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Multinationals are taking a cautious path in a boycott of China

Multinationals are taking a cautious path in a boycott of China

A backlash in China against foreign brands that have sought to move away from “forced labor” in Xinjiang cotton will drag multinationals into long-standing diplomatic threats as Beijing demands a rejection of allegations by the global garment industry.

Online calls, aired by state media, for this boycotts Hennes and Mauritz, Nike, Adidas, Burberry, Uniqlo and Zara have put pressure on brands to step down in a diplomatic row between Beijing and Western governments over alleged rights violations in the region. Chinese raw cotton.

The campaign was launched in one day by the United Kingdom, the United States, the EU and Canada. coordinated punishments More than 1m of Xinjiang officials have arrested Uighurs, Kazakhs and other Muslims in “re-education” camps. China denies allegations of abuse.

Unlike sometimes previous nationalist shouts directed at foreign groups, multinationals do not want to apologize and agree with China’s demands. Doing so could lead to criticism from politicians and human rights groups that Beijing is responsible for using “forced labor” in the region.

UBS analyst Zuzanna Pusz said the boycott was more serious than the crisis of the past, as brands were “caught up in something that is political.”

“If a brand makes a mistake in choosing communications or influencer, it can apologize and do things right. Trying to do things right here would do things wrong, ”he said, with many Western groups committed to following the guidelines of the Better Cotton Initiative, an ethical trade group that includes more than 2,000 Geneva-based brands. Members, including Nike and H&M.

Being a member is still a responsibility in China, after the state media accused the BCI of “staining” Xinjiang and spreading its rejection of its cotton. The nonprofit group stopped giving cotton in Xinjiang last year, citing “persistent allegations of forced labor and human rights violations in Xinjiang.”

China’s state-run CCTV television channel offered an interview to BCI representatives in Shanghai last week, accusing the Geneva headquarters of declaring that there was no evidence of “forced labor” in Xinjiang.

Mei Xinyu, a researcher linked to the Chinese Ministry of Commerce, told the Financial Times that the BCI now believes that it is “the only step towards sanctions against the Chinese government.” The team should reform its verification work to focus on technical standards and “move away from politicized actions,” he said.

BCI declined to comment.

Previous boycotts in China, such as those of Dolce & Gabbana after racist advertising campaigns, have been targeted at single companies, but the BCI has withdrawn brands that wanted to change the supply chain of the Xinjiang cotton label to change supply chains. .

H&M, which has gained the most weight in the last campaign, is not in the searches of China’s Alibaba T-mall and JD.com’s largest e-commerce platforms. Local media reported that some of the Swedish group’s stores have closed, although major cities remain open.

Dozens of brand ambassadors have ended their representation of foreign brands caught in boycotts, although so far Nike and Adidas have maintained sponsorship deals with major Chinese sports teams.

Many garment groups no longer realized that Xinjiang cotton would no longer appear on supply chains, partly due to a lack of oversight of where clothing components come from.

Cotton will change hands “at least” six or seven times from harvest to textile, sometimes passing through different countries, according to the BCI.

H&M has taken the brunt of the campaign and has not been on the searches of Alibaba T-mall and JD.com on China’s largest e-commerce platforms, with some stores reported to have closed their doors

The owner of the Bangladesh garment factory, which he did not want to name, said it was “extremely difficult” to ensure that cotton was not in Xinjiang.

“Almost all brands tell their suppliers that they“ don’t buy Xinjiang cotton, ”but the whole problem is traceability,” he added, adding that most garment manufacturers have no choice but to rely on suppliers for assurances about their cotton origin.

The Marks have sent a confused message about their attitude towards Xinjiang, and some groups that seemed to have internal disagreements issued conflicting statements in Chinese and English.

Weibo’s official Hugo Boss account, China’s microblog, said last week that the brand would “buy and accept” Xinjiang cotton, and its website said the company “has not acquired any goods originating in the Xinjiang region from direct suppliers”. Weibo’s post was later deleted saying the company was “without permission”.

Luxury bands like Hugo Boss and Burberry are much more exposed. China is the fourth largest market for H&M, but accounts for only 5% of revenue. Chinese consumers accounted for about 40% of the 281 billion euros spent on luxury goods in the year before the pandemic, but boosted 80% of growth, according to Jefferies.

Still, Greater China is Nike’s third-largest market: by May 2020, for the sixth year in a row, it had achieved double-digit revenue growth in the region, with sales of $ 6.7 billion.

Recently, China’s economic recovery has made the country a clear point for Western brands as demand in Europe and North America remains weak.

H&M declined to comment and Burberry did not respond to a request for response. There is, however, an attempt to soften the influence of the earlier statements by the brands. H&M, for example, has updated the original statement, removing lines that would “reduce exposure” to Xinjiang.

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