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Who Is The Winner of China’s Boycott Fanaticism?

Uyghurs in a labor camp. President Trump banned cotton import from Xinjiang in allegations of forced labor
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ChinaScope

{Editor’s Notes: The Chinese Communist Party’s (CCP’s) genocide of the Uyghurs and other ethnic minority groups there has caught the world’s attention. Many Western companies announced that they would not use Xinjiang cotton due to the persecution and the slave labor involved in the cotton production. Recently the CCP organized a nationwide boycott of these Western companies’ products, in the hope of using the China market to force the foreign companies to give up their principles and yield to the CCP. The timing of the boycott is interesting. It has to do with the sanctions the EU and the U.S. imposed. China wants to flex its muscles in front of world and its people, but it obviously turned out to be a self-defeating measure. The following summarizes the CCP’s cotton fight.  }

Led by the Communist Youth League and the Global Times, netizens across China launched a boycott of western clothing brands over the Xinjiang cotton issue and put up a “patriotic show” to fight against the “bullying behavior” from the west. However, only a few days later, lured by deep discounted deals, Chinese consumers stormed the retail stores of the clothing brands that were still under boycott. Hu Xijin, Chief Editor of Global Times which usually has a strong anti-U.S. sentiment, publicly called on the state media to tone down their boycott narratives. Statistical data also suggests the boycott could cost China hundreds of billions of dollars in losses in textile exports. It seems that Beijing decided to retreat after it incited the nationwide patriotic boycott sentiment.

On March 24, days after China was caught in the sanction wars with the U.S. and the EU, the CCP’s Communist Youth League used its official weibo (microblog) account to attack H&M, a Swedish clothing company, for a statement H&M made in September 2020. The statement expressed concerns over the forced labor and discrimination against ethnic minorities in the Xinjiang Uyghur Autonomous Region and that H&M would consequently terminate its business contract with cotton suppliers and manufacturers from the Xinjiang region. Prior to the H&M statement, Better Cotton Initiative (BCI), a non-profit, governance organization that promotes better standards in cotton farming and practices across 21 countries, issued a statement that they would discontinue activities in the northern western region in China where millions of Uyghurs are subject to religious persecution and forced labor. In the Communist Youth League post, it said, “It is H& M’s wishful thinking that they can make false accusations and boycott Xinjiang cotton while continuing to make money in China.” The post received hundreds of thousands in support from the netizens online. On March 25, “Support Xinjiang Cotton” was the top trending topic in China.

On March 24, e-commerce and online app stores in China, including JD.com, Tmall, Pinduoduo, Huawei, Xiaomi, and VIVO, removed H&M products from their listings.

Starting March 24, close to 50 Chinese TV and movie celebrities, including some from Hong Kong and Taiwan, publicly denounced the Western companies’ ban on Xinjiang cotton. Celebrities hired by those companies as their brand spokespersons in China announced the termination of their contracts with the respective companies. As a result many of them may have to pay a hefty contract termination penalty.

On March 25, the state media CCTVPeople’s Daily, and Phoenix TV, slammed H&M. They published a list of other international clothing brands which are members of the BCI and have also made similar statements to ban Xinjiang cotton, asking the public to boycott them. The list includes companies such as Uniqlo, Nike, Adidas, GAP, FILA, New Balance, Zara, Under Armour, Adidas, Burberry, Puma, and Tommy Hilfiger.

On the same day, Chinese Foreign Ministry spokesperson Hua Chunying said during a press conference, “The Chinese market is here… we open our hearts to welcome foreign companies, but we oppose malicious attacks on China based on rumors and lies that harm China’s interests.”

Despite facing the backlash over comments on Xinjiang cotton, H&M, Nike, and Adidas launched special promotions in China. On March 25 and 26, two styles of the Nike shoes went on sale on JD.com at a discounted price. A women’s style shoe received over 340,000 orders during the pre-sale. Both styles were sold out within seconds after the sale started. The sales were also hot in Nike and Adidas retail stores. There were pictures and videos on the Internet showing people forming long lines outside of these stores or jam-packing a Nike store isle to grab shoe boxes from shelves. Some Chinese netizens joked: “A 70 percent off special discount can solve all problems, including the issue of patriotism.” “These people are just practical. Nike completely understands how Chinese consumer’s mentality works.” “National pride and patriotic enthusiasm mean nothing compared to lucrative discounts.”

