Global fashion brands are facing an increasingly tough choice in China as a state-back campaign has fueled boycott calls against companies that have pledged to stop using cotton from Xinjiang.
After the Communist Youth League set off a wave of online attacks on H&M on Wednesday, other global brands, including Nike, Adidas, and Zara, have also come under fire, as Chinese nationalists question their statements distancing themselves from allegations of rights abuse in Xinjiang.
The Communist Party has used the buying power of the country’s consumers to pressure foreign companies into toeing the official line. This puts global businesses in an awkward spot, as they struggle to please both the Chinese government and growing concerns about alleged human rights abuse in China among Western governments and consumers.
“At the end of the day, they want to make money,” said Nick Marro, a global trade analyst with the Economist Intelligence Unit. “They have pressure on both sides. They have the Chinese market, but at the same time, for your domestic consumers back in your home market, you don’t want to portray yourself as being on the wrong side of history.”
Accusations of abuse against Muslim minorities in Xinjiang, including a mass internment program, forced assimilation and forced labor, have come under public scrutiny worldwide. The Chinese government says the allegations were made up by anti-China forces, an argument accepted by many of its citizens.
Many brands that are currently facing boycott calls in China depend heavily on the country’s growing consumer market.
For Nike, sales in Greater China accounted for about 23 percent of its total revenues from December to February this year. The contribution from Greater China, which includes the semi-autonomous Chinese territory of Hong Kong and self-ruled Taiwan, was about 19 percent in the fiscal year ended in May 2020.
Adidas had about 24 percent of its net sales coming from Greater China in 2020, according to its financial report.
Fast-fashion brand Zara had 179 stores in mainland China by January 2020, the largest number outside of its home market of Spain. On Thursday, a statement from Zara’s parent company Inditex on its concerns over supply chains in Xinjiang was no longer accessible. Inditex did not respond to a request for comment.
On Thursday, a number of Chinese sportswear and apparel brands saw their stock prices soaring, as investors expected them to profit from the campaign against their foreign competitors.
While most of the statements against forced labor were made last year, state media started sharing them days after the United States, the European Union, Britain, and Canada imposed new sanctions on Chinese officials for rights abuses in Xinjiang.
Nick Marro, with the Economist Intelligence Unit, said many brands would try to keep their heads low at the moment, hoping the Chinese state would put an end to the social media storm soon.
He said the Chinese government was also facing a dilemma, between pressuring foreign corporations to follow its line and presenting itself as a friendly partner to the businesses.
On Thursday, China’s Ministry of Commerce said it hoped companies would correct their wrongdoings, and welcomed them to make investments in Xinjiang.
Some foreign companies that got caught in nationalist furies in the past have managed to come back. The broadcast of NBA games was stopped in 2019 after a Houston Rockets executive tweeted support for Hong Kong protesters, prompting online outrage in mainland China.
Although the league suffered significant losses, Chinese state media eventually resumed airing its games a year later.
On Thursday, some internet users have pointed out that Nike, while being shamed by state media, remains a sponsor for China’s national basketball as well as tracker and field teams.
Some foreign brands, however, have decided to make it more clear that they do use cotton produced in Xinjiang. On Thursday, MUJI told state-run tabloid Global Times that it did not boycott cotton from the region.
The brand’s parent company Ryohin Keikaku Co. did not respond to a request for comment. On its flagship store on popular shopping site Taobao, MUJI marks a number of shirts as made by “Xinjiang cotton.”
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