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Why Chinese Regulators Cracked Down on Canada Goose and H&M

China’s regulators have been cracking down on what they described as “misleading” claims by foreign brands amid a growing political tug-a-war between Beijing and its Western counterparts.

Canada Goose got the chop earlier in the summer after the Shanghai Huangpu District Market Supervision and Administration Department fined Xiji (Shanghai) Trading Co., the luxury outerwear purveyor’s Shanghai operating company, 450,000 yuan ($69,700) for alleged “false advertising.” The regulator said that Canada Goose’s claims on Tmall of using “the warmest material from Hutterite,” referring to goose down produced by an ethnoreligious group of the same name, hoodwinked consumers because it pads its jackets with other materials.

“The main filling is ordinary duck down, but it costs tens of thousands of yuan at every turn. Is the Canadian goose down jacket sold for warmth or IQ tax?” an op-ed in the Economic Daily, a newspaper that operates under the auspices of the Central Committee of the Chinese Communist Party, said last week under the headline “Catch the Lying Canada Goose.”

“There is no factual basis for emphasizing the origin of ‘Hutterite’ to demonstrate the warmth of down,” it continued. “Canada Goose probably hasn’t carefully studied China’s laws and ignores changes in the Chinese market. The moon isn’t rounder in foreign countries, and foreign down jackets aren’t warmer.”

A spokesperson for Canada Goose told Sourcing Journal that there was a “misalignment of text” on Tmall and that the error has since been corrected.

Relations between Beijing and Ottawa hit a nadir following the detention of Huawei executive Meng Wanzhou at Vancouver International Airport in December 2018, though a threatened boycott of Canada Goose immediately after the arrest didn’t quite materialize. Instead, the soon-to-be fur-free outfitter saw its bottom line in the country boom, with direct-to-consumer revenues soaring by 188 percent in the first quarter ended June 27.

Still, the rift between the two nations has gotten progressively wider in the wake of suspected human-rights violations in China’s northwestern Xinjiang Uyghur Autonomous Region. In March, Canada joined the European Union, the United States and the United Kingdom in sanctioning several Chinese officials for their purported roles in alleged abuses against Uyghurs, Kazakhs and other Turkic Muslim minorities, including forced labor and extrajudicial detention.

Canada Goose isn’t the only brand facing a state-sanctioned backlash. According to the same Shanghai regulator, H&M was slapped with a 260,000 yuan ($40,300) penalty late last month for similarly “misleading customers” by erroneously claiming a winter jacket sold on Tmall in 2020 was a “limited style in China.” Authorities also confiscated 30,000 yuan ($4,600) in “illegal income” from the sale of “substandard” products.

Chinese regulators have flagged the Swedish retailer’s products before. In June, Chinese customs issued H&M a warning notice for nine batches of children’s underwear that it said had quality and safety risks. H&M products have also previously failed safety tests by the General Administration of Quality Supervision, Inspection and Quarantine, which scrutinize all imported apparel. Still, some observers wonder if the latest knuckle-rappings have anything to do with H&M’s former statement of concern about reports of forced labor in Xinjiang, which fueled a consumer clash and the fast-fashion chain’s erasure from China’s e-commerce platforms.

Unlike with Canada Goose, the Chinese boycott of H&M caused sales of the brand in Mainland China to crater. A mea culpa of sorts in March also did little to bring down the temperature. Analysts at Refinitiv SmartEstimates predict that H&M’s sales for the June-August period, its fiscal third quarter, will be up 14 percent year over year but down 9 percent from 2019. A sales statement from the retailer on Wednesday will precede a full-year earnings report on Sept. 30.

H&M declined to comment.

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