European companies in China are facing an increasingly politicised business environment, a leading trade group said on Thursday.
“On the one side, public opinion in Europe is demanding that companies demonstrate clear and transparent corporate social responsibility principles,” the European Union Chamber of Commerce in China said.
“On the other, they are potentially subjected to public backlash in China if, through showing that they are acting responsibly and that their supply chains are beyond reproach, they are perceived to be saying something that is ‘anti-China’.”
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The chamber, which represents more than 1,700 companies, issued the statement as Swedish multinational clothing retailer H&M is facing a boycott after saying last year that it did not source cotton from Xinjiang.
China has been accused of using forced labour in its far western region, with Uygur workers being transferred away from their homes to pick cotton. Former US secretary of state Mike Pompeo in January accused Beijing of “genocide and crimes against humanity” for its treatment of Uygur Muslims in the region.
Beijing has repeatedly denied the allegations.
The EU chamber said that while it did not comment on individual cases, “the increased politicisation of business is seeing more European companies being caught between a rock and a hard place”.
The backlash against H&M has seen its products removed from major Chinese e-commerce platforms.
Other foreign companies, including British luxury brand Burberry, American sportswear firms Nike and New Balance, and German athletics wear label Adidas, have also come under fire after being named by People’s Daily as companies that did not use Xinjiang cotton.
“There are many foreign companies that have released statements ‘cutting ties’ with Xinjiang cotton in the past two years,” the Communist Party mouthpiece said on Weibo, China’s Twitter-like social media platform.
Topics about Chinese celebrities ending their endorsement deals with international brands have been trending on Weibo, along with hashtags like, “I support Xinjiang cotton”, “It is the [companies’] loss if they miss out on Xinjiang cotton”.
China’s commerce ministry said on Thursday that consumers had “responded with action to the so-called business decisions made by certain companies based on false information”.
“We hope those companies would respect the market and correct wrongdoings to avoid politicising commercial issues,” ministry spokesman Gao Feng said.
Xinjiang cotton was “pure white and flawless” and “should not be subject to smear and tarnish campaigns by any forces”, he said.
Foreign companies were welcome to visit Xinjiang, and China was ready to support those interested in investing or trading with the region, he said.
Meanwhile, Gao said that China and the EU were conducting legal reviews of the Comprehensive Agreement on Investment signed in January.
The deal could be in jeopardy, however, after major parties in the European Parliament – which has yet to ratify it – said they would withhold, or were considering withholding, their support while sanctions remained on elected officials.
Beijing on Monday imposed sanctions on 10 European individuals – five of them members of the European Parliament – and four entities in retaliation for the EU’s sanctions linked to Xinjiang.
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