After submitting our response to Professor Laura Murphy of Sheffield Hallam University on her Laundering Cotton Report, there had been no correction on the report or updated research results. In her response to us, Professor Murphy continued to require more explaination and evidence, which we provided in full. We would like to share our email response below.
Dear Professor Murphy,
We are writing to thank you for the opportunity to share Texhong’s perspective regarding cotton sourcing. Our company is committed to strengthening our supply chain and appreciate your efforts to bring transparency and accountability to the industry.
While we are pleased that you have posted our response to the recent cotton report, there are still several areas where we feel our policies and procedures are not accurately represented. Further, we are working to drive industry-wide solutions which we mutually agree is important in protecting and respecting human rights.
You can rest assured that Texhong is deeply committed to producing quality products in a responsible manner and in compliance with the laws of the country of manufacture as well as the country of importation. We are sure that you also understand the complexities of the industry as well as the need for our organization to consider additional investment in our supply chain in order to ensure control and accountability throughout the production cycle.
With respect to investment, Texhong is building out a visual tracking system focused on the sourcing of fiber raw materials based on our current SAP ERP system, in order to more accurately document the source of our cotton products for our customers and stakeholders. It is our intention that this system will be a best-in-class model for the industry with a focus on full supply chain visibility and accountability.
Additionally, we have hired an independent law firm in the United States to fully audit our supply chain to ensure we have policies, procedures and enforcement mechanisms in place to help prevent any forced labor in our supply chain, or to detect and if identified, address, correct and remove any illegal activity. With respect to divestment, it is critical to note that the sale of our Tianmian factory was announced before the Laundering Cotton report was released. To date, we can fully confirm the divestiture of this factory. Documents verifying this change are publicly available.
As stated before, according to our internal verification, there has been no record of buying cotton from XPCC or any transactions with XPCC since 2020. To further confirm this important matter, we engaged an independent third party to conduct an external review of our trading records.
Another important area we would ask your consideration of is our company’s relationship with our subsidiary Winnitex and its role in the sourcing of global cotton. As stated before, Winnitex sources all of its cotton from the international market, the majority of which comes from the United States. Specifically, Winnitex sources no cotton from China and accordingly, we welcome you to review the attached statistics showing the sources of the cotton used by Winnitex. (Annex I).
It is important to note that Texhong and its subsidiaries are collectively the world's largest purchasers of U.S.-origin cotton. In fact, Texhong's U.S. cotton purchases in 2021 amounted to 314,186 metric tons, representing approximately 9% of total U.S. cotton exports. Annex II is a statistical table of Texong's
U.S. cotton and other international cotton purchases from 2016 to 2021 compared with the total export volume of U.S. cotton. Our investment in American cotton production will continue and grow in the future.
In sum, we deeply appreciate your commitment to ensure global supply chains are transparent and accountable and in particular that they respect human rights and dignity. Our company is committed to that same objective and has also strictly prohibited forced labor from occurring in our organization. Meanwhile, we are working with our industry partners to ensure the issues addressed in your report will not happen in our supply chain. We share a common goal to eradicate forced labor from our supply chain. We want to identify the problems, address, them and resolve them. We do not want to abandon workers in their time of need, but rather support them in removing the forced labor concerns wherever we can. We would humbly ask that you revisit your report and incorporate these activities into an updated version that more accurately includes these timely and relevant actions.
As we continue to work with the industry to address and eradicate forced labor in our supply chain we expect updated and improved programs. Thank you again for your consideration of our comments.
Sincerely,
Charles Hui
Company Secretary
