Domestic textile shares surge after Xinjiang cotton boycott
Textile and cotton companies in China saw their stock prices rise on Thursday amid growing support for domestic firms in response to statements by several international brands of a boycott of cotton from the Xinjiang Uygur Autonomous Region.
H&M’s boycott of Xinjiang cotton was among the hottest topics on social media, and other multinational clothing brands, including Nike, adidas, Zara and Gap, were said to have made similar statements.
Domestic sports brands Li Ning’s decision to have “using Xinjiang cotton” on its labels won public approval. Shares of the Hong Kong-listed firm rose by over 11 percent during intra-day trading and posted a 10.74 percent gain at the end of the day.
Anta Sports Products, also listed in Hong Kong, saw its shares rise by 8.4 percent.
It announced on Wednesday night that it was in the process of leaving the Better Cotton Initiative in response to the organization’s decision to suspend licensing of Switzerland-based BCI cotton from Xinjiang and echoing accusations of “forced labor” in the region, an allegation denied by Chinese authorities.
“We have always been and will keep purchasing and using cotton from China, including cotton produced from the Xinjiang Uygur Autonomous Region, in the future,” it said.
On the A-share market, textile and clothing companies including Ribo Fashion Group, Shanghai Metersbonwe Fashion & Accessories Co, Xingye Leather Technology and Yingfeng Technology all surged by the 10 percent daily cap.
CITIC Securities said in a report on Thursday that it believed the H&M situation was clearly a boon for domestic clothing brands.
Spokesman for the Ministry of Commerce Gao Feng told a press briefing on Thursday that it opposed any sanctions against Chinese individuals and entities based on falsehoods and fake information.
“We hold a welcoming and supportive attitude toward normal business activities and supply chain efforts in China,” he added.
Chinese consumers had responded with their practical actions regarding the business decisions based on falsehoods, he said.
Foreign enterprises are welcom to make field visits to Xinjiang and the ministry will lend positive support for trade activities and investment by foreign enterprises in the region, he added.
In an official statement, the China Consumer Association said the ban on Xinjiang cotton by some multinational enterprises had negatively impacted the sentiment of Chinese consumers and infringed their legitimate rights and interests.
“We oppose false propaganda on the raw materials and product origin of consumer goods based on fictitious and false words, to deceive and fool consumers at home and abroad,” it said.
It urged multinational companies and industry associations to rectify dishonest, unfair and unethical business practices and show respect for Chinese consumers.
It said consumers have the right to choose products independently and to have their personal dignity respected according to the China Consumer Protection Law.
Chinese actor Jing Boran and actress Ni Ni have cut ties with Japanese retailer Uniqlo following TV star Wang Yibo’s decision to terminate his contract as a Nike representative. Chinese actress Tan Songyun also said she would end all commercial cooperation with Nike.
“This is not the behavior of a single brand, but the BCI organization, which has a greater economic interest behind its control of pricing and standards in the cotton supply chain,” Ma Gang, a garment industry analyst, told the 21st Century Business Herald.
Banning Xinjiang cotton is essentially repelling China’s textile supply chain, Ma said. China produces about 22 percent of the world’s cotton, while 80 percent of China’s cotton is from Xinjiang.