Effective March 14, 2022, the U.S. Customs and Border Protection (CBP) has detained merchandise produced or manufactured by Li-Ning at all U.S. ports of entry. The measure is the result of an investigation by the CBP indicating Li-Ning uses North Korean slave labor in its supply chain.
In the statement, U.S. customs said that “such merchandise will not be entitled to entry unless the importer provides clear and convincing evidence that their merchandise was not produced with convict labor, forced labor, or indentured labor under penal sanctions within 30 days of notice of detention. If the company fails to provide clear and convincing evidence within this timeframe, the merchandise may be subject to seizure and forfeiture.”
According to its latest annual report, Li-Ning generated 98.8 percent of its revenue in China and only 1.2 percent overseas. Li-Ning has not yet commented on the CBP investigation or the entry restrictions. After the announcement, its shares fell as much as 3.2 percent in early trading in Hong Kong before recouping their losses and rising 4.2 percent. Li-Ning’s shares have lost almost 38 percent of their value this year.
The Chinese company was created in 1990 and is named after its founder, the gymnast Li Ning. At the 1984 Los Angeles Olympics, Li won six medals, including three gold medals.
Update March 16: The Chinese sportswear brand averred in a statement that its suppliers are strictly prohibited from using any form of forced labor. While it has not found any cases of forced labor in its supply management system, it could not specifically rebut the CBP’s claim, since no specific sources of information were disclosed. The CBP said that its investigation had indicated that Li-Ning was in violation of the Countering America’s Adversaries Through Sanctions Act (CAATSA), which prohibits the entry of goods manufactured by North Korean nationals. CBP will detain Li-Ning goods at the port of entry until the importer provides, “clear and convincing evidence” that the goods were not produced using forced labor. Just over 1 percent of Li-Ning’s revenues come from sales outside of the PRC.
