Many western clothing companies, including H&M, Nike and Burberry have suddenly found themselves in hot water amidst a nationalistic backlash in China. The catalyst?—their stance on sourcing cotton from Xinjiang, where forced labor of Uyghurs and other predominantly Muslim minorities has become one of the cogs of the massive apparatus of oppression. The backlash came after the rounds of tit-for-tat sanctions between China and the EU, the US, Canada, and the United Kingdom over abuses in Xinjiang last month.
In its reaction to initial EU and US sanctions related to Xinjiang, China decided to up the ante by targeting not only EU officials but also researchers and NGOs. At the same time, it unleashed the nationalist sentiments targeting Western brands for their supposed complicity in blackening China’s image. While the outrage of the nationalist circles within the Chinese population is genuine, the role of the party apparatus in inflaming and directing outrage is pivotal. While no public disorder incidents were recorded (contrast this with the 2012 protests against Japan), the apparent erasure of H&M from the Chinese internet, including the removal of its stores from maps, attested to the scale of China’s appetite for retribution.
The episode makes the case for increased economic engagement with China, epitomized by the EU’s CAI agreement, on increasingly shaky footing. It is clear that despite the promises of fair treatment, access to the Chinese market can be weaponized at Beijing’s will. Moreover, the flare-up of tensions illustrates the tightrope western companies must walk to accommodate audiences in China and avoid domestic cries of hypocrisy.
A big test in this matter will be the upcoming Olympic Games in Beijing next year. While the pressure from the Western public opinion and politicians to withdraw sponsorship of the games will be immense, it may pale in comparison with the almost sure to a quick death it would mean for the companies’ future in China. The stakes for European companies heavily exposed to China are not small, by any means. As argued by one representative of the German car conglomerate: “Are we prepared to live with a Volkswagen that is half the size of what it is now? That is what this boils down to. That is the debate we need to have.”