Daily Management Review

Row Over Forced Labour In China’s Xinjiang Hits European Fashion Brands


A host of European fashion brands such as Adidas, Inditex and H&M faced severe criticism on social media in China over their previous comments and views made over contentious issues in Xinjiang province of China which also resulted in their shares falling at the stock exchange on Thursday.
On Wednesday, H&M was singled out by the Chinese state media and criticised for a statement that was reportedly made the Swedish retailer and quoted in the media in which the company reportedly had said that it was deeply concerned following media reports of accusations of forced labour in Xinjiang and its clarification of not sourcing any raw materials from that Chinese region. Reports about this could not clarify why an old statement of the company on the issue was back in public glare.
According to reports, internet and social media users started to look for statements foreign retailers on Xinjiang that had been made earlier after a call by China to stop foreign brands from tarnishing the image of China.
Social media users in China called other users to stop purchasing Nike’s products while also calling out to support local brands such as Li Ning and Anta. And there were other social media users who simply asked Adidas to leave China.
Earlier this month, Adidas had said that China is set to be its fastest growth market. However after the recent social media attacks, the shares of the company dropped by 4.5 per cent on Thursday as the company became the biggest loser on the German blue chip index DAX.
There was a 2.2 per cent and 1.6 per cent drop in the stock price of H&M and Inditex respectively. Share price of Nike had dropped on Wednesday over the same China issue.
On the other hand, there was a6 per cent hump in the shares of Anta Sports Products Ltd in Hong Kong on Thursday after the company issued a statement that it will continue with its policy of sourcing cotton for its products from the Xinjiang region of China. Li Ning Co's shares surged over 7 per cent.
Following imposing of sanctions on Chinese officials by the European Union, United States, Britain and Canada over alleged human rights abuses by its officials in the western region of Xinjiang, China hit back by denying all such allegations earlier this week in addition to retaliating with its own sanctions against European lawmakers, scholars and institutions.
In a statement issued on Wednesday, H&M said in a conciliatory tone that the company respected its Chinese consumers and affirmed its committed to make long term investments and further business development in China.
No comments or statements on the China issue were available from Nike, Adidas and Inditex.