After sanctions: China boycott against H&M and Nike - shoes burned, stocks plummet

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By: Christiane Kuehl

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In the dispute over forced labor in cotton fields in Xinjiang, fashion companies such as H&M and Nike are suddenly faced with boycotts in China. They had stopped purchasing from Xinjiang because of the allegations.

Brussels/Beijing/Munich - It's boycott time again. As is so often the case when China is in conflict with other countries, state media, individual film and music stars and Internet users are calling for boycotts of goods.

This time, the anger is aimed at the entire West: On Monday, the EU, the USA, Great Britain and Canada simultaneously imposed sanctions on Chinese politicians for cracking down on the Muslim Uyghur minority in the Xinjiang Autonomous Region. Companies that, due to the human rights situation and suspected forced labor in cotton fields in Xinjiang, no longer purchase cotton from the region - and have publicly announced this - are now the focus of attention.

Swedish fashion group Hennes & Mauritz (H&M) was the first to be hit by Chinese boycotts on Wednesday - when someone dug up statements from H&M from Spring 2020. Even then, the company announced that it would no longer buy cotton in Xinjiang. H&M products disappeared from major online shopping portals like Alibaba's Taobao.com from Wednesday. State media accused H&M of "lies" and "ulterior motives". The Youth League of the Chinese Communist Party etched, according to Reuters news agency: "Spreading rumors to boycott Xinjiang cotton while trying to make money in China? Wishful thinking!” H&M China tried to fight back: The group announced that it represented “no political position” and would continue to advocate for long-term investments in China.

China: Credible allegations of forced labor on cotton farms in Xinjiang

Xinjiang is one of the world's most important cotton production areas, which - usually through middlemen - also supplies many Western companies. The US banned imports of cotton and tomatoes from Xinjiang in January. Chemicals used on the world market or polysilicon - a precursor for photovoltaic cells - also come from Xinjiang. The current problems in the fashion industry should therefore soon reach other sectors as well.

In the past two years, not only H&M but also other clothing companies such as Adidas, Nike, Fila, Hugo Boss and Burberry decided to stop sourcing cotton from Xinjiang. Many of them are members of the Better Cotton Initiative. The alliance strives for sustainability in the industry - and set up a task force on working conditions and forced labor at the beginning of 2021.

“Decent work and forced labor are key sustainability issues in cotton production. At BCI, we are committed to further strengthening our capabilities on these issues," said BCI Managing Director Alan McClay at the time. BCI's own studies from 2020 had confirmed an increasing risk of forced labor in cotton farms. Chinese companies are also members of BCI. The Chinese sporting goods manufacturer Anta has now demonstratively withdrawn from the initiative and emphasized that it will continue to buy cotton from Xinjiang.

Boycotts in China have a strong impact on affected companies due to the importance of this huge market. According to a report by the US magazine Business Insider, the boycott sent Nike shares into a nosedive. She lost five percent by Thursday morning alone. Videos had previously circulated on China's social media of people demonstratively burning the brand's "Air Jordan" shoes.

Like its competitor Adidas, Nike is actually very popular in China. In fiscal 2020, China, Taiwan and Hong Kong accounted for 19 percent of Nike brand sales. According to the European Chamber of Commerce in China (EUCCC), European companies are also in a difficult situation due to the "growing politicization of business" in the People's Republic. However, the EUCCC does not comment on individual cases.

China: People's feelings hurt by shopping ban in Xinjiang

In conflict situations with foreign countries, the Chinese Communist Party's propaganda often speaks of "the Chinese people's hurt feelings." So too now: "The Chinese people will not allow some foreigners to eat China's rice while smashing its husks," said a spokeswoman for the Ministry of Foreign Affairs in Beijing. The Chinese market is open to foreign companies. "But we resist malicious attacks on China based on rumors and lies that harm China's interests."

Again and again, foreign companies are urged to make apologies on the basis of the argument that they have hurt the "feelings of the Chinese". For example, the US fashion chain Gap once had to apologize in China for showing an “incorrect” map of China without Taiwan on a T-shirt. In consumer-friendly China, boycotts usually end as quickly as they are launched. But you never know beforehand.

China and EU: sanctions and retaliation

In response to the EU sanctions, China immediately imposed retaliatory sanctions on ten politicians, scientists and think tanks. Counter-sanctions against nine British individuals and organizations followed on Friday. The MPs sanctioned by Beijing would "play an important role in shedding light on the human rights abuses against the Muslim Uyghurs," Prime Minister Boris Johnson said on Twitter, emphasizing his support for those affected.

Despite the similarities in the current sanctions policy, Chancellor Angela Merkel insisted on “a European China policy” on Thursday evening after the EU summit. There will be "no identity" with Washington on this issue, said the Chancellor. "That's perfectly clear." US President Joe Biden attended the summit for the first time. Biden basically wants to stick to a tough course in China policy. This could pose problems for countries like Germany with close economic ties to China. Biden's government condemned the boycott on Friday. "We support companies that ensure that the products we consume are not made through forced labor," State Department spokeswoman Jalina Porter said in Washington on Friday.

Merkel emphasized, however, that it is "not just about economic interests" but also about living "European sovereignty". "That means we naturally have a common set of values ​​with the United States of America (...), but we also have our own interests on the other side." And just as the United States recently held talks with representatives of Beijing in Alaska, "we will also be talking to China." (ck, with dpa and AFP)