However, unlike the TV and movie industry, China’s basketball and soccer associations were quiet and the sports celebrity stars remained silent. The reason was Nike. Nike has been a major sponsor in the China’s sports arena. The media reported that, in 2018, Nike renewed its contract with the Chinese Super League (China’s soccer league) for 10 years for 3 billion yuan (US$460 million) in cash plus merchandise sponsorship. In 2015, the Chinese national soccer team also signed a 12-year, 1-billion-yuan (US$150 million) contract with Nike. In 2018, Nike signed a 10-year contract with the Chinese National Basketball Association for an undisclosed amount. On January 8, 2020, Nike and the Chinese Athletic Association renewed their contract for 12 years.

Meanwhile, in the past few days, Hu Xijin, Chief Editor of Global Times, who was the first one to resist the Western companies’ ban on Xinjiang cotton, has toned down his narrative on Weibo. On March 25, he called the state agencies not to condemn those foreign companies but rather let public opinion take the lead. On March 26, Hu wrote on Weibo calling for tolerance on individual differences when it comes to being a patriotic citizen. On March 27, he wrote that “the ongoing cross sanctions between China and western countries may appear strong, but they are mostly symbolic. … If this (patriotic) show continues, the U.S. will win and China and European countries will lose.”

While the official media is calling on the Chinese public to cool down their nationalist sentiment, sanctions on China from overseas have not stopped. According to Global Times, Amazon may remove many cotton products from China. The reason is that, according to U.S. government regulations, any cotton products exported to the U.S. cannot contain Cotton from Xinjiang. China’s annual cotton production is about 6 million tons, of which more than 80 percent is used to make cotton fabrics. Amazon’s move will greatly impact Xinjiang cotton sales. Each year, China exports 500 billion yuan (US$76 billion) of cotton products to the U.S. Among those, 40 percent of the exports use Xinjiang cotton.

If all foreign countries continue to ban Xinjiang cotton, statistics suggest China’s textile export industry could suffer hundreds of billions in export revenue losses. China’s annual domestic apparel retail sales are about 1 trillion yuan (US$150 billion), while exports are about 840 billion yuan (US$128 billion). Exports account for 46 percent of China’s total apparel production. For home textiles, China’s domestic annual retail sales are approximately 200 billion yuan (US$30 billion), the export value is about 300 billion (US$46 billion), and exports account for 60 percent of China’s total home textiles production. In terms of industrial textiles, China’s annual domestic retail sales are about 80 billion yuan (US$12 billion), and exports are about 190 billion yuan (US$29 Billion). Exports accounted for 70 percent of the total. So in total, apparel, home textile, and industry textile exports are approximately US$190 billion, which accounts for more than half of the total of China’s textile production volume. According to China’s 2020 customs data, 7.4 percent of China’s total exports come from textiles.

In addition to export revenue losses, China will also face unemployment pressure. The number of employees in the textile industry is estimated to be 170 million throughout the industry chain. Meanwhile many foreign textile companies may decide to move their factories out of China or even leave the China market after the boycott fight is over.

Is the CCP the winner of this round of boycott fanaticism in China or has China just been hoisted by its own petard?

Endnotes:
1. Radio Free Asia, “The Boycott of Western Products Only Lasted for Three Days Before Hu Xinjin (Global Times’ Chief Editor) Asked the Chinese Public to Cool Down,” March 29, 2021.
https://www.rfa.org/mandarin/yataibaodao/ql2-03292021063308.html.
2. Epoch Times, “Beijing’s Manipulating Xinjiang Cotton Fight Hurt Its Own Economy and Expedited Decoupling Between The U.S. and China,” March 30, 2021.
https://www.epochtimes.com/gb/21/3/30/n12845856.htm.

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