H&M aims to ‘regain trust in China’ after cotton backlash

H&M is hoping to regain customer trust after recent backlash.

31 March 2021 | Teddy Ng and Finbarr Bermingham | South China Morning Post (original link)

Embattled Swedish fashion chain H&M said it wanted to regain the trust of customers in China – a week into a backlash in mainland China for its refusal to use Xinjiang cotton.

In a statement on Wednesday, the company stressed the importance of the Chinese market and said it was working on strategies for material sourcing.

“China is a very important market to us and our long-term commitment to the country remains strong,” it said.

“We are working together with our colleagues in China to do everything we can to manage the current challenges and find a way forward.

“We are dedicated to regaining the trust and confidence of our customers, colleagues, and business partners in China.”

H&M said it wanted to be a responsible buyer in China and elsewhere, and “are now building forward-looking strategies and actively working on next steps with regards to material sourcing”.

“By working together with stakeholders and partners, we believe we can take steps in our joint efforts to develop the fashion industry, as well as serve our customers and act in a respectful way,” it said.

The statement did not refer to Xinjiang, but the commitment comes as the company faces a storm of criticism from customers and Chinese officials over its decision to not source cotton from the region over concerns about forced labour.

H&M announced the decision in a statement in 2020 but it only began attracting widespread attention in China after the European Union, the United States, Canada and Britain imposed sanctions on Chinese officials and entities over alleged human rights violations in Xinjiang.Other multinational clothing companies, including Nike and Adidas, released similar corporate statements last year.A number of celebrities, including Hong Kong Canto-pop singer Eason Chan Yik-shun, have since cut ties with those companies.

On Monday, Xinjiang government spokesman Xu Guixiang said multinational companies should realise that wielding sanctions against Xinjiang would only hurt the businesses themselves.

But internet users on the mainland appeared to be unconvinced by the H&M statement.

“I will continue to resolutely resist Nike, Adidas, H&M, no matter what kind of statement you make,” one commenter said on Weibo.

Another said: “Apology and sincerity not seen!”

H&M reported an expected loss in the first quarter, swinging to a net loss of US$122 million in the December to February period.

The backlash in China resulted in the brand being removed from major e-commerce sites in China and its store locations vanishing from some digital maps.

Caught between sanctions and boycotts, foreign businesses were finding their operations in China increasingly politicised, according to observers.

Patricia Jurewicz, founder of the not-for-profit Responsible Sourcing Network, said the past two weeks had been a time of huge anxiety for brands. In the case of H&M, there was surprise at the delayed reaction to the brand’s declaration on Xinjiang cotton, given that it was made months ago.

“Companies are now trying to lay low and not say anything. A number of companies have changed their policies on their websites to avoid being next in this,” Jurewicz said.

“The question companies are facing is what is more important: that you stand up to human rights abuses, or selling to the Chinese market and making money? It is a really egregious situation with the abuses on one hand and governments mandating they can’t buy from there.”

Eddie Jernigan, chief executive of JG Global, a cotton and textile supply chain management company, said the industry had “reached a tipping point” from which there was no return.

“Things started changing over the last 12 months, starting from when US Customs and Border Protection implemented cotton bans. This forced everyone to come clean about where they were sourcing in China – that is the tipping point that shook everything up,” Jernigan said.

Analysts suggest that this might mark the end of a balancing act in which Western brands could tell their customer bases back in Europe and the United States that they were sourcing responsibly in China, sell freely to China’s 1.4 billion consumer market and make few or minor changes to their business models in the process.

“Now we’re going through this PR disaster and boycott of Western brands, does this lead to these companies having to change everything?” Jernigan said.

Additional reporting by Amber Wang


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