Shockingly, it’s not pronounced “ham” (Source: Sean Gallup / Getty Images)
The allure of China’s market — which boasts 400m+ middle-class citizens — is nearly impossible for any global corporation to ignore.
But selling in China isn’t always an easy affair, particularly when geopolitics gets in the way.
On March 22, the EU, US, UK, and Canada announced coordinated sanctions for individuals involved with forced labor camps in China’s Xinjiang region, home to the Uyghur Muslim minority population.
Xinjiang is home to 90% of the country’s cotton production
According to The Economist, the $12B industry is immaterial to China’s GDP (0.1%). However, China works with many global fashion brands and is responsible for ~40% of the world’s textile exports.
Decrying the labor practices in the region, the previous US administration placed a wholesale ban on Xinjiang cotton.
Feeling Western pressure, Swedish fast-fashion retailer H&M had issued a statement on Xinjiang prior to the sanctions… making it an easy retaliation target.
H&M’s clothes were blocked from ecommerce apps…
… landlords canceled its leases, and the retailer received opprobrium from internet trolls. Per The Economist, 5% of H&M’s global sales (~$1B) could be lost if China shuts it out.
Nike and Adidas are facing similar boycotts for previous statements about Xinjiang.
There is no easy solution
Fashion brands can’t guarantee that their textiles are free of forced labor, namely because Chinese governments won’t allow on-the-ground audits.
The renewable energy industry may soon face similar Xinjiang questions: ~50% of the world’s polysilicon for solar panels come from the region.