Shares Slide on Demand Concerns
An affiliate of the leading Chinese Communist Party — Communist Youth League — has called for a boycott of certain Western companies, including Nike, H&M, and Adidas, for their statements related to the Xinjiang region.
Weibo, China’s version of Twitter, hosted a huge number of comments attacking the allegations and calling for a boycott of their products. This issue quickly became one of the hottest topics on the popular social network.
Communist Youth League activists used a statement from Nike, which was reportedly released months ago, to fuel the social media backlash.
“We are concerned about reports of forced labor in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR),” Nike said in the statement.
“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.”
Numerous human rights organizations had been calling for years for Western countries to impose sanctions on China for their persecution of the minority Uyghur population in China's Xinjiang region. According to Human Rights Watch, the Muslim minorities are held for months in unlawful facilities.
A spokesperson for China’s Ministry of Commerce called these accusations “groundless” and asked Western companies to respect market rules and correct mistakes.
Multiple Chinese celebrities reportedly supported the backlash, with popular actor Wang Yibo having reportedly terminated his contract as a Nike representative. Worldwide fashion brands are now facing a huge dilemma — to continue expressing concerns over the treatment of Uyghur people or retreat to please the huge customer base in greater China.
H&M, which operates over 500 stores in China, has obviously opted for the latter, with the Swedish fashion business already removing their statement from the website and publishing a new one to say:
"[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.”
The world’s second-biggest clothing company has been removed from major ecommerce stores, including Alibaba and JD.com, in China, following the resurfacing of their previous statements concerning the Xinjiang region.
A few days ago, new sanctions against Chinese officials were introduced by the United States (US), European Union (EU), Canada, and the United Kingdom (UK) over the alleged genocide that took place in the Xinjiang region.
“The evidence, including from the Chinese Government's own documents, satellite imagery, and eyewitness testimony is overwhelming,” the joint statement reads.
Shares of Nike and H&M are trading more than 4% in the red as China is one of the biggest and most important regions for these businesses.
H&M and Nike are among the companies facing serious criticism in China over their previous statements on the government’s alleged treatment of Muslim minorities in the Xinjiang region.