Fashion giant sees sales drop in China after Xinjiang boycott

Swedish fashion giant H&M saw sales fall in China after becoming the target of a boycott there.

H&M was one of the brands to express concern about alleged human rights abuses against Uighur Muslims in China’s Xinjiang province.

The statement prompted celebrities to cut ties with the brand and e-commerce platforms to turn away from H&M.

Sales fell, although H&M’s global business returned to profit as the effects of the pandemic faded.

China accounted for about 5% of the retail group’s sales last year and was one of its biggest suppliers.

In the second quarter of 2021, H&M’s sales in China fell 23% in local currency compared to the same period last year.

“As far as China is concerned, the situation remains complex. Otherwise, we refer to what we have already said,” CEO Helena Helmerson said as H&M quantified the impact of the boycott for the first time.

The world’s second-largest fashion retailer reported a pre-tax profit of $420 million (£305 million) for the past quarter, higher than expected, compared with a loss for the same period in 2020.

Why is H&M being boycotted in China?

Several Western brands, including H&M and Nike, have faced a backlash from Chinese buyers recently after the companies raised concerns about the alleged use of Uighur forced laborers in cotton production.

In March, H&M was removed from the Chinese online retail platform Tmall and the domestic mobile phone maker’s app store after concerns were raised about the alleged use of Uighur forced laborers in cotton production.

Later in March, however, H&M said it was committed to regaining the trust of its Chinese customers and partners and that its commitment to China remained firm.

Last week, the head of Nike, which is also facing a boycott in China, vehemently defended the sporting goods giant’s business in the country.

“Nike is a brand that belongs to China and serves China,” Chief Executive John Donahoe said when asked about competition from Chinese brands.

Donahoe was commenting on Nike’s fourth-quarter results, which showed sales doubled to $12.3bn (£8.8bn) in the three months to the end of March, better than expected.

What is Xinjiang and who are the Uighurs?

Xinjiang is China’s largest region and produces about one-fifth of the world’s cotton. In theory, it is an autonomous region, but in practice, it faces restrictions that have only increased in recent years.

Xinjiang is home to millions of Chinese Uighurs, a Muslim minority that is culturally and ethnically close to Central Asian countries.

The mass migration of Han Chinese (the majority ethnic group in China) to Xinjiang in recent decades has exacerbated tensions with the Uighurs, which have at times turned deadly and violent.

This has led to massive security measures and an extensive state surveillance program that critics say violates the Uyghurs’ human rights. China claims these measures are necessary to combat separatism and terrorism. Uighurs have been held in camps where allegations of torture, forced labor, and sexual abuse have surfaced. China has denied the allegations, claiming that the camps are “re-education” facilities designed to help Uyghurs lift themselves out of poverty.

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