Burning cotton issue set to spread

Editorial | Mary Ma 26 Mar 2021

Will Beijing go as far to demand all foreign fashion brands such as H&M, Nike and Adidas use Xinjiang cotton if they want to continue to market their products in China?

While that is hypothetically possible in the midst of a poisoned relationship between China and the West, any such move would still sound too bizarre.

To date, an angry Beijing has been careful in reciprocating the coordinated sanctions by the European Union, the UK, the US and Canada, and that means tit-for-tat moves against individuals and political organizations and thankfully nowhere near the corporate sphere with its potential knock-on effects for an already battered global economy.

This round of sanctions was led by the EU. In additon to four Xinjiang officials, it has also singled out the Xinjiang Production and Construction Corps Public Security Bureau. This effectively bans all economic products associated with this organization, of which Xinjiang cotton is its largest cash cow.

The surge in calls to boycott brands like H&M, Nike, Adidas has reached fever pitch since the EU-led sanctions row erupted.

While the latest row echoes similar past frictions when mainland actors cut commercial ties with western brands and online shopping platforms pulled products as state media urged a national boycott, things may not be the same this time around.

In the past, such frictions were isolated and short-lived.

For example, Houston Rockets executive Daryl Morey's 2019 tweet supporting anti-government protesters in Hong Kong angered Beijing and scheduled NBA events in the mainland were canceled after the NBA stood by Morey.

This may have led to revenue losses for the NBA, but more than a year later, it is expecting things to revert to normal, hinting at the isolated nature of the row.

The latest sanctions could be different. Consumer boycotts, blackout of products on major online shopping platforms like Tmall and Taobao may hurt sales, but they are unlikely to succeed in getting the western brands to use Xinjiang cotton again.

That's because if they did, the firms cannot sell their fashions and accessories in the EU, UK, US and Canada. Worse still, these firms will face punitive fines for doing business, directly or indirectly, with those sanctioned.

What's coming will be hard stuff for H&M, Nike and others, as it is so unlike the NBA incident where business-minded executives could easily compromise with their commercial partners in the mainland.

Now at risk is the trade deal known as the EU-China Comprehensive Agreement on Investment that President Xi Jinping and EU leaders concluded in principle in December after nearly nine years of negotiations.

A review of the deal is currently held up at the European parliament following Beijing's retaliation against a dozen EU politicians and some parliamentary committees. The deal has to be ratified within a year or it will be void.

Both sides want it done. China sees it as key to bringing in fresh foreign cash. The EU is counting on it for growth through increased trades with China.

However, it takes a long time for the EU to roll out a policy. As such, the sanctions took time, and it will take no less time for the EU to roll them back. That's the EU tradition. So, the tensions are destined to last longer than expected.

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