Boycotts of H&M, Nike, and Others Creates Massive Opportunity for Chinese Brands Like LiNing
H&M, Nike, Adidas, and numerous other major international brands are facing the wrath of Chinese consumers this week after netizens surfaced statements from the brands saying that they would not source cotton from China’s Xinjiang region over forced labour concerns. By Wednesday evening, 8 out of the top 10 hot topics on Weibo were related to Xinjiang cotton, and the heat continued into Thursday. Celebrities were quick to terminate their contracts with involved brands, and stores from some of the brands have temporarily closed. Netizens began to boycott international brands while expressing their support for Chinese brands stating that “this is the time” for Chinese brands and calling on their fellow consumers to start buying Chinese brands.
Will this just pass or is it a turning point? Will Chinese brands be able to capitalize on this massive opportunity?
The Scandal
On March 24, Chinese netizens unearthed and posted a Statement on Due Diligence published by H&M last year saying it would never use cotton from Xinjiang Province over forced labor concerns.
With support from government media outlets and China’s Communist Youth League, the posts quickly went viral and began trending on Weibo’s hot topics board. Main ecommerce platforms such as Taobao, JD and Pinduoduo removed H&M products and Huawei directly banned H&M’s app from being downloaded.
A related topic called “I support Xinjiang’s cotton” (#我支持新疆棉花) received over 1.8 billion views on Weibo within a day.
Other Brands Started Coming Under Fire
After the H&M news came out, people kept digging deeper and found out a non-profit group called Better Cotton Initiative (BCI), that gives sustainability accreditation to businesses, had stopped licensing activities in Xinjiang and that many other international brands had been working with BCI or had also published pledges to avoid using Xinjiang cotton. One of these was Nike.
Nike Boycott
In the statement, Nike was asking its suppliers not to use cotton produced in Xinjiang. All of a sudden, people moved their target to Nike and now the related statement on Nike’s official website can no longer be accessed.
One of China’s hottest young celebrities, Wang Yibo, who often appeared in Nike campaigns and even had an offline event with Nike scheduled for March 26, quickly and publicly terminated his collaboration with the brand. With 38M followers on Weibo this announcement drew swarms of attention. Following Wang, another Chinese celebrity, Tan Songyun (谭松韵) also made the announcement to stop her collaboration with the brand.
The whole scandal was like fire and it spread very quickly. Many other international brands, such as Uniqlo, ZARA, Pull & Bear, Adidas, IKEA and more were found to have similar announcements.
Today, popular video game Honor of Kings announced it was cancelling its much awaited collaboration with Burberry. Only days after the new skins Burberry designed for the game had been revealed to much fanfare.
Consumers Rally Behind Chinese Brands
Similar incidents have occurred in the past.
For example a political scandal that started with luxury brand Versace in 2019. At that time, it classified Hong Kong and Taiwan as countries on its T-shirts. Then many other international brands were found to have similar designs. They came under fire for a while and celebrities and consumers were busy distancing themselves from these brands, like right now.
But there are three things that make this situation different. One is that most incidents in the past have been related to Chinese maps and territories that are not in line with Chinese standards. This time, they are targeting an industry, or at least that is how it is being portrayed, with people online saying that these brands are “boycotting Xinjiang cotton, yet they want to make money in China?”
Xinjiang makes almost a fifth of the world’s cotton, so it’s obviously a significant industry in that region.
The second difference is that the scandal that happened two years ago impacted mainly luxury brands. These are not affordable to everyone, so it impacted a smaller consumer group. But this time, these are brands that the majority of people would buy. H&M, Zara, Nike, Adidas, Uniqlo….I would bet any Chinese millennial or GenZ has at least one item from these brands if not many.
And third…these brands have Chinese competitors.
When H&M got called out, people said, that’s ok, there are so many other influencer Taobao brands that offer similar clothing. Then when Nike got called out, people were saying there were many other sports brands, especially domestic brands to choose from, such as LiNing and Anta.
When he heard about the incident, my fellow CMI content creator Hank Zhang agreed. “If this had happened several years ago, Nike wouldn’t have to worry so much. But now people’s opinions of Chinese brands have changed. It’s cool to wear homegrown brands like LiNing and Anta. So people have an easy alternative.”
LiNing & Anta Benefitting From Nike Boycott
LiNing has already benefited greatly from the scandal. After all of this started happening, netizens noticed that some LiNing apparel even boldly calls out that it uses cotton from Xinjiang. On the comment area under related Weibo posts, people were saying they would definitely support Li Ning and other domestic brands. On March 25, only a day after the scandal began, its stock price rose 7%.
Besides the rise in stock price, Li Ning’s livestream on Douyin on March 24 saw a huge boost. Its official Douyin account “李宁体育” achieved average sales of 300k RMB/day in the past 30 days. But on that evening, it managed to achieved over 3M RMB in a single night.
Another sports giant, Anta, which is actually the third largest sports group in the world, was originally under fire because Fila, which it acquired many years ago, was a member of BCI. However, it didn’t get affected by the scandal too much. It reacted quickly and made an official announcement on March 24 saying it was in the process of exiting the organization and it would keep using Xinjiang cotton.
Chinese netizens showed great support for Anta’s decision and were commenting “support domestic brands” on Anta’s livestream. It is estimated that on the evening of March 24, Anta’s livestream room on Douyin managed to achieve nearly 2M RMB. This is also a big leap from its usual performance of around 800k RMB.
Other domestic brands spotted this trend and grasped the opportunity to show their support for domestic materials. Another sports brand did something creative. ERKE (鸿星尔克) tagged Wang Yibo (the celebrity that left Nike) on Weibo and invited him to be its ambassador. The post quickly showed up on Weibo’s hot topic ranking board. I haven’t seen the brand for a while and it was a little bit surprising to see how it made use of the scandal to promote itself.
Our Takeaway
Even while I am writing this article, it is being discovered that there are more and more international brands that have made the announcement to boycott Xinjiang cotton, including Burberry, Calvin Klein, New Balance and Puma. Following these findings are correspondent celebrities’ Weibo announcement saying they would permanently discontinue their collaboration with those brands, and those are top celebrities.
To be honest, I am shocked as I never expected this scandal would go out of control like this.
This is a complicated issue but it comes down to the fact that brands should respect China and Chinese consumers if they want to earn money from us. I think that’s the bottom line and common sense in every country.
You can’t do one thing to please one market that is offensive to another. And you can’t assume that we will see issues the way that people in other countries will.
The Chinese market is indeed growing so quickly but behind the growing consumption ability of Chinese consumers is our ego and need to be respected. If brands think making money out of Chinese consumers is easy, then they are wrong. We may want the best quality and name brands, but we also won’t allow a brand to show disrespectful signs towards our country.
This may eventually pass over like all the other scandals have. But it will really depend on how these brands respond and how they choose to act. Either way, I think this will have a long lasting impact on the future of Chinese fashion brands who will definitely be seeing more support from consumers over the months to come.
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