H&M Should Lay Low Until China Anger Blows Over, EU Chamber Says

Chinese anger at Hennes & Mauritz AB and other brands who refuse to use cotton from Xinjiang will pass but businesses will continue to face risks from political issues, the head of the European Union Chamber of Commerce in China said.

“You really have to just let it happen, lay low and see when it blows over and then come back again,” Joerg Wuttke told Bloomberg TV on Tuesday. “Chinese customers love European products and brands, so I guess it will be the same for textiles.”

Chinese social-media users started a call for a boycott of H&M last week after discovering an undated statement from the company saying it would not use cotton from the far western region of Xinjiang over forced-labor concerns.

The retailer was criticized by the Communist Youth League and the People’s Liberation Army, and outlets vanished from Apple Maps and Baidu Maps searches. Some of the H&M’s stores in smaller cities were closed by landlords.

Other Western brands like Nike Inc. and Adidas AG have drawn consumer ire for their pledges not to use Xinjiang cotton. The region supplies around 80% of the material for China.

The U.S. and some other Western nations accuse China of interning up to 1 million Muslim Uyghurs in work camps and forcing some 500,000 children into boarding schools.

China denies the allegations, saying it is combating religious extremism and offering jobs and education to improve lives. Chinese Foreign Ministry spokeswoman Hua Chunying sidestepped a question over whether the government was behind boycotts of H&M and other companies during a regular press briefing on Tuesday in Beijing.

“Some Chinese netizens have expressed their anger over Xinjiang cotton, including on H&M,” she said. “Chinese consumers have the freedom of choice.”

A long list of foreign companies have gotten into trouble in China for offending the ruling Communist Party’s political sensibilities. State broadcaster China Central Television stopped showing National Basketball Association games for over a year because an executive from one team tweeted support for protesters in Hong Kong.

China hit the European Union with retaliatory sanctions over the Xinjiang issue last week. It punished 10 individuals and four entities in the EU, including the Mercator Institute of China Studies of which Wuttke is a board member.

Wuttke said Tuesday that while the China market “saved” many companies last year as the Asian nation’s economy rebounded from the coronavirus pandemic, “at the same time there’s this kind of political pressure.”

The backlash could damage Beijing in the long run given “it jeopardizes Chinese jobs,” he said. “China definitely doesn’t come out of this looking very pretty.”

©2021 Bloomberg L.P.

BQ Install

Bloomberg Quint

Add BloombergQuint App to Home screen.