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When Hennes & Mauritz released its quarterly report this week, it was a question everyone wanted answered. How is the company affected by last week’s boycott in China?
But questions were left unanswered and the curious had to settle for a nondescript written statement that the Swedish garment giant is working with its colleagues in China to address “current challenges and find a way forward.”
CEO Helena Helmersson declined to respond to the information that all online purchases with H&M products in China are down or about the effect of the 20 closed stores in the country.
Therefore, China has It has already accomplished part of the purpose of punishing H&M for not using cotton from Xinjiang, and it succeeded in getting the garment giant to conduct internal censorship in an attempt to minimize the damage. Her & Mauritz’s decision was made following reports that members of the Uighur Muslim minority are being forced to work in the fields.
This is not the first time that China has used the power that its huge market gives the country in relation to business. For businesses, this means a good balancing act in which profits in a market with more than a billion people must be weighed against ethical values.
An H&M store in Shanghai.
Photo: Héctor Retamal / AFP
This time, the Communist Party’s youth union started the boycott after unearthing a statement several months ago from the Swedish clothing giant.
Spreading rumors of boycotting Xinjiang cotton while still wanting to make money in China? Hopeful thought !, the youth league wrote on Weibo, the Chinese equivalent of Twitter.
The boycott spread to others Western companies such as Nike, Uniqlo, Burberry and Adidas, which also signed the Better Cotton Initiatives call not to use cotton from Xinjiang. Suddenly, famous Chinese stars showed on social media how they throw away Burberry bags or buy clothes from a Chinese brand with excellent cotton fabric from Xinjiang. H&M disappeared from digital maps, it was not possible to order a taxi for its stores, and its clothing trade was reduced in the large online shopping applications.
The course of events shows that business operations in China are about more than income and expenses. Companies in the world’s second-largest economy must also be prepared to become a pawn in the great political game.
The attack on clothing companies came shortly after the EU, for the first time since the 1989 Tiananmen Square massacre, imposed sanctions on China. The United States, Canada and the United Kingdom soon followed.
China responded with sanctions against various Western politicians, researchers and organizations, and then an attack on companies that have spoken out on the Xinjiang issue.
this is not the first time A critical opinion in China is aimed at attacking foreign companies for political purposes. And China has noted that the tactics often work. After Norwegian salmon was boycotted for several years due to political prisoner Liu Xiaobo receiving the Nobel Peace Prize, Norway finally more or less apologized. SAS airline flies to Taipei and not Taiwan after pressure from China, which believes that Taiwan is part of the People’s Republic.
Police are trying to prevent pictures from being taken outside a shop in Beijing.
Photo: Greg Baker / AFP
This week, companies like Hugo Boss have come out and said they support Xinjiang cotton. Inditex, which owns Zara, has removed a critical statement about Xinjiang from the web. VF Corporation, which owns The North Face, and PVH, which owns Calvin Klein, among others, have done the same.
The challenges of friction between profit and ethics will continue. Next year, Beijing will host the Winter Olympics. Various organizations have called for a boycott of the Games because they believe that China is committing human rights abuses in Xinjiang.
The question for companies is whether should I sponsor the games or not. If they don’t, they run the risk of seizures like the ones Hennes & Mauritz suffered this week. If they sign with their name during the Olympics, they may, on the other hand, receive strong criticism from customers at home who increasingly demand sustainability, both environmentally and socially.
China is also not insensitive to conflicts with Western companies, and this type of attack often subsides after a while. Western products are popular with Chinese consumers, if they disappear it can cause irritation. Furthermore, Western companies employ millions of people and rising unemployment is undesirable, especially as the economy recovers from the COVID-19 pandemic.
