In a July 25 email to membership, the Business Technology Association (BTA)—an industry-leading organization with members consisting of office technology dealerships, resellers, manufacturers, distributors and service companies—outlined its position on Ninestar and Lexmark. The U.S. Department of Homeland Security (DHS) announced June 9 that goods imported from Ninestar (which holds a majority ownership stake in Lexmark) were being restricted due to alleged forced labor practices in conjunction with China’s Xinjiang region.
As reported by ENX Magazine on June 16, the DHS announced that products from Ninestar and its eight Zuhai, China-based subsidiaries were being restricted from U.S. entry due to the “participation in business practices that target members of persecuted groups including Uyghur minorities in the PRC,” it said in a June 9 release. Ninestar was added to the Entity List, joining other Chinese firms cited for committing forced labor infractions. The list was created following the passage of the Uyghur Forced Labor Prevention Act (UFLPA), signed into law by President Biden in December 2021.
On June 22, Lexmark announced it was replacing Ninestar as a supplier on a global basis. The Lexington, Kentucky-based firm also disavowed the practices its parent company allegedly employed. It wrote, “Lexmark is committed to ensuring that all our suppliers adhere to the highest standards of compliance, security and social responsibility. We support international labor standards and follow all applicable laws in the markets in which we operate.”
What follows is the BTA letter to members:
The Business Technology Association (BTA) fully supports the Uyghur Forced Labor Prevention Act (UFLPA). Any product produced through forced labor should be foreclosed from use within the industry. BTA also abides by the bylaws under which it operates and all laws of the United States of America. The U.S. Constitution guarantees “due process of the law.” Likewise, our country has denied guilt by association. If a parent should commit a crime or a child is found to violate the law, the entire family is not punished.
The Forced Labor Enforcement Task Force (FLETF), a part of the Department of Homeland Security, imposed a ban on goods produced by Ninestar Corporation and eight of its subsidiaries. BTA is interfacing with FLETF to determine the breadth of these restrictions and the products banned. The ban applies to products produced in Zhuhai, China. Ninestar operates under numerous subsidiaries and has offices and plants throughout the world. FLETF has been clear that its ban applies only to products produced in the Zhuhai region of China. Products from many other Ninestar affiliates have not been banned and continue to enter through U.S. ports of entry.
Ninestar issued a statement on June 12 stating, in part, that: “it abides by the applicable standards of international labor protection, and fully protects the legitimate rights and interests of laborers.”
Ninestar owns 63.04% of Lexmark and corporate records indicate Ninestar has lent funds to Lexmark. Although Lexmark is majority owned by Ninestar, “Lexmark investors have no operational control of the company.” Lexmark is not the only office technology manufacturer that incorporates Ninestar components in its products. The sudden ban of Ninestar products has caused numerous companies to seek alternative sources. Suppliers contacted by BTA have acknowledged incorporation of Ninestar products and their immediate discontinuance while searching for alternative sources. All these companies are operating under a cloud until the dust settles and new sources are identified. The full extent of the ban is still being evaluated.
BTA’s Response:
- Continued discussions with the FLETF as to the extent and scope of the Ninestar ban. Is Lexmark or are Lexmark products included?
- Notice to Ninestar that the conduct cited by the FLETF is contrary to the high standards of BTA and violation has resulted in a motion to remove Ninestar as a BTA member. Consistent with due process, Ninestar must respond on or before Aug. 4, 2023.
- Continued discussions with other suppliers to determine the impact of the Ninestar ban and the steps taken to overcome.
- Continued member updates.
- 2023 BTA National Conference in Boston, Massachusetts:
Will Slave Labor Disrupt the Supply Chain?
Moderated by Bob Goldberg, BTA General Counsel
The embargo entered against Ninestar and several of its subsidiaries has raised countless questions. How do the restrictions affect Lexmark and other OEMs relying on Chinese-made components and supplies? BTA has brought together leading industry executives to present the latest on the situation and project into the future. This panel will definitely be one of the most important discussions in 2023.
