July 5, 2022

Companies Brace for Impact of New Forced Labor Law

It’s a strategy that Richard Mojica, a lawyer at Miller Chevalier Chartered, said “should suffice,” since the jurisdiction of U.S. customs extends just to imports, although Canada, the United Kingdom, Europe and Australia are considering their own measures. Instead of moving their operations out of China, some multinationals are investing in alternative sources of supply, and making new investments in mapping their supply chains.

At the heart of the problem is the complexity and opacity of the supply chains that run through China, the world’s largest manufacturing hub. Goods often pass through many layers of companies as they make their way from fields, mines and factories to a warehouse or a store shelf.

Most companies are well acquainted with their direct suppliers for parts or materials. But they may be less familiar with vendors that their primary supplier does business with. Some supply chains have many layers of specialized suppliers, some of whom may contract out their work to other factories.

Take carmakers, who may need to procure thousands of components, like semiconductors, aluminum, glass, engines and seat fabric. The average carmaker has about 250 tier-one suppliers but exposure to 18,000 other companies across its full supply chain, according to research by McKinsey Company, the consultancy firm.

Article source: https://www.nytimes.com/2022/06/22/us/politics/xinjiang-uyghur-forced-labor-law.html

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