The Trading Standards Institute has said Edinburgh Woollen Mill could be in breach of retail regulations.
An investigation claimed to show some of the cashmere jumpers sold by the city-based clothing giant are made in a factory where 80 of the workers are from the military-run state. Edinburgh Woollen Mill insisted the labels are “factually correct” but Trading Standards said the firm “could be in breach of the regulations” to protect consumers from unfair trading.
Question were also raised over what happens to North Korean workers’ wages.
Edinburgh Woollen Mill has around 500 outlets across the UK which sell garments including cashmere jumpers.
Some of these are labelled James Pringle and “Designed in Scotland”, which are produced by a company based in Mongolia called Eermel.
North Korean workers are looked after by the producer and live in a dormitory outside the capital of Ulan Bator.
Workers have showers and televisions, however the firm said their wages are paid to the North Korean government.
Eermel external director Bayar said: “We are transferring the money to the account of the light industry of North Korea. How they split the salary – we don’t know.”
David Woods, a manager at the Eermel factory who has recently left the company, said: “The North Korean workers fit in very well with Mongolian people, they’re hard workers, they don’t complain and they get stuck in.”
The claims were made in a BBC investigation.
Edinburgh Woollen Mill confirmed that some goods come from the factory in Mongolia but claimed Eermel had said “no funds are paid to North Korea or any North Korean agency”.
Mr Woods showed James Pringle cashmere jumpers complete with “Designed in Scotland” labels in Mongolia.
Although there is no legal requirement to label clothes with the country where they are made, it is an offence to mislead customers as to where the product is made.
The Trading Standards Institute said labelling a jumper as “Designed in Scotland” but not saying where and how it had been made “could be in breach of the regulations”.