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“Good Cotton” or Good Business?

by Kristin Avenis

After Chinese ‘netizens’ uncovered Nike and H&M’s past statements about labor concerns surrounding the cotton from China’s Xinjiang region, there has been a national attempt to boycott the fashion brands. The concerns came after reports of forced labor and exploitation of the Muslim Uyghur minority came to H&M and Nike executives. They came alongside other western brands’ condemnations on the Chinese government’s generational treatment of the Uyghur community, ultimately placing sanctions on the region. Chinese nationals were infuriated by the accusations and called for the western brands to then leave the Chinese market. Chinese consumers and government officials uphold that these statements are anti-Chinese lies and that their policies adhere to ethical guidelines.

The national outrage has resulted in the loss of Nike and H&M’s Chinese ambassador connections and celebrity partnerships. The event comes at a problematic timing as both Nike and H&M’s revenue has been hit hard by the COVID pandemic and much of their profits were coming from the rebooted Chinese economy. In fact, Nike’s earnings in Greater China exceeded its revenue in the U.S. and Canada “by more than $3 million.”

Many Chinese consumers have begun to support more domestic brands that do promote the use of Xinjiang cotton. The revenue loss on these companies and the general market shift towards more domestic brands have already hit the companies hard, and the prolonged efforts of these consumers can produce much damage to the company’s profits and reputation.

This controversy brings up the question for many corporations – What do you do when sustainability gets in the way of your profits and investments?

photo by Greg Baker via Getty Images

These western companies are trying to do good when they encourage ethical business practices. It is admirable to ensure that your company’s supply chain does little to no unnecessary harm, and I believe in this value. However, it is hard to square off the market losses you face when controversies like this come up. I believe that sustainability is necessary to ensure long-term benefits for companies, so I think that engaging with Xinjiang’s cotton source again will be seen as hypocritical and produce even more backlash. While this is an unfortunate hit to their company, H&M and Nike can work with other sustainable suppliers in China to prove their dedication to the Chinese consumer AND their integrity towards ethical business practices.

ORIGINAL SOURCE:

Yiu, K. (n.d.). Calls for boycotts in China against Nike and H&M over Xinjiang cotton. ABC News. Retrieved March 26, 2021, from https://abcnews.go.com/International/calls-boycotts-china-nike-hm-xinjiang-cotton/story?id=76671154

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