The fallout from statements around Xinjiang sourcing has been fast and furious.
H&M and Nike are facing calls for boycotts on China’s social media after netizens called attention to statements by the brands expressing their concerns over reports of forced labor in the Xinjiang Uyghur Autonomous Region of northwest China.
Days after U.S. and its allies slapped sanctions against several Chinese officials for what they described as “genocide” against Uyghurs, Kazakhs and other Turkic Muslim minorities, other brands have found themselves in the crosshairs, too: Adidas and Uniqlo were starting to trend on Weibo, China’s version of Twitter, on Thursday, with several celebrity spokespeople, such as “Mulan” actress Liu Yifei, announcing they were dropping the brands. In a similar move, Chinese gaming company Tencent scrapped its partnership with Burberry to create skins, or digital fashion, for its popular multiplayer online game “Honor of Kings.“
The tempest began Wednesday after Chinese state media and social-media users started lashing out at H&M, accusing the Swedish retailer of spreading rumors and smearing China’s reputation by cutting ties with cotton suppliers in the region.
In a statement posted on its website in September, H&M said it was “deeply concerned by reports from civil society organizations and media that include accusations of forced labor and discrimination of ethno-religious minorities,” adding that it would no longer procure cotton from the region. According to one report, more than half a million ethnic minority workers are being compelled to pick cotton by hand through a state-sponsored labor transfer and “poverty alleviation” scheme. Xinjiang produces 85 percent of China’s cotton, which in turn accounts for roughly one-fifth of the world’s supply.
ShangdiZhiying_5zn, a user on Weibo posted a screenshot of H&M’s statement, noting that “the company had officially announced to stop using products from Northwest China’s Xinjiang Uygur Autonomous Region.” The post attracted thousands of comments, including “calling H&M to quit the Chinese market now” and “the company’s clothes suck, and I will no longer buy.”
“Spreading rumors to boycott Xinjiang cotton while trying to make money in China? Wishful thinking!” China’s Communist Youth League wrote on Weibo, the nation’s version of Twitter, in a post that garnered hundreds of thousands of “likes” and was forwarded nearly 30,000 times.
Netizens also swarmed H&M’s official Weibo account, excoriating the retailer with comments such as “I heard that you are boycotting Chinese cotton, then I will boycott your products.” By Thursday morning, searches for H&M’s name on China’s biggest e-commerce websites and service apps, such as Alibaba’s Tmall, JD.com and Pinduoduo, produced zero results. H&M’s official Tmall store, which opened to great fanfare in 2018, including a star-studded fashion show in Shanghai, redirected to an error page.
H&M’s celebrity endorsers in China—Huang Xuan and Victoria Song—have announced they’re no longer working with H&M. In a statement, Huang said he and his team “resolutely oppose any attempts to discredit the country‘s human rights efforts.” Song said “national interests supersede everything else, boycott any efforts to sully China’s reputation.”
A statement by Nike, released last year, when allegations of brand complicity in labor-rights abuses first emerged, attracted similar ire Thursday, with topics involving the Just Do It firm among the highest-trending on Weibo. (Nike products were still available on the major e-commerce platforms as of Thursday, however.)
“We are concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR),” Nike had said. “Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region.”
Nike reiterated this stance in its 2020 impact report, published earlier this month, noting that it has strengthened its audit processes and has been conducting ongoing due diligence with its suppliers in China to “identify and assess potential risks related to the employment of Uyghurs, or members of other ethnic minorities” in an effort to “preserve the integrity” of its global supply chain.
Like their H&M counterparts, Nike brand ambassadors Wang Yibo and Tan Songyun have announced the end of their relationships with the Swoosh company. Shanghai-based sneaker resale platform Poizon, known as Dewu in Chinese, said it was removing all Nike products indefinitely.
In a post on Twitter on Thursday morning, Hu Xijin, editor-in-chief of the state-run Global Times newspaper, wrote that the “West suppresses China by sanctioning Xinjiang and forces Western companies to follow suit. Political correctness in the West has stimulated forming a corresponding ‘political correctness’ in China.”
An H&M spokesperson told Sourcing Journal that the brand has “nothing further to share…at this point,” though it had written in a statement on Weibo on Wednesday that it has “always managed our global supply chain in an open and transparent manner, ensuring that our suppliers worldwide comply with our sustainability commitments such as the OECD Guidelines for Responsible Business Conduct and do not represent any political position.”
Nike did not immediately respond to a request for comment, nor did Adidas, Burberry or Uniqlo owner Fast Retailing.
H&M and Nike’s bottom lines will likely be rocked by the boycott, said Di Fan, assistant professor of fashion retail and marketing at the Hong Kong Polytechnic University. Greater China is H&M’s fourth-largest market and was responsible for $1.1 billion in sales in 2020. The region is also one of Nike’s most profitable and fastest-growing, even during the pandemic, where it was able to offset some of the sportswear giant’s losses due to China’s post-lockdown rebound as the rest of the world began sheltering in place. In December, Nike reported that its revenues for its fiscal second quarter grew 24 percent year over year in Greater China, compared with 1 percent in North America.
Losing the online channels would be a major blow to both brands because the “pandemic has made consumers favor online shopping,” Fan said. Companies and individuals in China, too, may be “reluctant to partner with the firms not welcomed by the Chinese government,” he said. Meanwhile, the stock prices of Chinese fashion brands have “greatly advanced” Thursday, with an 8.4 percent boost for Anta Sports and a 10 percent uptick for Li-Ning.
