Apple Is Said to Cut Off Chinese Supplier Over Xinjiang Labor
(Bloomberg) -- Apple Inc. has severed ties with Chinese component supplier Ofilm Group Co. over allegations it’s involved in a government program that transfers ethnic minorities from Xinjiang to other parts of the country for work, a person familiar with the matter says.
The iPhone maker is thought to have terminated its contracts with Ofilm over the concerns a few months ago, the person said, asking not to be identified discussing a private matter.
Ofilm’s shares tumbled by the 10% daily limit, closing at the lowest level since August 2019, after saying in an exchange filing that an overseas customer will stop buying its products. The Chinese company, which did not name the client, said it is evaluating the impact of the change on its earnings.
It was unclear whether Apple -- which has drawn fire in the past for alleged rights violations within its massive Chinese-centered supply chain -- knows if the allegations about Ofilm are true. The world’s most valuable company has in recent years begun to clamp down on suppliers and in 2020 suspended iPhone-assembler Pegatron Corp. on suspicion of labor abuses. The issue of China’s actions in Xinjiang is a particularly thorny one in the U.S., where it’s been likened to genocide.
The Shenzhen stock exchange on Tuesday asked the Chinese company to clarify the situation, including when exactly its major client terminated orders. The U.S. company didn’t respond to an emailed request for comment on Wednesday, while calls to Ofilm’s office in Shenzhen weren’t answered.
China has been accused by the U.S. and other Western governments of detaining more than 1 million Muslim Uyghurs in camps in the far western Xinjiang region and pushing them into work programs. The U.S. government and lawmakers in Canada and the Netherlands have said China’s actions constitute genocide. Washington has also banned cotton products from the region, and there have been some calls to boycott next year’s Winter Games in Beijing over the issue.
China has repeatedly denied the allegations, dismissing them as lies. Chinese Foreign Ministry spokesman Zhao Lijian said at a regular briefing Wednesday in Beijing there was no truth to allegations of forced labor in Xinjiang. He decline to comment on Apple and Ofilm.
The Australian Strategic Policy Institute said in a report last year that Ofilm used at least 700 Uyghur laborers from Xinjiang at a factory in the southern province of Jiangxi. The workers were sent there in late April 2017 as part of a state-sponsored labor transfer program, the think tank said.
The Uyghurs were expected to “gradually alter their ideology” and express gratitude to China’s ruling Communist Party for their work assignments, the think tank said, citing Chinese-language news articles.
Workers from Xinjiang have no way to refuse the government-ordered assignments because of “all-pervasive surveillance blanketing Xinjiang, backed by the threat of arbitrary detention in internment camps,” said Kelsey Munro, a senior analyst at ASPI’s International Cyber Policy Centre.
“Companies professing ethical manufacturing values have an obligation to invest resources in understanding their supply chains and ensuring they’re not contributing, however indirectly, to this state-backed form of coerced labor,” she said.
Ofilm employs about 300 people from Xinjiang at a unit in Jiangxi, according to a statement on the provincial government’s website. An official with a bureau that handles ethnic and religious affairs visited the company on Feb. 21 to check on the work of ethnic minorities, the statement said.
The U.S. government added Ofilm to its entity list in July 2020, saying it was among 11 Chinese companies “implicated in human rights violations and abuses in” Xinjiang. The move meant the firms would face limits on access to U.S.-originated items, including technology and commodities.
Ofilm announced last month it was selling some camera-making assets to Wingtech Technology Co. to focus on core operations such as consumer electronics.
©2021 Bloomberg L.P.