Date: Thursday, April 15th, 2021
Source: Nikkei Asia
NAGOYA, Japan -- Leading Japanese ketchup producer Kagome has stopped importing tomatoes from China's Xinjiang, Nikkei learned Tuesday, joining the growing ranks of Western brands that have ceased sourcing materials from the region over reported abuses against Uyghur Muslims.
Kagome halted import of Xinjiang-grown tomato paste used in some of its sauce products last year. Tomatoes that have already been imported will be used up by the end of this year.
Along with costs and quality, "human rights problems have become a factor in making decisions," said a Kagome representative.
Kagome is believed to be the first major Japanese corporation to stop doing business with the region over the Uyghur issue. A host of popular Western brands, including H&M and Nike, have stopped buying materials made in the region, which in turn spurred a backlash from Chinese consumers.
The impact on Kagome's operations appears minimal. The procurement of Xinjiang tomatoes, which is shipped in paste form, has been declining over the past few years. Xinjiang tomatoes currently represent less than 1% of the tomatoes used by the group. The produce will be replaced by tomatoes from other nations, and there will be no impact on production.
Kagome has always disclosed on its website that it produces raw ingredients in Xinjiang. The company performs regular visits to the factories and fields and has "confirmed that the tomatoes used in the past were not produced in an environment that violated human rights," said a Kagome representative.
China was the world's top producer of tomatoes in 2019, providing 62.76 million tons, or roughly 35% of global production, according to data from the United Nations Food and Agriculture Organization.
The Xinjiang region in particular is ideal for growing tomatoes given ample amounts of sunlight in the summer and the difference in temperature between day and night.
Investors and human rights groups have been applying pressure on companies over abuses against the Uyghurs. The Interfaith Center on Corporate Responsibility, a U.S. shareholder advocacy group, last month urged 47 companies suspected of using suppliers involved in forced labor in Xinjiang to disclose details about them.
The list of companies includes Google parent Alphabet, Apple, Volkswagen and Fast Retailing, the Japanese parent of the casual clothing chain Uniqlo. Kagome was not named.
For companies that depend on China for a large portion of income, taking a stand against the reported abuses carries the risk of pushback within the world's second-largest economy. At the same time, continuing operations in China unchanged could lead to critics from the West to declare a company is insensitive to human rights issues.
Swedish apparel maker H&M announced in September that it would terminate business with a Chinese yarn producer. The decision came with a cost: since last month, H&M products have been unsearchable on Alibaba Group Holding's online marketplace.
Kagome exports vegetable juice made in Japan, among other products. The Chinese mainland, however, is responsible for only 0.4% of group sales. On top of the fact that Xinjiang tomatoes can be easily substituted, Kagome is in a more comfortable position to cut business dealings with the region.