The Terribly High Cost of Cheap Goods

In her debut book, Made in China: A Prisoner, an SOS Letter, and the Hidden Cost of America’s Cheap Goods (Algonquin), investigative journalist Amelia Pang journeys into the heart of China’s shadow economy. Through a combination of history, reporting, and harrowing interviews, she traces the rise of a forced-labor system under Mao and its modern evolution into a national economic engine—and, increasingly, a tool for China’s ethnic cleansing of Uighurs and other minorities. The scale of this system is hard to fathom. Currently, an estimated two million people are held in China’s system of Laogai: reeducation through labor camps, detention centers, prisons, and detox facilities—not including the over a million Uighurs in camps in the western region of Xinjiang, which has become a heavily surveilled open-air prison.

Pang chronicles the human toll of this system by following the story of how one prisoner, Sun Yi, came to be held in a camp and forced to make “Totally Ghoul” graveyard kits for Kmart. Through Sun Yi’s story, Pang illuminates the hidden financial incentives and political arrangements that make this system possible: from fickle consumer demand to greedy multinational brands to desperate factory owners to subcontracted prisons and camps—where so many of our improbably cheap goods are made by what can only be called slave labor.

Pang’s book arrives at a critical moment in U.S.-China trade relations. In his last day as Secretary of State, Mike Pompeo declared China’s surveillance and systematic imprisonment and murder of Uighurs in Xinjiang to be a genocide. China produces a fifth of the world’s cotton, and 84% of it comes from Xinjiang, but because of the prevalence of slave labor, the U.S. has finally decided to ban it. Despite a trend toward sustainability and transparency, “virtually the entire fashion industry” has been found to use cotton from Xinjiang. Many brands have been unable to definitively say whether their supply chains are free of slave labor.

Over Zoom, Pang discussed how the world’s largest slave economy came to be, why fashion brands need to change their manufacturing and sourcing practices, and what consumers can do in response.

This interview has been edited and condensed for clarity.

GQ: How did you decide to write this book?

Amelia Pang: Every time one of these letters pops up and makes a lot of headlines, there are expressions of outrage. But nothing actually ever changes—nobody ever really talks about the holes in the supply chain that allow products made in forced labor facilities in China to end up in our stores. I thought Sun Yi’s letter was a particularly compelling story. The fact that it was a Halloween decoration made it extra chilling.

You went to Shanghai to research contracting with prisoners and other detention camps firsthand, and you posed as a foreign business woman. What was that like?

It’s very hard to do any reporting on the labor camps connected to Uighurs in Xinjiang. But the labor camps that I visited, like the pre-trial detention centers and drug detox centers and prisons—these have innocuous names, but they're actually all forced labor facilities that are working with exporters.

Those types of facilities are surprisingly easy to visit. I just showed up at the camp and said I was from an overseas company and wanted to source from them. Everybody was very excited to talk to me. The employees welcomed me, they offered to give me a tour. I was too afraid to go in and talk too much and reveal that I'm not actually with a manufacturer.

What are the differences between the kinds of prisons, detention centers and forced labor camps?

They have different names, but they're all essentially the same. These are, for the most part, extralegal detention centers where the people detained have not gone to trial, they don't have access to a lawyer. These prisoners are arbitrarily sentenced by the police department, so a judge doesn’t hear their case. The exception is the prisons, where people do get sentenced, but they also have to do a significant amount of manufacturing work for very long hours, and conditions are very similar. These prisons are exporting all around the world.

What are the types of people who wind up in these places? Why are they there, and what, if any, legal recourse do they have?

So many different kinds. Ethnic minorities like Uighurs, Kazakhs, and other people of Turkic descent in China. There are many different kinds of activists: pro-democracy activists, religious activists—like the Falun Gong people, the underground Christians, even Catholics. There are civil rights lawyers who have tried to stand up for these types of people, and also a lot of petty criminals.

These camps are often used as subcontractors because factories can't meet a deadline in time, or they just don't have the capacity. Can you explain the relationship between legitimate manufacturing in China and this shadow economy based on slave labor?

That's what I was surprised to learn as well. It's not just greedy Chinese factory owners. These Chinese factories: there are so many of them, and they're very competitive. If any factory can get a contract with a big global brand, this is such an important and precious opportunity to them. They don't want to do anything that would risk upsetting the brand and having them jump over to another factory. Let's say a company, like H&M or Walmart, puts in an order for 100,000 hats, and they're all black hats. But then you have a celebrity in the US who suddenly starts wearing lime green hats, and now everybody wants to wear those. A lot of these companies would want to capitalize on this sudden shift. So they're going to either have to enter a large order without giving the factory time to make them, or they're going to have to change the last order they gave for 100,000 black hats to 100,000 lime green hats—and those are pretty significant production changes. A lot of companies do not give the factories enough time to make such a radical change. We're always auditing the Chinese supplier but nobody's auditing the practices of the business—whether the business is actually engaging in fair sourcing practices.

So what these factories do is they just contract it out to labor camps? Because they have no other way to meet the deadline?

Yes, they contract out to someone who can make it in an incredibly short period of time. That may be some kind of a shadow factory, not necessarily a labor camp, like a sweatshop. Or it could be a labor camp where detainees work for little or no payment. They could be forced to stay up 24 hours to meet the deadline. They have no choice.

