Committee Writes to Costco, ADI on Banned Chinese Products

Representative Chris Smtih (R-NJ) and Senator Jeff Merkley (D-OR) of the bicameral Congressional-Executive Commission on China (CECC) sent letters Oct. 31 inquiring about Costco and ADI's selling of banned products with ties to China.

ADI, a wholesale distributor of security, AV and low-voltage products with $3.4 billion of sales through more than 200 locations in 17 countries and Costco, a membership-only retailer that also sells Chinese seafood, came under fire from the committee for selling security products linked to People's Republic of China (PRC).

Costco sells Lorex security products, linked to the Chinese company Dahua. Originally erroneously labeled "Made in the USA," Costsco's products were re-labled "Made in China."

"The sale of Lorex security equipment allows Dahua to profit from the U.S. market even though its equipment is banned from U.S. government use because of security and human rights concerns. Dahua has also been placed on the Department of Commerce’s “Entity List,” because of its role in the PRC’s genocide in the Xinjiang Uyghur Autonomous Region (XUAR)," the letter to Costco read.

The letter noted that many of Costco's competitors halted sales of the products, citing human rights concerns, "making Costco’s continued sale of the equipment all the more puzzling and seemingly in conflict with your company’s stated commitment to the United Nations Guiding Principles on Business and Human Rights and the International Bill of Human Rights."

ADI sells Hikvision and Dahua security devices, with clients in hospitals and schools using their surveillance technology.

"The telecommunication and surveillance equipment manufactured by these companies is a recognized threat to American users as the equipment is manufactured according to standards that could be leveraged by intelligence agencies of the People’s Republic of China (PRC), where private sensitive information of Americans is likely stored," the ADI letter stated.

ADI's website lists the devices as National Defense Authorization Act (NDAA) compliant; the devices are in fact prohibited by the NDAA.

Experts found vulnerabilities in both company's products, allowing for unathorized viewing of footage and meddling with settings.

The Costco letter also raised questions about Costco's seafood supply, which "implicates the supply-chains of Costco and many other retailers and grocery chains in forced labor, including of ethnic Uyghurs and North Koreans."

Read the Costco letter here and the ADI letter here.