Here’s Why H&M And Nike Are Facing Heat In China
The retail giants are facing backlash over their statements.
The Rising Backlash
H&M and Nike are not having their best time in China now.
- Reports said that, by Wednesday night, at least three major Chinese e-commerce platforms — Pinduoduo, JD.com and Tmall — have withdrawn H&M products from sale.
- H&M’s products also vanished from Alibaba’s e-commerce platform Taobao.
- The popular Chinese actor Wang Yibo terminated his contract as a representative for Nike.
- Another Chinese actor, Tan Songyum also announced that she was terminating her contract with Nike.
Why This Happened?
This backlash comes after a recent social media post by the Communist Youth League, a Chinese Communist Party group said, “Spreading rumours to boycott Xinjiang cotton, while also wanting to make money in China? Wishful thinking!”. This post is what lead to many Chinese calling for boycotts, celebrities cutting ties and e-commerce platforms dropping H&M.
So, did H&M actually boycott Xinjiang cotton?
Here is the answer to that: Last year, H&M stated that it will not be sourcing cotton from Xinjiang and was ending its relationship with a Chinese yarn producer over “forced labour” accusations involving minorities in the region. The company made this statement after a report by think tank the Australian Strategic Policy Institute pointed to H&M as a beneficiary of a forced labour transfer programme.
Nike has made a similar statement which said, “We are concerned about reports of forced labor in, and connected to, the Xinjiang Uighur Autonomous Region (XUAR)”. The statement also 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.”
Why are these statements resurfacing now?
The answer: Might be because of the announcement of Western sanctions. These sanctions were announced a couple of days back and were introduced as a coordinated effort by the European Union, UK, US and Canada. The sanctions include travel bans as well as asset freezes, and they target senior officials in Xinjiang who have been accused of serious human rights violations against Uighur Muslims.
To calm down the backlash, H&M issued a statement saying “[This] does not represent any political position … H&M Group always respects Chinese consumers. We are committed to long-term investment and development in China.” However, it might not be enough to calm down the fire that is spread on social media.
A huge wave of backlash has been seen against both Nike and H&M in social media, with several calls for people to boycott their products. The hashtag “I support Xinjiang cotton” was a trending topic on Chinese social media site Weibo with over 1.8 billion views.
So, many Chinese people are mad because H&M, Nike and other retail giants do business in China, and they spread false information over the Chinese government’s actions towards Uighur Muslims. This is a difficult time for the retailers, and we have to wait and see how they are going to handle this complicated situation.
Head to moneyguru’s Insight section to stay updated on all major financial news updates of the day!