Nike, Adidas, Burberry, Uniqlo ensnared in Xinjiang cotton controversy

Update, March 26:

In the last 24 hours, many brands have found themselves in the same boat as H&M: at odds with public sentiment in China stemming from their participation in the industry body BCI (Better Cotton Initiative), which has been vocal about labour practices in the Xinjiang Uyghur Autonomous Region (XUAR). 

A sampling of the latest events:

• More than 40 Chinese celebrities have signaled that they are ending their contracts with brands including H&M, Adidas, Nike, Uniqlo, Converse, CK, Puma, New Balance, Tommy Hilfiger, Lacoste and Burberry.
• FILA China declared that it would exit BCI and, in a statement on Weibo, stated that it is using cotton sourced from China, including Xinjiang.
• Chinese brand Anta, which announced its exit from BCI yesterday (as reported in our original story below) has seen its stock continue to rise, along with that of China-based sportswear brand Li Ning.
• Honor of Kings, China’s No.1 multiplayer online battle game, developed by Tencent, ended a partnership with Burberry.

China's Ministry of Commerce weighed in via an official statement Thursday, saying, “China firmly opposes any sanction imposed on individuals or entities based on the pretext of so-called human rights issues in the Xinjiang Uygur autonomous region, and companies involved should avoid politicizing business issues.” 

Wang Yibo (left) and Seven Tan (Tan Songyun, right) cut ties with Nike by sharing images reading "I support Xinjiang cotton".
 

Original article published March 25, under the headline 'H&M boycott in China intensifies over Xinjiang supply issue':

A nationwide boycott of H&M goods is underway in China as social-media users condemn the brand and its products abruptly disappear from major ecommerce platforms.

Yesterday, PRWeek reported that Chinese users on social media were calling for a boycott of H&M goods. The backlash follows an eight-month-old statement produced by the fast-fashion giant. That statement addressed accusations of forced labour and discrimination of ethnic minorities in the Xinjiang Uyghur Autonomous Region (XUAR).

"We strictly prohibit any type of forced labour in our supply chain, regardless of the country or region," the statement said. "If we discover and verify a case of forced labour at a supplier we work with, we will take immediate action and, as an ultimate consequence, look to terminate the business relationship."

The statement surfaced on social media yesterday and sparked an online storm of opinions. Comments on Weibo included "get out of Chinese market", "the company's clothes sucks, and I will no longer buy", and "I heard that you are boycotting Chinese cotton, then I will boycott your products".

Chinese actor Huang Xuan has also terminated his relationship with the brand, according to reports. On his Weibo account, he posted a statement that said he was "firmly opposed to any attempt to discredit the country". Those calling for a boycott claim that international sanctions against China are unjustified and based on "biased reports in foreign media and from international human rights campaigners".

In a major move, H&M products also appeared to have been removed overnight from major Chinese e-commerce platforms including Tmall, JD, Taobao and Pinduoduo.

A search for H&M products on Tmall this morning produces zero results.

H&M's statement was a response to a report from the Australian Strategic Policy Institute, which accused the brand of using cotton from Xinjiang cotton yarn maker Huafu Fashion. Last year, H&M said its suppliers have stopped new cotton purchases from Xinjiang because of the Better Cotton Initiative's decision to discontinue licensing cotton from the region.

"In addition, we have conducted an inquiry at all the garment manufacturing factories we work with in China aiming to ensure that they are not employing workers from XUAR through what is reported on as labour transfer programmes or employment schemes where forced labour is an increased risk," the brand said in its statement.

China is H&M's fourth largest market globally with 505 owned physical stores. 

Nike and Uniqlo next?

Nike, which last year gained US$6.7 billion in revenue from Greater China, is also getting pushback on a recent statement it made confirming its dissociation with textiles spun from Xinjiang.

The brand acknowledged that it has been conducting due diligence with regards to suppliers in China and addressed potential forced labour risks related to the employment of Uyghurs and other ethnic minorities in XUAR.

The statement also claimed that Nike had not lobbied against the Uyghur Forced Labor Prevention Act. This is in contrary to reports last year that Nike was among a number of large MNCs that were lobbying against the act, which would effectively ban imported goods associated with labour from Xinjiang. Last year, human rights groups and reports cited several brands including Nike, Coca-Cola, Adidas, Calvin Klein and Tommy Hilfiger as companies suspected to be linked to forced labour in XUAR. Campaign Asia-Pacific has reached out to Nike China for comment.

Both Nike and H&M are members of the aforementioned Better Cotton Initiative (BCI), a non-profit governance group that promotes better standards in cotton farming and practices. BCI has been vocal against labour practices in XUAR, and plays a role in holding retail brands accountable for their supply chains.

Uniqlo, Adidas, Gap, and Levi Strauss are also among the fashion retail brands that have signed onto the BCI principles and criteria. On Weibo, H&M, Nike and Uniqlo dominated the top three trending topics this morning (see screenshot below).

State-owned media Global Times reported that Chinese sportswear maker Anta Sports will be quitting BCI and will continue to use cotton produced from XUAR. On that news, Akta's stock has risen more than 7% on the Hong Kong exchange this morning. BCI has 2,100 members worldwide, approximately 500 of which are from China.

It’s also worth noting that the flurry of boycotts comes just a week after the US, EU, UK and Canada imposed sanctions against a number of Chinese officials over suspected human rights abuses in the Xinjiang region. US Secretary of State Antony Blinken said last week: “Amid growing international condemnation, the PRC continues to commit genocide and crimes against humanity in Xinjiang.”

More updates to follow.