Li Ning refutes US claim of using North Korean forced labour in its supply chain as his sports goods are banned in America

Li Ning said his company has “zero tolerance” for misconduct, according to a statement to the Hong Kong stock exchange
US statutes carry “rebuttable presumption” that all goods from the target area are tainted, unless there is “clear and convincing evidence” otherwise

Li Ning

Lam Ka-sing

Published: 4:03pm, 17 Mar 2022

Why you can trust SCMP

Li Ning, the triple-gold Olympic medallist in gymnastics, said his namesake company has not found any forced labour in its supply chain, defending one of China’s largest athletic brands after its exports were banned this week by US customs.

“During the operation and review process, the group has not discovered any cases of forced labour in the supplier management system,” Li said in a statement to Hong Kong’s stock exchange, where the shares of Li Ning Company Limited are traded. The company “strictly prohibits and opposes any form of forced labour employed by its suppliers,” and “always upholds human rights and legal rights of labour”, Li said, adding that these are the “basic principles” for his company’s cooperation with all partners.

The US Customs and Border Protection (CBP) this week banned Li Ning’s products from entering the American market, citing “unless the importer provides clear and convincing evidence” that there was no forced labour involved, according to a statement.

Under the Countering America’s Adversaries Through Sanctions Act (CAATSA), goods manufactured wholly or in part by North Koreans anywhere in the world are banned in the US, unless clear and convincing evidence is provided that they were not made with forced labour.

Li Ning, the retired Olympic gold medalist and founder of Li Ning Company Limited, during an interview in Beijing on April 29, 2019. Photo: Simon Song

“This has been an ongoing investigation for several months involving numerous offices within CBP who independently reached the same conclusion,” a CBP spokesperson said in an emailed reply to South China Morning Post, three days after the ban on Li Ning’s products took effect. “CAATSA is a sanction, and is already imposed on Li-Ning until … the company can provide a rebuttal to CBP’s presumption of North Korean labour in their supply chain.”

The ban on Li Ning is the latest dust-up between the US and China, as the worst bilateral relations in decades spilled over into punitive actions on companies that are maintaining commerce between the two largest economies on the planet.

Xinjiang’s economy and the impact of US sanctions

The CAATSA carries a “rebuttable presumption” that all goods made by North Koreans are the result of forced labour, similar to the Uyghur Forced Labor Prevention Act (UFLPA) signed into law in December 2021, that also presumed that everything that originates in western China’s Xinjiang region is tainted by forced labour.

Under both statutes, companies will be able to appeal the prohibition only if they can provide “clear and convincing evidence” that their supply chains are free of forced labour.

Hong Kong’s Esquel Group, the apparels producer for such US brands as Tommy Hilfiger and Nike, which operates a factory in Xinjiang’s capital Urumqi, sued in the United States to be removed from the UFLPA’s banned list. The case was rejected by a US judge in October, pending an appeal by Esquel.

China and the US: where is the relationship heading?

The ban on Li Ning applies to new imports from its effective date, leaving the brand’s products that are already in the US market unaffected.

In its defence, Li said his board could not respond to “speculation” or “allegations” of abuse without knowing the source of the information. The company “applies zero-tolerance policy” for misconduct, and “all suppliers are treated equally,” Li said.

The CBP declined to provide any information that “may reveal law enforcement techniques or expose individuals or parties involved in referrals,” the spokesman said. Still, “CBP is committed to fairly and expeditiously working to review information Li Ning believes is appropriate to meet this rebuttal requirement,” he said.

“CBP is actively investigating other instances of North Korean labour and thus other CAATSA violations,” he said. “Additional CAATSA enforcement actions may occur on companies around the world who utilise North Korean labour in violation of US sanctions.”