Chinese apparel brands rally on support for Xinjiang cotton sourcing

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Shares in Chinese apparel groups and other companies with ties to Xinjiang have rallied as a backlash against western brands that have expressed concerns over forced labour in the region gathers pace.

The Hong Kong-listed shares of sportswear makers Li Ning and Anta Sports have climbed about 19 per cent and 14 per cent, respectively, over Thursday and Friday as Chinese brands expressed their support for cotton sourced from Xinjiang, where officials have been accused of human rights abuses.

State-run Chinese media have stoked boycotts of western apparel brands including H&M and Nike this week by circulating historic statements of concern from the groups about the use of forced labour in the region.

The episode has highlighted the balancing act international companies have been forced to perform to ensure they are not complicit with human rights abuses in Xinjiang while maintaining a commercial presence in China. About 1m Uyghurs have been detained in the region and officials there have been sanctioned by the US.

On Tuesday, Anta said on Weibo — a Twitter-like platform in China — that it always had and always would use cotton from Xinjiang.

Li Ning, founded by a former Olympic gymnast, and Anta are among China’s best-known and most popular sportswear brands.

More than 20 other Chinese clothing brands have made statements pledging their support for Xinjiang cotton.

“[We] support snow-white Xinjiang cotton and support the prosperous development of the motherland’s cotton industry,” said high-street retailer HLA Group, whose stock is up 11 per cent over the past two days, in a post this week. Shares in Shanghai Metersbonwe, another retailer that has expressed support for Xinjiang cotton, are up 22 per cent in the same period.

The rally has extended to companies that contain “Xinjiang” in their names. Shares in Xinjiang Goldwind Science & Technology, China’s largest wind turbine manufacturer, jumped more than 9 per cent on Friday to make it one of the CSI 300 index’s best-performing stocks.

Shares in Xinjiang Sailimu and Xinjiang Talimu, rival cotton producers based in the region, have climbed about 21 per cent and 16 per cent, respectively, over the past two days.

The backlash against international apparel brands in China has coincided with a diplomatic row between Beijing and western countries, with co-ordinated sanctions from the EU, UK, US and Canada targeting officials implicated in mass internment of Uyghurs and other Muslims in Xinjiang.

However, analysts believe that Chinese consumers’ anger towards the likes of Nike and H&M could be brief.

“In the past, negative sentiment towards [foreign] consumer brands in China usually did not last long and the impact on sales was also short lived,” said Wei Xiaopo, an analyst at Citigroup.

The China Consumers’ Association, a government watchdog, warned on Thursday that companies’ statements on Xinjiang might constitute “deceiving” consumers and infringing their freedom of choice over raw materials.

Businesses should “immediately correct their dishonest business practices in order to fulfil legal obligations”, the association said in a statement.

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