlic went up 50 percent over the two years up to the end of 2017.
Jinxiang produces 80 percent of the world’s garlic exports. The U.S. sources 80 percent of all its fresh garlic imports from China, according to AskCI Consulting, a trade data consultancy. Chinese imports make up roughly 20 to 30 percent of all garlic consumed in the U.S., according to U.S. and Chinese figures.
But it is illegal to import goods produced in part or whole by forced labor into the U.S. If a complaint is raised against a foreign production site, U.S. Customs and Border Protection (CBP) will issue a “withhold release order” — meaning that shipments from that source must be held at the border — and may also launch a criminal investigation into the importer.
Anti-dumping measures imposed after calls from the American fresh garlic-growers’ association, and in place since 2008, mean that all Chinese garlic importers face a 376 percent duty, apart from Zhengzhou Harmoni and its U.S. affiliate Harmoni International Spice.
U.S. anti-dumping cases can only be initiated by domestic companies that have suffered as a result of the dumping. The garlic association has not nominated Harmoni in its annual submission of complaints against Chinese companies. As a result, Harmoni has never faced an anti-dumping investigation by the Department of Commerce.
But after receiving allegations that Harmoni was using prison labor, the customs department detained shipments of garlic from the company in December 2016 and January 2017. It later reversed that decision after Harmoni supplied CBP with documentation about its supply chain, according to the company. CBP declined to comment on the case.
The use of forced labor is not, however, restricted to the garlic industry. It also occurs in other Chinese supply chains. Of the 29 active withhold release orders that have been issued by the U.S., 23 are against Chinese sites.
Customers have found notes, hidden by prisoners, in goods sold in the U.K. and U.S. — from Christmas ornaments to socks. One note was found by a woman in Arizona after buying a Walmart-brand handbag last year. “Prisoners in the Yingshan Prison in Guangxi, China, are working 14 hours every day,” the handwritten note read in Chinese. “Whoever doesn’t finish his work will be beaten.… Being a prisoner in China is worse than being … a dog in the U.S.”
The letter was signed with the name of a man who was sentenced to serve 15 years in Yingshan Prison in 2012, according to local court records. Calls to Yingshan Prison confirmed that it has a department in charge of production and sales. Walmart confirmed that it has dropped a supplier who had been subcontracting from Yingshan Prison after investigating the issue.
But there are at least 55 prison companies whose registrations detailed all kinds of manufacturing and even construction work. Some explicitly had “prison” in the name, such as Jiangxi Province Prison Group. Others were owned by provincial prison bureaus, or were owned by the officials in charge of prison bureaus. Many describe themselves as being in the export industry — particularly those companies in the coastal export zones of Zhejiang, Jiangsu and Shandong.
Neither the Peixian detention center nor the Commerce Ministry responded to requests for comment on this story. The Ministry of Foreign Affairs declined to comment. “Prisons are run like companies, with their own sales teams,” says Li of China Labor Watch.
Unlike companies, prisons do not enforce labor law.
“We often needed to work from five in the morning to nine at night so the prison is able to make more money,” says one former convict who served five years in jail in Tonghua, Jilin province, where he made wreaths for export to South Korea. Another inmate, released from Yantai Prison in Shandong province last year after serving four years, also described a 5 a.m. to 8 p.m. workday with at most one rest day each month.
“We did nothing but work,” says the Yantai ex-prisoner, “there were no traces of life.” The prison holds 3,000 people, but, he says, he was part of a smaller team of 130 doing unskilled electronics work, bundling wires for electronics company Weihai Ruicao, which supplies the South Korean multinational LG.
LG confirmed that Weihai Ruicao was a supplier to another LG supplier, SL Electronics. LG has since said in a statement that: “SL Electronics severed its business relationship with Weihao Ruicao when SL was unable to obtain clear proof that they were in compliance with our code of conduct.”
Multinationals often rely on a series of local intermediaries and suppliers, who have an incentive to keep their use of prison labor secret. Detecting its use can be extremely difficult. Prisons do not print receipts or sign formal contracts, according to former prisoners, although some have sales departments that responded to telephone inquiries when we posed as buyers.
But for prisoners there is no choice. “The incentive for the prisoner is not monetary,” says one rights advocate who asked to remain anonymous. “Engaging in labor is a prerequisite for clemency in terms of sentence reduction or parole. Prisoners earn points for performing labor.”
OZY partners with the U.K.'s Financial Times to bring you premium analysis and features. © The Financial Times Limited 2020.