PPAI Magazine May 2023

Must Read | The Long March Inspect, Inspect, Inspect The promotional products industry is devoting considerable time, expertise and effort to ensuring that the cotton and other goods it imports are compliant with the UFLPA and not the product of forced labor. “We began tracking the cotton issue in 2019, when we were made aware of reports of human rights abuses occurring in XUAR,” says SanMar’s Lott. “Over the next several years, we began a series of supply chain mapping exercises, working closely with our suppliers, to identify where our products are sourced and ensure no finished products or inputs to products are made in XUAR or by entities named on the UFLPA Entity List.” These inspections and standards extend to the partners and vendors industry companies do business with, as well. “We do not source cotton directly; therefore, we require all our suppliers to include raw material certifications with each shipment,” says Next Level’s Hales. “Further, we comply with robust sourcing standards that are endorsed by leading associations in the industry, hold our suppliers to the same high expectations and use isotopic testing as an important safeguarding mechanism.” Making The Move The exit from China has been one of measured progress for most companies in the promotional products industry, although not uniform across product categories, as production alternatives for some goods may be more readily available than others. Approximately 53% of Koozie Group’s total production expenditures are in Asia, although the company is making progress in reducing its reliance on China. “Of the spend in Asia, 90% of it is still coming from China. In 2016-2017, it was 97%,” Montaubin says. “We have moved some production from China to Vietnam, Bangladesh and India over the past few years. We have looked at Mexico as an alternative source, but there is still a big price gap between Mexico and China despite the cheaper freight.” Haesler says PCNA is looking for opportunities in other countries, not just because issues in China with cotton but also to diversify as part of the company’s ProudPath initiative. In particular, the company is exploring alternatives for certain hard goods categories that currently come primarily out of China. “The piece of it that will continue to be a big problem for us – or opportunity, to be honest with you – is drinkware, which is an $8 billion industry, and it’s all coming out of China,” Haesler says. “Tech is another area where almost the whole industry is located in China. We have moved cables and some things to Vietnam. Also, some of the drinkware factories we work with are exploring U.S. production, as well as opening a factory in Mexico.” 72 • MAY 2023 • PPAI