H&M has spent 15 years setting up shop in China, trying to woo the country’s fast-growing middle class. But this year, it has discovered just how tricky it is to navigate human rights issues in the Chinese supply chain, while also making money from Chinese consumers.
Many Western companies, from H&M to Nike to Burberry, have said they will no longer source materials and manufacturing resources from Xinjiang, a region in China’s northwest that produces a fifth of the world’s cotton, because of reports that China is forcing hundreds of thousands of minorities into manual labor in cotton fields. China has responded with fury: Government spokespeople called these allegations of forced labor “malicious lies,” Chinese brand ambassadors cut ties with these brands, and some local consumers have reportedly vowed to boycott them.
This puts brands that are typically Olympic sponsors, such as Nike, Coca-Cola, General Electric, and Visa, in a tough situation. If they don’t sponsor the games, Beijing will perceive it as a slight. If they do, Western consumers will accuse them of being complicit with China’s crimes against humanity. “Brands can no longer please both China and the West,” says Blanchette. “They’re going to have to pick a side, and there will be fallout whatever they choose.”