What are the conditions like in these detention camps?

Prisoners are brutally beaten for not working fast enough or for not meeting the quota of the day, and they don't have access to medical care for their injuries. They sleep in very tight quarters, with many people in a cell, or sometimes people even sharing a bed. They don't necessarily have access to laundry, so everyone is just wearing the same clothes over and over again.

For the women, there's a lot of sexual violence. Survivors report unrelenting, repetitive sexual violence day after day. For everyone else, there are other types of torture, including just hanging someone for long periods of time, to the point where their feet become swollen and they lose consciousness, and just leaving someone in solitary confinement for so long that they begin to lose a grasp on reality.

You write about the lack of medical care in your book, but also about strange medical exams prisoners receive. Can you talk about the connection between forced labor and the organ market in China?

While prisoners often don't have access to medical care when they are injured from torture or on the job, they sometimes get these random health checks and aren’t told what they are for or what the results are. In 2019, the China tribunal in London reviewed a lot of the evidence and found that political prisoners in China were being executed for their organs. The organ trade is a $1 billion industry in China. So it's incredibly lucrative.

So the people who are working in forced labor camps, they're also essentially being held as potential organ donors?

Right, and you do see that risk more with the Uighurs, because their biometric data is collected—everyone in Xinjiang has their data collected. There's been some accounts based on survivors that they've had family members who died in the camps but their bodies were not not given back to them.

A few weeks ago, the US State Department declared that there was a genocide happening in Xinjiang, and banned cotton products grown there. How significant was this ban?

It doesn't solve the issue, but it does help. Last year, before the ban, the US imported about $9 billion worth of clothing from China. Previously, Customs and Border Patrol would only ban the one specific product from a supplier at a time. Let's say a factory was caught using forced labor to package potatoes. Now this factory cannot export potatoes to the US. But this same factory that was using forced laborers can still export onions to the US.

It seems like the focus should be on the bad actors, not the items that are coming in.

Yeah, it was focusing on the wrong thing. A lot of times the factory would just change their name. There wasn't good tracking going on on the government side.

Fashion companies often talk about their audits. When disasters happen, they'll say, “Our auditors didn't find any evidence of issues. So we can't be blamed.” Can you talk a little bit about how not all audits are equal?

Audits are designed to protect a corporation rather than the workers. There are many different kinds of audits. When you hear a company say, “Oh, we conducted an audit, and found no evidence of forced labor,” I would push back and say that means nothing. You need to review a lot more information.

Was it a standard audit? that costs a couple hundred dollars and only checks for cleanliness of the factory, quality of the merchandise, simple things like that. That kind of audit cannot detect something as complex as illegal, hidden subcontracting to labor camps. There are more expensive, comprehensive audits called social compliance audits, where they look at wage documents, how many employees the factory actually has, and how much you're actually producing. Those could cost $1,000 or more. Then you have another tier of audits that cost about $5,000, where they really cross-analyze the wage documents of all the departments in the factory. How many companies are actually doing those kinds of audits?

So people try to cheat the system.

It all comes back to our Western desire for extremely trendy and cheap products. So a lot of corporations will demand that factories meet all these regulations and standards, but they won't actually pay them more for those standards. So factories have no choice but to revert to cheating the system, including software that can create fake timesheets. They will even have the holes stamped out and in irregular ways to make it look authentic. It can be very hard for even a good auditor to find out the truth.

If we can't rely on audits, what's the best way to bring greater transparency to the fashion supply chain? How can consumers demand greater accountability?

We start by asking our favorite brands to reveal how much they're paying their factories to make their products. Currently, the words “sustainability” and “transparency” are just marketing buzzwords. They're essentially meaningless. If you look at the sustainability pages of brands-—to the unknowing person—it would look amazing. A lot of companies list their first or second tier factories and their addresses. But what actually goes on in those factories?

Through your research, have you come across any products that you own, that you realize might have been made through slave labor?

I'm starting to realize everything is potentially made by slave labor. There's no way to really confirm unless companies start revealing more information about how they're auditing their factories and what their sourcing practices are.

For years, Chinese goods have been disparaged as low quality or made under sweatshop conditions, and you talk about the Nike boycott in the 1990s as part of that history. But more recently, now some of the most advanced textile and garment factories are in China. There's a sense that maybe some of the “Made in America” stuff was basically just racism in disguise. On top of this, China is becoming the largest consumer of fashion goods in the world. So a lot of brands are investing quite heavily in not just making things in China, but selling things in China. Is there a more nuanced position?

Yes, absolutely. I don't think the solution is necessarily avoiding all made in China products or pulling out of China entirely. Because I don't even think that would be possible. With how far globalization has gone, I don't think we could just turn back the tide like that. There are good factories in China and good reasons to source from China, but I think we also have to be a lot more aware of how our sourcing practices contribute to factories using forced labor. And if we do find out that one of a brand’s suppliers is using forced labor, we have to be able to drop them immediately.

Ultimately, brands do respond to consumer demand. If they can find that this particular demand is lucrative and marketable for them, then they'll go in that direction, but we as consumers have to start saying we care. Until brands suffer significant PR damage from something, they won’t be compelled to act.

Originally Appeared on GQ