Busi­ness ties in China dif­fi­cult to track

Ivanka Trump’s man­u­fac­tur­ing com­pa­nies shrouded in se­crecy

Waterloo Region Record - - WORLD - Erika Kinetz

SHANGHAI — It is no se­cret that the bulk of Ivanka Trump’s mer­chan­dise comes from China. But just which Chi­nese com­pa­nies man­u­fac­ture and ex­port her hand­bags, shoes and clothes is more se­cret than ever, an As­so­ci­ated Press in­ves­ti­ga­tion has found.

In the months since she took her White House role, pub­lic in­for­ma­tion about the com­pa­nies im­port­ing Ivanka Trump goods to the U.S. has be­come harder to find. In­for­ma­tion that once rou­tinely ap­peared in pri­vate trade track­ing data has van­ished, leav­ing the iden­ti­ties of com­pa­nies in­volved in 90 per cent of ship­ments un­known. Even less is known about her man­u­fac­tur­ers. Trump’s brand, which is still owned by the first daugh­ter and pres­i­den­tial ad­viser, de­clined to dis­close the in­for­ma­tion.

The deep­en­ing se­crecy means it’s un­clear who Ivanka Trump’s com­pany is do­ing busi­ness with in China, even as she and her hus­band, Jared Kush­ner, have emerged as im­por­tant con­duits for top Chi­nese of­fi­cials in Wash­ing­ton. The lack of dis­clo­sure makes it dif­fi­cult to un­der­stand whether for­eign gov­ern­ments could use busi­ness ties with her brand to try to in­flu­ence the White House — and whether her com­pany stands to profit from for­eign govern­ment sub­si­dies that can de­stroy Amer­i­can jobs. Such ques­tions are es­pe­cially pro­nounced in China, where state-owned and state-sub­si­dized com­pa­nies dom­i­nate large swaths of com­mer­cial ac­tiv­ity.

“There should be more trans­parency, but right now we do not have the le­gal mech­a­nism to en­force trans­parency un­less Congress re­quests in­for­ma­tion through a sub­poena,” said Richard Painter, who served as chief White House ethics lawyer for Ge­orge W. Bush, and is part of a law­suit against Pres­i­dent Don­ald Trump for al­leged con­sti­tu­tional vi­o­la­tions. “I don’t know how much money she’s mak­ing on this and why it’s worth it. I think it’s put­ting our trade pol­icy in a very awk­ward sit­u­a­tion.”

An AP re­view of the records that are avail­able about Ivanka Trump’s sup­ply chain found two po­ten­tial red flags. In one case, a prov­ince in eastern China an­nounced the award of ex­port sub­si­dies to a com­pany that shipped thou­sands of Ivanka Trump hand­bags be­tween March 2016 and Fe­bru­ary of this year, Chi­nese pub­lic records show — a pos­si­ble vi­o­la­tion by China of global fair trade rules, trade ex­perts said.

The AP also found that tons of Ivanka Trump cloth­ing were ex­ported from 2013 to 2015 by a com­pany owned by the Chi­nese govern­ment, ac­cord­ing to pub­lic records and trade data. It is un­clear whether the brand is still work­ing with that com­pany, or other state-owned en­ti­ties. Her brand has pledged to avoid busi­ness with state-owned com­pa­nies now that she’s a White House ad­viser, but con­tends that its sup­ply chains are not its di­rect re­spon­si­bil­ity.

Ivanka Trump’s brand doesn’t ac­tu­ally make its prod­ucts di­rectly. In­stead, it con­tracts with li­censees who over­see pro­duc­tion of her mer­chan­dise. In ex­change, those li­censees pay the brand roy­al­ties. The AP asked Ivanka Trump’s brand for a list of its sup­pli­ers. The com­pany de­clined to dis­close them. The cloth­ing, footwear and hand­bag li­censees con­tacted by AP also de­clined to re­veal source fac­to­ries.

Abi­gail Klem, pres­i­dent of IT Op­er­a­tions LLC, which man­ages Ivanka Trump’s brand, said the com­pany does not con­tract with for­eign state-owned com­pa­nies or ben­e­fit from Chi­nese govern­ment sub­si­dies. How­ever, she ac­knowl­edged that its li­censees might.