Peter Irwin, a senior program officer of the Uyghur Human Rights Project, an advocacy group in Washington, D.C., said the brewing tempest is a “scare tactic” by the Communist Party regime to induce non-Chinese companies to fall in line. Other apparel purveyors that have spoken out against Uyghur abuses, include Patagonia, which announced last July that it will no longer source materials in Xinjiang. The Fair Labor Association, a workers-rights-focused multi-stakeholder initiative whose roster includes Adidas, Uniqlo owner Fast Retailing, Gildan, Hanesbrands, Lululemon, Nike, Patagonia and Under Armour, has also prohibited its members from sourcing and producing goods, whether directly or indirectly, from Xinjiang.
“[It’s] sending a message to other brands who are ostensibly rejecting the use of forced labor cotton from the Uyghur region,” Irwin said. “China takes this approach in its bilateral relationships with other countries as well. By singling out one with a threat, [it is] signaling to the rest of the world that [it] won’t tolerate criticism.”
And it might be working. On Thursday afternoon, it appeared that PVH Corp., which owns Calvin Klein and Tommy Hilfiger; Zara owner Inditex; and VF Corp., which operates Timberland and The North Face, had removed public statements denouncing forced labor in Xinjiang.
Inditex’s notice, published last year, said the company is aware of a number of reports alleging social and labor malpractice in supply chains involving Uyghurs in Xinjiang and called them “highly concerning.” “Following an internal investigation, we can confirm that Inditex does not have commercial relations with any factory in Xinjiang,” it added. The link to the statement now directs to an error page.
PVH Corp. had said forced labor was a “zero-tolerance issue” and that it was “deeply troubled by the reports of mistreatment and coercive labor practices involving Uyghur and other minorities inside and outside Xinjiang. While our suppliers have assured us that no violations exist within their business operations, we take seriously recent reports on the issue.” The page now reads “requested document not found.”
“We are disturbed by any reports of human rights violations within global supply chains,” VF Corp.’s statement had read. “We have ended, and will continue to end, business relationships with any company that refuses to remediate human rights violations when they occur. In addition, as a global organization, we comply with all laws and regulations applicable to VF everywhere in the world, including those laws that may dictate supply chain activities.” It said that none of VF Corp.’s brands source products or raw materials from Xinjiang and it “prohibit[s] sourcing—directly or indirectly—from XUAR for any product or upstream input.” The link now directs to a “not found” page.
Inditex, PVH Corp. and VF Corp. did not immediately respond to requests for comment.
Other brands have made a more decisive stand amidst the fray. Japanese retailer Muji told the Global Times on Thursday that it has conducted due diligence on all companies in the region that are involved in its supply chain and its stores in China will continue to carry products made with Xinjiang cotton. Asics, the Japanese sporting company, wrote on Weibo that it will continue to purchase Xinjiang cotton and it is “firmly opposed to all actions that discredit and spread rumors about China.” Fila China, which is operated in Greater China by Anta, has also said it will stay the course with purchasing and using cotton from China’s cotton-producing areas, including Xinjiang.
German luxury firm Hugo Boss, wrote on Weibo Thursday that Xinjiang’s long-staple cotton is “one of the best cotton in the world, and we believe that high-quality raw materials will surely realize value. We will continue to purchase and support Xinjiang cotton.” A statement on its official website notes, however, that while the company values its “longstanding relationships with many partners in various locations in China. So far, Hugo Boss has not procured any goods originating in the Xinjiang region from direct suppliers.” A representative from the brand said the latter was its official position, and that it “believe[s] in positive and constructive relationships with all partners, nations and people worldwide.”
The rancor swirling in the online conversations targets not only Western brands but also responsible sourcing non-governmental and multi-stakeholder initiatives such as the Better Cotton Initiative, which pulled out of Xinjiang in October, the Fair Labor Association and the Ethical Trading Initiative, said Kate Larsen, principal of SupplyESChange, a sustainability consultancy in London. Anta, for one, told the Global Times that it is starting the process of quitting the Better Cotton Initiative. Fila China said on Weibo Thursday that it was doing the same.
“Whilst [Western] brands are increasingly expected by emerging European human rights due diligence laws and investor Environmental, Social, Governance expectations to ensure no forced labor and breach of human rights in their supply chains, respect for human rights should also extend to ensuring more support for their China social compliance and other staff and NGO initiative staff,” she said. “Whilst delicate, increasing careful dialogue with Chinese suppliers and even perhaps government official stakeholders, and stressing efforts globally to root out any exploitation may smooth business relationships more than acrimonious accusations.”
Another solution, Irwin said, is for brands like H&M and Nike to join forces and repudiate the use of Uyghur forced labor in a “more concrete” way. “In doing so, you avoid direct attacks because the Chinese government is not in a position to take on the entire fashion industry,” he said.
“Let’s make no mistake, China absolutely needs these companies to buoy its cotton and textile industry, which remains enormously profitable through supply chains.”
The furor is also indicative of the increasingly fraught nature of a global supply chain rife with political volatility, trade tensions and social unrest, said Dr. Sheng Lu, associate professor of fashion and apparel studies at the University of Delaware.
“From Myanmar’s military coup to the rising tensions associated with forced labor concerns, fashion companies may find political risk a more significant challenge in their sourcing decisions this year,” he said. “I won’t be surprised to see a more drastic adjustment of sourcing destinations by fashion brands and retailers should they find no other practical way to mitigate the risks.”