‘It’s a warning shot’: H&M faces backlash in China over year-old stand against forced labour

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The headline in the Beijing Daily was as stark as it was strident: “A full-scale yanking from the shelves for H&M! How many brands out there still hold the delusion of eating Chinese food while smashing the Chinese pot?”

Almost immediately, the digital shelves were empty of the Swedish clothing store’s goods, with the brand vanishing from China’s biggest e-commerce sites, including Taobao and JD.com. A tidal wave of social-media posts condemned H&M for its year-old stand against forced labour and its commitment to avoid the use of products from China’s Xinjiang region, which produces a fifth of the world’s cotton and has been accused of forcing ethnic minorities to pick it by hand.

China denies any abuses, and an H&M statement provoked a vociferous public outcry after it was spread widely across domestic social media this week, with a single post from one account attracting more than 120 million views and commentators jeering H&M’s “suicide” in the Chinese market.

Soon, the online mob turned on other brands that have publicly denounced forced labour in statements about Xinjiang: Nike, Adidas, Fila, Gap, New Balance, Under Armour and others.

It marked one of China’s most stinging rebukes of foreign brands, a retaliatory campaign almost certain to draw financial blood and instill terror into companies that must now choose between ethical choices regarding the use of forced labour and preserving their bottom lines in the vast Chinese market.

“It’s a warning shot, not just to H&M but all companies,” said Shaun Rein, a specialist in consumer behaviour and the founder of the China Market Research Group. “Because what do you do?” Refuse to boycott slave labour, and U.S. and other Western consumers “will boycott you.” Speak out against forced labour in China, and “the Chinese will.”

People in China are “proud of China regaining her position as a superpower, and they don’t like the criticism, because they feel that [it’s] unfounded,” Mr. Rein said.

In a wave of online condemnation, Chinese rapper NineOne removed a song called Puma – a reference to the sportswear brand – from four years ago, saying she opposed any threats to China’s national interests. Another rapper, SeanT, publicly claimed that a “Nike” mention in one of his songs was, in fact, a reference to fake shoes.

Influencers publicly abandoned Western brands and posted images of themselves posing with Chinese alternatives. Domestic sportswear companies Li Ning and Anta saw 10.74-per-cent and 8.4-per-cent share-price gains Thursday.

Chinese government ministries also rushed out condemnations. “Pure and flawless Xinjiang cotton does not allow any forces to discredit it,” said Ministry of Commerce spokesperson Gao Feng.

“The Chinese people are very open and friendly, but they will not be offended,” said Foreign Affairs Ministry spokesperson Hua Chunying. “One thing is clear: The Chinese people will not accept that some companies are trying to do negative things in China while making money here.”

Politically driven anger in China – with state propaganda stoking seething consumer sentiment – has already destroyed profits for Norwegian salmon farmers, South Korean automakers and K-pop artists, Australian vintners and, for a time, Canadian canola producers.

But the far-reaching reprisal against foreign clothiers points to a “huge, massive risk” for foreign brands in China, said Elijah Whaley, the chief marketing officer at ParkLu, a marketing platform for key opinion leaders, or KOLs.

“We’ve already had KOLs that have dropped out in collaboration with Nike and H&M. And I’m sure there’s further fallout to come,” he said. On issues deemed sensitive by Beijing – a list that is growing longer – brands increasingly must decide whether they “are more afraid of Western backlash than they are of Chinese backlash.”

Some foreign brands have openly acknowledged using Uyghur workers. Skechers, for example, sources shoes from a factory where, other workers have told The Globe and Mail, Uyghurs are brought in through government-organized programs and segregated from other employees. Skechers confirmed that the factory, Dongguan Luzhou Shoes, employs Uyghurs but said it conducted two audits last year and came away satisfied.

“Neither of these audits revealed any indications of the use of forced labour, either of Uyghurs or any other ethnic or religious group, nor did the audits raise any other concerns about general labor conditions,” Skechers said in a statement. Uyghurs at the factory “are employed on the same terms and conditions as all other factory employees and in particular with respect to working conditions, pay, promotions, etc.”

The issue of cotton production is particularly muddy.

Chinese authorities have denied allegations of forced labour, saying people sign employment contracts and are paid for their work.

But late last year, the Better Cotton Initiative, a non-profit organization dedicated to improving working conditions and the environmental impact of cotton production, suspended approval of cotton from Xinjiang based on human-rights concerns.

In January, the United States banned all products made with cotton from Xinjiang, with U.S. Customs and Border Protection saying it had found a series of forced labour indicators, including debt bondage, restriction of movement, isolation, intimidation and threats, withholding of wages, and abusive living and working conditions.

The Canadian government has also banned the import of all products produced by forced labour.

During Xinjiang’s harvesting season, fields wave with milky blobs of cotton, which are picked and moved on trucks piled high with the harvest. Authorities have sought to promote mechanization, but 70 per cent of Xinjiang’s cotton fields are still picked by hand, a labour-intensive effort.

In two important cotton-growing counties of Xinjiang’s Aksu prefecture, pickers used to be recruited from other parts of China. In 2020, however, those jobs “were all taken care of by the region,” according to a government report. It said local officials ensured the signing of employment contracts and arranged for recreational rooms and leisure areas for workers in government facilities and called for an end to workers sleeping on the floor, open-air accommodations and substandard drinking water and food. It also said local cadres must “actively carry out ideological education” during the harvest.

In recent years, Chinese authorities have incarcerated large numbers of Uyghurs and other predominantly Muslim groups in Xinjiang for forcible political indoctrination and skills training. The government says those people have graduated, but former detainees and relatives have said people who leave indoctrination camps are regularly forced to sign work contracts.

Chinese authorities, however, accuse critics of lying about the existence of forced labour.

With H&M, China has demonstrated that it will punish them for doing so.

The message from Beijing is “we expect you to make a choice,” with an expectation that companies will “continue to use cotton that might have been produced through forced labour,” said Bjorn Jerden, the director of the Swedish National China Centre at the Swedish Institute of International Affairs. Mr. Jerden was recently sanctioned by China in retaliation for European Union sanctions against senior officials in Xinjiang.

For those companies that don’t fall into line, he said, “what China is saying, basically, is that if you go down that line, it will hurt your bottom line.”

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