European fashion stocks hit by China Xinjiang row

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Fashion retailer H&M is facing a potential boycott in China after a statement the company made a year ago expressing deep concerns over reports of forced labor in Xinjiang stirred a social media storm this week.

What is clear is that diplomatic tensions between China and Western countries have been rising this week.

China foisted sanctions on British lawmakers and lobby groups Friday, widening a chasm between Beijing and Western powers critical of alleged rights violations in Xinjiang.

The sanctions, including travel bans and asset freezes, target senior officials in the north-west region.

Companies like H&M are now finding themselves caught in the middle over the issue.

Nike as well as H&M made the statements a year ago, but the story gained public attention just recently after a pro-government group, the Communist Youth League, posted the remarks on its page on the social media site Weibo.

In the undated statement, H&M said it's "deeply concerned by reports from civil society organizations and media that include accusations of forced labor and discrimination of ethnoreligious minorities".

Chinese netizens don't buy the H&M reply regarding Xinjiang cotton, and some said the reply implies that the firm is not doing wrong, Global Times reported. The outrage has been stoked by comments on platforms like the microblogging site Sina Weibo from celebrities and groups like the Communist Youth League, an influential Communist Party organization.

State media followed the young Communists' lead.

Chinese state media CGTN shared a video on Weibo claiming to show the reality of cotton-picking in Xinjiang, which involved automation and quotes from a Uighur farmer saying that people "fought" to work there for high earnings.

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Award-winning Chinese actress Zhou Dongyu terminated her contract with Burberry as the brand's ambassador, as Burberry has not "clearly and publicly stated its stance on cotton from Xinjiang", her agency said on Thursday.

Muji's comments came after rival H&M's products were dropped on Wednesday by Alibaba Group Holding's e-commerce platform Tmall and other online marketplace operators, including JD.com and Pinduoduo.

"There is never "forced labor" in picking cotton in Xinjiang".

H&M has a long relationship with China, which is important to both sides.

The treatment of the Uyghurs in Xinjiang is an incendiary issue for Beijing.

Mainland China was one of the four largest markets by sales for H&M in 2020, during which the fashion giant operated 445 brick-and-mortar stores across 146 cities in the country.

The sanctions by the US, Britain, Canada, and the European Union were a rare instance of coordinated action against Beijing over human rights violations.

What is Xinjiang and who are the Uighurs?

The Japanese retailer "will ask companies in our supply chain to strive to improve working conditions, as well as to continue to cautiously gather information and take appropriate measures such as due diligence to prevent human rights abuse in the supply chain", the spokesperson said.

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