Companies that have refused to pull their support from Xinjiang have found themselves facing sanctions or outright bans in the West.
As calls denouncing the treatment of Uighur Muslims in the Xinjiang province of China have grown in the West, companies are increasingly halting their business operations in the region – moves that have been met with hostility by China.
Swedish clothing company H&M Group, the world’s second largest global fashion retailer, is facing a nationwide boycott in China amid an outcry by the Chinese public that has been heavily pushed by the government. The potential boycott comes after the company promised last year to stop buying cotton from Xinjiang.
H&M isn’t alone. Companies like Tommy Hilfiger, Nike and Calvin Klein have all lost brand ambassadors due to the backlash from Chinese consumers after joining the call to stop using cotton produced in Xinjiang to protest the treatment of ethnic minorities there.
“This is a familiar pattern,” Dr. Ralph Weber, a professor of European global studies at the University of Basel in Switzerland, told TMS. “Officially, the Chinese government claims to have no part in this,” he said, but the problem is even deeper.
“In recent years, the classic party talking points of serving the country and loving the motherland have received increasing emphasis,” said Dr. Weber, pointing out that the fundamental differences with consumers in China seems to be leading this charge.
But companies who refuse to pull their support from Xinjiang have found themselves facing sanctions or outright bans in the West.
“We need to be looking at products that are made in that part of China to make sure they’re not coming here,” the United States Secretary of State Antony Blinken said on NBC’s Meet the Press on April 11.
“Companies face a more complex situation and risk being squeezed between great power politics,” said Dr. Weber. “Until a few years back, companies were comfortable in dealing with the commercial actors of an authoritarian state, even encouraged to do so by their governments.” But now, he said, “companies will be more and more forced to choose the market they want to serve.”
“In any case, multinational companies will be much more in the spotlight and will face pressure to account for their human rights footprint in a more serious manner like they do for their climate footprint.”
Dr. Weber also said that the forced shift for companies is a direct result of new ways of handling foreign policy in China.
Previously, most notably under the Obama administration, the American attitude toward China was that trade would slowly inject liberal democratic values into China, an attitude Dr. Weber called, “astonishingly stubborn.” This attitude made it easy for companies to operate inside the country without taking into consideration potential human rights concerns.
But trade wars and economic sanctions have put responsibility back into the hands of global corporations to address human rights issues while maintaining a worthwhile consumer base.
“Perhaps,” said Dr. Weber, “we will see a recalibration of the commercial relations, shifting supply chains and new forms of cooperation, decoupling in some areas and intensified relations in others.”
But the new approach to political influence for companies could also have implications for domestic companies too.
On Saturday, Chinese tech company Alibaba got hit with a record 18 billion yuan (US$2.75 billion) fine for violating antitrust laws after an antimonopoly probe found that it had abused its massive position in the market for several years.
The fine is being seen as a crackdown on antitrust violations by technology conglomerates after years of more relaxed enforcement, but it also comes as the Alibaba business empire is under heightened scrutiny after its founder, Jack Ma, publicly criticized the country’s regulatory system.
Late last year, Ma criticized Chinese regulators for being too careful in minimizing risk, saying that Chinese banks acted like “pawnshops” by lending money only to entities able to put up collateral. After his comments, Beijing effectively stifled plans for a record-breaking initial public offering from Ant Group, the fintech giant that was created out of Alibaba.
And in the US, companies like Coca-Cola, Delta Air Lines and Citigroup have picked sides in the debate over whether or not new voting legislation introduced in Georgia perpetrates voter suppression there.
“It is finally time for Republicans and Conservatives to fight back – we have more people than they do – by far!” said former President Donald Trump in a statement urging his supporters to boycott companies who opposed the Georgia law.
Dr. Weber said the political pressure facing corporations both domestic and abroad is related. “There are … clear entanglements and connections between the two phenomena and the internal and external challenges to liberal democracy,” he said.
But Dr. Weber also warned of the risks of overgeneralizing the problems.
“There is a risk of unduly conflating the issues in [China] and the US, which would mean to ignore the fundamental differences in terms of the two political systems and their respective normative projects, however failing one considers them to be in these projects.”
Ultimately, he said, the choice to be more or less political doesn’t lie with the companies though.
“Under the new trends, to the extent that they persist, it will be increasingly difficult for companies to be political and apolitical at the same time.”
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