Environment

WSJ: Textile industry ravages China’s rivers

We know the story by now. Chinese factories are churning out cheap goods and harmful pollutants, all in the name of explosive economic growth and competition in the global marketplace.But not too much is said about the role multinationals play in the country’s pollution problem.

Jane Spencer from The Wall Street Journal writes about the high price of the textile industry on China’s environmental health. “There’s a joke in China today that you can tell what colors are in fashion by looking at the rivers,” she writes.

China Pays Steep Price As Textile Exports Boom
The Wall Street Journal
By Jane Spencer
August 22, 2007

In the more than two decades since international companies began turning to Chinese factories to churn out the cheap T-shirts, jeans and sneakers that people around the world wear daily, China’s air, land and water have paid a heavy price. China has faced harsh criticism in recent months over the safety of exports ranging from tainted toothpaste to toxic toys. But environmental activists and the Chinese government are increasingly pointing to the flip side: the role multinational companies play in China’s growing pollution by demanding ever-lower prices for Chinese products.

Prices on fabric and clothing imported to the U.S. have fallen 25% since 1995, partly due to the downward pricing pressure brought by discount retail chains. One way China’s factories have historically kept costs down is by dumping waste water directly into rivers. Treating contaminated water costs upwards of about 13 cents a metric ton, so large factories can save hundreds of thousands of dollars a year by sending waste water directly to rivers in violation of China’s water-pollution laws.

“Prices in the U.S. are artificially low,” says Andy Xie, former chief economist for Morgan Stanley Asia, who now works independently. “You’re not paying the costs of pollution, and that is why China is an environmental catastrophe.”

The debate is that U.S. clothing retailers, such as Gap Inc. and Target Corp., have not tightened their oversight of Chinese textile suppliers.

One such textile company, Fountain Set Holdings Inc. is the largest knit cotton manufacturer in the world, and its factories are responsible for about 6% of the global supply of knit cotton, according to the article. The company has paid roughly $1.5 million in penalties and spent $2.7 million to upgrade its water-treatment facilities, following inspection by environmental protection officials last June, which revealed a pipe buried underneath the Fuan Textiles mill in southern China that was dumping roughly 22,000 tons of contaminated water into a nearby river.

The reporter, Jane Spencer, tried to contact many U.S. companies about their dealings with Chinese textile suppliers. But hardly anyone wanted to divulge information.

Companies including Target and Liz Claiborne say they have “no contractual relationship” with Fountain Set, but acknowledge they use its products. As recently as June, Fountain Set named Kohl’s Corp. of Menomonee Falls, Wis., as one of its customers. In an email statement, Kohl’s said it is “not a Fountain Set Holdings client.”

Phillips-Van Heusen Corp., which owns brands including Calvin Klein, didn’t respond to inquiries for this story. Eddie Bauer Holdings and Tommy Hilfiger Corp. declined to comment.

The implication is that these companies should be keeping a closer eye on the textile industry supply chain. But most of them focus on the end of the chain.

Gap, for example, employs a full-time social-responsibility staff of 93 people involved in monitoring 2,000 factories around the world for labor issues and environmental practices. But Fountain Set isn’t on the list, because Gap’s monitoring program focuses on companies that sew fabric into clothes, rather than mills.

Another issue is that of cost and convenience. U.S. companies outsourced to China to begin with after stricter environmental laws imposed in the 1970s drove up production expenses. And now, they are hesitant to switch suppliers after already developing a relationship with them.

The Chinese government is doing its part to tighten regulations and punish polluting industries. But it looks like apparel companies might actually have the upper-hand. The question is whether or not they will take advantage of their influence.

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