H&M Addresses Xinjiang Cotton Controversy
SHANGHAI–H&M put out an official statement Wednesday addressing Xinjiang cotton, with the Swedish retailer saying it hopes to regain the trust and confidence of the Chinese market while remaining a responsible buyer.
“We are working together with our colleagues in China to do everything we can to manage the current challenges and find a way forward,” the Swedish fast fashion group said after bearing the brunt of a government-driven crackdown which resulted in its e-commerce operations blocked in the country.
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“China is a very important market to us and our long-term commitment to the country remains strong,” H&M continued. “Having been present there for more than thirty years, we have witnessed remarkable progress within the Chinese textile industry. Being at the forefront of innovation and technology, China will clearly continue to play an important role in further developing the entire industry. We are proud our suppliers are being part of that development and we want to continue contributing to driving progress together with our partners and stakeholders in the country. We want to be a responsible buyer, in China and elsewhere, and are now building forward-looking strategies and actively working on next steps with regards to material sourcing. Together with all relevant stakeholders, we want to collaborate to be part of the solution and jointly build a more sustainable fashion industry.”
“As a global company, we comply with local laws and regulatory frameworks in all the markets where we operate. Our company values are built on trust, respect, integrity, and dialogue. We wish to focus on our core business and on what we do best – bringing fashion and design to our customers all around the world.”
“We are dedicated to regaining the trust and confidence of our customers, colleagues, and business partners in China. By working together with stakeholders and partners, we believe we can take steps in our joint efforts to develop the fashion industry, as well as serve our customers and act in a respectful way.”
A host of foreign brands were ensnared including Nike, Adidas, Uniqlo, and Burberry, but H&M is the only one to have had its online stores on all the major Chinese e-commerce sites blocked. There are several hypotheses for this. For one, Sweden has significantly less political leverage than countries like the U.S., Germany, and Japan, had Nike, Adidas, or Uniqlo been blocked. Picking on H&M triggers less of a diplomatic crisis. Secondly, the group had not been performing that strongly in the market as it is, with China down 17 percent last year. It’s also a brand that is easily swapped out by consumers for other domestic fast fashion options be that MJStyle or Urban Revivo or the many affordable clothing options on Taobao. While at first Chinese netizens pledged their support of companies like Li Ning and Anta pushing up their share prices in a vow to buy local, in truth, the Chinese consumer is very attached to Nike and Adidas and would find it hard to replace their products.
Mark Tanner, the managing director of China Skinny, pointed out that unlike quarrels of the past this “wasn’t the result of someone sitting in an office in Europe or North America oblivious to geopolitical sensitivities in China,” said Tanner. “The Xinjiang cotton protests – whether justified or not – were the result of conscious concerns from western consumers about what’s happening in the west of China.”
He added, “But as so many brands have learnt, Chinese consumers move on quickly, the luxury brands called out for the Hong Kong t-shirts, etc in 2019 had record years in 2020. The challenge for H&M will be getting back online, which is so important. How long they will be in the cold, will be based on how they deal with it in the short term, but as we saw with the NBA, if it is not handled in a way that China would like, these wounds can take some time to heal with the online platforms, who are singing from Beijing’s hymm sheet more than ever now.”
A Royal Bank of Canada note was also cautiously optimistic. “We have seen brands like Nike and H&M weather similar controversies in the past and maintain relatively strong sales, however short term we think H&M may see a negative impact on its sales in the large and growing Chinese market [which accounts for around] 6 percent of group sales.”
While the west has become increasingly vocal about Xinjiang cotton following multiple reports from the BBC, New York Times and various NGOs telling of mass human rights abuses against the Uyghurs, most Chinese do not believe the allegations or justify the camps as “anti-terrorism” measures.
In a long essay posted on Weibo yesterday, Hung Huang, a fashion and TV personality, criticized the Better Cotton Initiative accusing it of double standards for western versus companies in developing markets.
“In reality it just collects money, mainly third world countries cotton manufacturers’ money. If you don’t pay membership fees, I don’t give you certification. No certification, then European and American brands do not buy your raw materials. But American cotton manufacturers like Boswell are not BCI members and these brands still buy Boswell’s cotton.”
She also claimed that western brands are able to promote their use of BCI-certified cotton even if not actual members of the organization, whereas if Chinese brands declare their use of BCI-certified cotton, the NGO asks them to stop unless they pay to join as certified members. WWD has reached out to BCI for a response.
Hung also said the China fashion industry had for too long followed the west’s standards–be it for mundane issues such as how it uses foreign clothing sizing to its fashion media ,which for the most part are local editions of magazines owned by western groups like Conde Nast or Hearst–and that this incident showed how it needed to develop a strong domestic market and standards.
In the Kearney FDI Confidence Index, an annual ranking of countries and their attractiveness for foreign investment released before the controversy over Xinjiang cotton, China fell from 8th last year to the 12th spot. It previously topped the index from 2002 to 2012, dropped to 12th.
“This result is counterintuitive when it comes to the fast restart of China’s economy last year, long before other economies began to regain momentum,” the report said. “However, it may reflect escalated U.S.–China trade tensions and other policy conflicts along with the exposure of international supply chains to China, which— consistent with Kearney analysis—has led some companies to restructure their supply chains to avoid geopolitical and tariff fallout, among other factors compelling investors to rethink their global supply chains.”
In 2020, unfavorable views of China reached historic highs in countries studied by Pew. Sweden was second only to Japan on the tally, with 85 percent viewing China negatively.
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