“We li­cense the rights to our brand name to li­cens­ing com­pa­nies that have their own sup­ply chains and dis­tri­bu­tion net­works,” Klem said in an email. “The brand re­ceives roy­al­ties on sales to whole­salers and would not ben­e­fit if a li­censee in­creased its profit mar­gin by ob­tain­ing goods at a lower cost,” she added.

But Michael Stone, chair of Beanstalk, a global brand li­cens­ing agency, said lower pro­duc­tion costs for li­censees would ul­ti­mately ben­e­fit Ivanka Trump by free­ing up money for mar­ket­ing or lower re­tail prices, both of which drive sales.

“It gives her a com­pet­i­tive ad­van­tage and an in­di­rect ben­e­fit to her fi­nan­cially,” Stone said. “The more suc­cess­ful the li­censee is the more suc­cess­ful Ivanka Trump is go­ing to be.”

The AP iden­ti­fied com­pa­nies that sent Ivanka Trump prod­ucts to the United States by look­ing at ship­ment data main­tained by Im­portGe­nius and Pan­jiva Inc., pri­vate com­pa­nies that in­de­pen­dently track global trade. Pan­jiva’s records show that 85 per cent of ship­ments of her goods to the U.S. this year orig­i­nated in China and Hong Kong, but be­yond that, it’s be­com­ing more dif­fi­cult to map the brand’s global foot­print.

The com­pa­nies that shipped Ivanka Trump mer­chan­dise to the U.S. are listed for just five of 57 ship­ments logged by Pan­jiva from the end of March, when she of­fi­cially be­came a pres­i­den­tial ad­viser, through mid-Septem­ber. Pan­jiva col­lects data from U.S. Cus­toms and Bor­der Pro­tec­tion, which did not im­me­di­ately re­lease the miss­ing data to AP.

While in many cases the man­u­fac­turer ships goods di­rectly, mer­chan­dise can also be made by one com­pany and shipped by an­other trad­ing or con­sol­i­da­tion com­pany.

There used to be more vis­i­bil­ity. Last year, 27 per cent of the com­pa­nies that ex­ported Ivanka Trump mer­chan­dise to the U.S. were iden­ti­fied in Pan­jiva’s records, and back in 2014 a full 95 per cent were named. For two of Ivanka Trump’s li­censees — G-III Ap­parel Group Ltd. and Marc Fisher Footwear — the num­ber of ship­ments ap­pears to plunge in 2015, likely be­cause they “re­quested to hide” their ship­ment ac­tiv­ity, ac­cord­ing to Pan­jiva records. Nei­ther com­pany re­sponded to AP’s ques­tions.

The brand de­clined to com­ment on the grow­ing murk­i­ness of its sup­ply chain.

Chris Rogers, an an­a­lyst at Pan­jiva, said any com­pany can ask cus­toms au­thor­i­ties to redact its in­for­ma­tion for any rea­son. About a quar­ter of com­pa­nies re­quest anonymity, he said, but the ma­jor­ity don’t mind dis­clos­ing who they’re do­ing busi­ness with.

“A lot of com­pa­nies have said, ‘yes there might be a com­mer­cial dis­ad­van­tage, but we want to be trans­par­ent about our sup­ply chain,’” he ex­plained. While ethics lawyers may see dis­clo­sure as the best an­ti­dote to con­flict of in­ter­est, many brands see it as a tool to keep sup­ply chains scan­dal-free. Pub­lic out­cry over sweat­shop con­di­tions prompted com­pa­nies like Nike Inc. and Ap­ple Inc. to dis­close the names of their man­u­fac­tur­ers, and a grow­ing num­ber, publicly iden­tify their sup­pli­ers. Ivanka Trump should do the same, said Allen Adam­son, founder and CEO of BrandSim­ple Con­sult­ing. “It’s a missed op­por­tu­nity to lead by ex­am­ple.”


A woman browses jew­elry for sale at the Ivanka Trump Col­lec­tion shop in the lobby at Trump Tower in New York City.


Since Ivanka Trump took on her White House role, 90 per cent of the ship­ments of her mer­chan­dise do not in­clude pub­lic dis­clo­sure of the com­pa­nies that sent the goods to the U.S., data shows.

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