Why Chinese are boycotting H&M, Nike, and Adidas?
3 min read
It seems China and controversies these days go hand-in-hand. Let’s break down the recent one!
Before we start, Understand the back-drop of the story. In 2019, China produced 22.4% of total cotton production in the world. Not only production but also consumption of cotton in China has been remarkably high. From its entire production, Xinjiang alone produces 87% which is 5.2Mn tons of cotton. But the twist here is, European Union, UK, USA, Canada have reasons to believe that Xinjiang’s cotton isn’t manufactured by use of advanced technology but is produced by employing forced human labor.
Xinjian lies in the north-west of China. The region is home to Uighur Muslims who face various atrocities at the hands of the Chinese. It is estimated that more than millions of Uighurs have been detained in camps. Chinese Government abuses them and deprives them of basic human rights while employing them in picking up cotton. This wasn’t acceptable to western countries and hence they placed various sanctions on the Chinese Government. However, the Chinese were quick to respond and refuted all the allegations. In-fact China claimed that it is lifting the region out of poverty and building the infrastructure. And claimed, all those camps are not “detention camps” but are “vocational education and training programs”.
Amid the cold war between the Governments, Western Brands like H&M, Nike, Adidas, Hugo Boss stand to lose. The reason being, a year ago, H&M, Nike had issued a statement stating that they were “deeply concerned” about the abuses faced by forced labor employed for picking up the cotton in the region of Xinjiang and that they no longer buy cotton produced in there. Further, Hugo-Boss had gone on record saying in September 2020 that its suppliers are required to prove that they don’t source cotton from Xinjiang.
And all these statements came into the limelight recently when a communist posted a message on microblogging Twitter-like Weibo site, “Spreading rumours to boycott Xinjiang cotton, while also wanting to make money in China? Wishful thinking”. This single message led to an outrageous cry from 1.4Bn Chinese consumers who blamed western brands for being hypocrites and retaliated by boycotting the brands. They were supported by the celebrities who severed ties with big brands and lastly by E-commerce operators who took down H&M products from their platforms.
The effect was H&M, Nike and Adidas saw their market-cap tumbled by $0.7Bn and $10.7Bn respectively in a day.
In-response, H&M, and other brands did come out with clarificatory statements but the damage was done. As per reports, it is believed that if Brands don’t make terms with Chinese consumers then they may see their growth falling by 50% in 5 years as China is one of the biggest markets for all brands.
However, this episode of quadrants comprising of Consumers, Chinese Government, Western Countries and Western Brands leave us with an interesting thought; whether Conglomerates should be passing any comment on the political matter? What do you reckon?
