On June 9, the U.S. banned imports from China’s Ninestar Corp. as part of the U.S. Uyghur Forced Labor Protection Act (UFLPA). The Act prohibits imports produced in the Xinjiang region of China or by companies on UFLPA Entity List, unless the importer can provide proof no forced labor was involved in production. There are 22 companies currently on the list.
Ninestar, which manufactures the Pantum printer brand, is also a majority owner of Lexmark, which it bought in 2016 when it was known as Apex Technology (read our Analyst Corner coverage of the news). Apex acquired Static Control a year prior, putting both companies under the same ownership.
According to the DHS statement, “Effective June 12, 2023, goods produced by Xinjiang Zhongtai Chemical Co., Ltd. and Ninestar Corporation and eight of its Zhuhai-based subsidiaries will be restricted from entering the United States as a result of the companies’ participation in business practices that target members of persecuted groups, including Uyghur minorities in the PRC.”
The effect on Lexmark remains unclear. They are not named in the statement, and a company spokeswoman told the Wall Street Journal that “Ninestar investors have no operational control” of Lexmark and “We do not anticipate business disruption resulting from the order.” Lexmark also reportedly sent a letter to its dealers reiterating that it operates as an independent entity and has a contingency plan in place to manage any potential disruptions.
On June 22, Lexmark issued a statement saying, “Lexmark has stopped shipments from Ninestar and its affected subsidiaries to the U.S. and will replace Ninestar as a supplier globally.” The statement noted that “only a small portion of Lexmark manufacturing comes from Ninestar and its subsidiaries. We do not anticipate significant business disruption from this order.”
Just days before the ban, Image Star announced it had been selected as Pantum’s authorized distributor in the United States. Following the announcement of the ban, we asked Image Star’s Chief Commercial Officer Phillip Crean about any potential impacts, and he responded as follows:
“We launched our Pantum partnership last week, and we received an enthusiastic response from the channel. Image Star and Pantum have ample inventory in the US to support near-term dealer demand. We are optimistic about the brand’s prospects in the US, and we are working closely with Pantum on options to ensure ongoing product availability.”
Ninestar has also responded to the ban, issuing a statement that says in part (translated from Chinese via Google Translate), “The company has been strictly abiding by the laws and regulations applicable to business development, abide by the applicable standards of international labor protection, fully protect the legitimate rights and interests of workers. The company continues to strive to provide all employees with equal, friendly and positive work atmosphere and career development opportunities. At present, the company is comprehensively assessing the potential impact of this incident on the company and making a good response. The company will continue to pay attention to and follow up the aforementioned related matters, and strictly abide by the relevant rules and timely fulfill the obligation of information disclosure. The Company will issue further announcements if necessary.”
This is a developing story and we will update as warranted.
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