[Opinion] H&M Faces a Boycott in China – Is This a Beginning of Economic Decoupling?

Author: MOS Ruiqiu

Swedish multinational clothing retailer H&M is facing a boycott within China for not buying cotton produced in Xinjiang. Mainland Chinese media reported that H&M products were removed from all major Chinese e-commerce platforms, including JD and Taobao.

China is H&M’s fourth-biggest market with sales of 2.9 billion Swedish crowns ($339 million) in 12-month through November 2020.

In fact, H&M made this decision and posted this statement online in the past year, expressing that “H&M group is deeply concerned about reports from civil society organizations and media that include accusations of forced labor and discrimination of ethnoreligious minorities in Xinjiang Uyghur Autonomous Region (XUAR).” The statement also stated H&M’s decision that “We do not work with any garment manufacturing factories located in XUAR, and we do not source products from this region.”

While H&M addressed the issue last year, ironically, the boycott against H&M came just a day after the sanctions between the CCP and the western nations. This week, the US, European Union, and Canada imposed coordinated sanctions on CCP’s officials as accused of human rights abuses in Xinjiang. CCP China immediately denied the claims and hit back with sanctions on European officials and organizations. It seems that the H&M incident could be a CCP’s retaliation.

According to the LUDE media report, the “H&M incident” could be the beginning of economic decoupling between CCP China and the western countries.

LUDE explained that multinational companies are not only chasing economic interests, they also follow ethics and industry rules. For example, H&M decided not to buy Xinjiang cotton as H&M followed Better Cotton Initiative’s (BCI) rules. Because BCI has decided to suspend licensing of BCI cotton in XUAR as “it has become increasingly difficult to conduct credible due diligence in the region”; thus, as a BCI member, H&M has to change its supply chains and stop purchasing Xinjiang cotton.

LUDE also analyzed that if more western industries and associates announce rules on regulating economic cooperation with CCP China, then, more multinational corporations have to distance themselves from ties to CCP China in order to keep their bigger western market. It could cause economic decoupling between the CCP Chinese companies and the western companies.

On Thursday morning, H&M’s boycott in China has extended. Meanwhile, Nike, Uniqlo, and Adidas have become new targets on Chinese treading news and social media over their stance to remove Xinjiang cotton from their supply chains.

The situation puts multinational corporations in a sensitive position. Many companies in clothing, footwear, and other industries have to evaluate the benefits and costs regarding the cooperation with companies in CCP China.

Reviewer: Irene

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