Fashion giant H&M sees China sales slump after Xinjiang boycott


Swedish fashion giant H&M has experienced a slump in sales after it became the target of a Chinese boycott in Chinese market, even as its global business returned to profit as the impact of the pandemic eased.

The sales slide came months after the world’s second-largest fashion retailer raised its concerns over alleged human rights abuses against Uyghur Muslims in China’s Xinjiang province.

Its statement, along with several other brands, on the alleged abuses, also led Chinese celebrities to cut ties with the brand and for e-commerce platforms to drop H&M.

H&M’s sales in China were down 23% in the local currency for the second quarter of 2021, compared to the same time last year.

China accounted for around 5% of the retail group’s sales last year and is one of its biggest suppliers.

“With regards to China the situation remains complex. Beyond that we refer to what we have said before,” Chief Executive Helena Helmersson said as H&M quantified for the first time the impact of the boycott.

The fashion retailer reported a stronger-than-expected US$420m (£305m) pre-tax profit for the quarter, after a loss in the same period in 2020.

Several Western brands, including H&M and Nike, recently faced a backlash from Chinese shoppers after the firms expressed concerns about the alleged use of Uyghur forced labour in cotton production.

In March, H&M was removed from the Chinese online retail platform Tmall and domestic phone makers’ app stores after it expressed concerns about the alleged use of Uyghur forced labour in cotton production.

But later in March, H&M said it was dedicated to regaining the trust of customers and partners China and that its commitment to the country remained strong.

Last week, the boss of Nike, which also faced a boycott in China, made a robust defence of the sportswear giant’s business in the country.

Chief executive John Donahoe said “Nike is a brand that is of China and for China” in response to a question about competition from Chinese brands.

Mr. Donahoe made the comments during a discussion on Nike’s fourth quarter earnings, which showed revenues had doubled to a better-than-expected US$12.3bn (£8.8bn) for the three months to the end of March.

In March, a group of Western countries imposed sanctions on officials in China over rights abuses against the Uyghurs.

The sanctions were introduced as a coordinated effort by the European Union, UK, US and Canada.

In December, the BBC published an investigation based on new research showing China was forcing hundreds of thousands of minorities including Uyghurs into manual labour in Xinjiang’s cotton fields. (Source: BBC)