Canadian brands sold clothing from factory suspected of secretly using North Korean forced labour

Update: Canadian retail giant Reitmans Ltd. will remove from its stores all remaining inventory made at a factory in China suspected of using North Korean forced labour, according to a press release from the company.

Retail giant Reitmans brought more than 100 shipments of clothing into Canada from a Chinese factory suspected of secretly using North Korean forced labour, a months-long CBC Marketplace investigation has found. 

And they're not alone. 

YM Inc., which owns well-known brands such as Sirens, Stitches, Bluenotes and UrbanKids, also did business with the same factory, Dandong Huayang Textiles and Garment Co. Ltd., up until 2019. Although a smaller volume, the company imported clothing at least 21 times, according to U.S. shipping records.

YM says it does not partner with anyone using forced labour. 

And Reitmans says it has a policy against using forced labour, and that its orders from the Dandong factory were a small amount of what they've sold on store shelves. 

But experts say the city of Dandong, located on the border of North Korea and China, has a history of employing North Korean workers at their factories, and Dandong Huayang is no exception.

U.S. authorities blocked shipments from Dandong Huayang from entering American stores earlier this year on suspicion of forced labour, assistant port director of the Port of New York and New Jersey, Ed Fox told Marketplace. 

"The allegation is that North Korean citizens were being brought into China, held at the factory, several of the key elements of forced labour were present," said Fox. "There was debt-bondage, they were restricted in terms of movement, their travel documents had been seized."

WATCH | The full Marketplace investigation:

Fox said the U.S. importer attempted to disprove the allegations of forced labour, but the documentation it presented had inconsistencies and so the shipment was ultimately destroyed.

Factory denies having 'illegal workers'

Reports dug up by CBC journalists reveal a government pilot project issued by China Customs (General Administration of Customs, People's Republic of China) to hire North Korean labour in 2014, and local media reports show Dandong Huayang was among the factories that participated.

In a Chinese government notice from 2017, officials describe North Koreans as factory workers who will work long hours, won't talk back and will cost the factory less.   

In an email to CBC Marketplace, Dandong Huayang factory management denied having any "illegal workers," and says it has no knowledge of the government pilot project to hire North Koreans years ago. 

But when CBC Marketplace dispatched two different undercover teams to Dandong Huayang this summer and captured extremely rare footage of workers at the factory, the team also secretly recorded conversations with a local nearby and a woman wearing what appears to be the factory uniform and logo. Both women told the team that a lot of North Koreans are currently working inside the factory. 

Reitmans — which also owns Penningtons and RW&Co — says its recent unannounced audit of Dandong Huayang conducted in December 2020 showed no signs of North Korean workers or forced labour, but after U.K. newspaper The Guardian reported North Korean forced labour at a factory owned by Dandong Huayang, it stopped putting through new orders with the company "out of an abundance of caution." 

Still, Marketplace found the retailer selling clothing from an old shipment at Penningtons stores nine months after it said it cut ties with the factory.

Canadian clothing sales potentially funding North Korea's nuclear program 

The UN Security Council adopted sanctions banning the use of North Korean migrant workers after the country launched ballistic missiles in November of 2017. 

The Security Council called the actions a "threat to international peace and security," and demanded that all workers be repatriated back to North Korea by the end of 2019, saying their wages bring in foreign currency that the North Korean regime "uses to support its prohibited nuclear and ballistic missile programs."

WATCH | Are some Canadian clothing sales indirectly funding North Korea's nuclear weapons program?

Reitmans sold clothes from factory accused of using North Korean forced labour

3 years ago

Duration 2:21

Marketplace spent months poring over shipping records and hidden-camera footage from a Chinese factory suspected of using forced labour. The investigation found clothes from the factory being sold inside Reitmans stores. Reitmans told Marketplace that forced labour is banned from its supply chains and that unannounced audits did not uncover any North Korean workers. But after serious concerns were raised last year, Reitmans says it stopped new orders from this factory. Nine months later, however, items from a past order were still on store shelves.

China is required to enforce the UN sanctions, but several media reports show that many North Koreans are still working in the country, sometimes on visitor visas to avoid detection. 

U.S. shipping records, which are publicly available, show a direct link from the Dandong Huayang factory in China to Reitmans Canada headquarters in Montreal and YM Inc. in Toronto. YM Inc. had already stopped ordering from Dandong Huayang by the repatriation deadline, but Reitmans received at least four more shipments since then. 

Expert details reports about workers 'falling down from exhaustion'

Professor Remco Breuker of Leiden University in the Netherlands, a leading expert in contemporary North Korea, says anywhere between 70 and 100 per cent of wages made by North Koreans abroad are taken by the state, and that money — directly or indirectly — funds its nuclear program.

He says the reason countries around the world hire them anyway is because they are "obedient and they're cheap … the perfect kind of worker you'd want in a factory."

"These workers can work 12 to 16 hours on a daily basis. And if deadlines need to be met they can work for 24 hours," said Breuker. "There are reports of people just dropping, falling down from exhaustion."

The International Labour Organization defines conditions such as wage theft, excessive overtime and the inability to leave as "forced labour."

The U.S. takes action, but Canada fails to act

Fox, the assistant port director in New Jersey, says everyone has a moral obligation to act when it comes to forced labour around the world. 

"These people are literally modern-day slaves. We correctly look back on the past and talk in depth about what we can do to address the sins of slavery from the past. That's great that we do that, but we have an opportunity to address sins that are occurring today," said Fox. 

"As human beings we have an obligation to do what we can to stop that from happening." 

Fox told Marketplace that U.S. port authorities regularly share intelligence around forced labour with their Canadian counterpart, the Canada Border Services Agency (CBSA). 

But when Marketplace asked the CBSA why it failed to stop shipments into Canada from the same Dandong factory, the agency responded that it requires "legally sufficient and defensible evidence" in order to stop a shipment on suspicion of forced labour, but admitted that it's never actually done that before.

'We're far behind other countries, and that makes me really sad'

A new law passed in California in September will now hold clothing brands responsible for the wages of all workers in their supply chains within the state. 

Canadian brands don't face such scrutiny here.

The government has failed three times to pass the Modern Day Slavery Act, which would require Canadian retailers to carefully monitor their supply chains and report their findings. 

Canadian Sen. Julie Miville-Dechêne told Marketplace the fact that Reitmans chose to continue selling clothes from Dandong Huayang illustrates the problem with self-regulation.

"They knowingly [sold] clothes that were at risk of containing forced labour to customers who didn't know about it," she said. "That's the choice they made.... It's unacceptable."

Miville-Dechêne says that without a law, Canadian brands face "unequal competition," whereby the companies that are willing to accept suspected forced labour in their supply chain are able to offer cheaper prices than those that exercise due diligence. 

• Click here for full statements from those featured in this investigation

Miville-Dechêne blames delays caused by the pandemic for the recent death of her bill, but she remains optimistic and plans to re-introduce it in the Senate as soon as possible.

"We're far behind other countries, and that makes me really sad because as a Canadian, I think we don't have much excuse for being that far behind," she said, noting that the bill is modest — only asking for transparency — and it could be improved or made stronger at the committee level. 

"Some companies will do their best, others will do the minimum. But we have to do something as a country," she said.

Anika Kozlowski, who teaches sustainable and ethical fashion at Ryerson University in Toronto, says it can't be left to the consumer to look at a piece of clothing and determine whether it's been made by forced labour.  

The Canadian government, and Canadian brands, must take greater responsibility, she says.

"They absolutely should know how their products are being made and how the people involved are being treated," she said. "There's just no excuse for that." 

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