Print Edition - 2017-09-27 | MONEY
In Ivanka Trump’s China, business ties shrouded in secrecy
Sep 27, 2017-
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 US 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 percent 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, chairman 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 percent of shipments of her goods to the US this year originated in China and Hong Kong, but beyond that, it’s becoming more difficult to map the brand’s global footprint.
The brand declined to comment on the growing murkiness of its supply chain.
Published: 27-09-2017 10:00