China reacts surprisingly to Tadashi Yanai’s comment on Xinjiang cotton

LONDON – The Chinese government remained calm and reacted cautiously to Tadashi Yanai’s comments that Fast Retailing did not use cotton from Xinjiang.

Yanai, president and CEO of Fast Retailing, Uniqlo’s parent company, told the BBC his company does not use local cotton despite working closely with Chinese manufacturers. It was the first time that Yanai publicly confirmed the company’s policy.

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In the past, comments criticizing Xinjiang would have been met with angry disapproval from the Chinese government and sparked a major media storm.

This time, China took a step back, with government spokeswoman Mao Ning saying: “Xinjiang cotton is among the best in the world, and companies should make decisions based on their own interest rather than being influenced by political pressure.”

Xinjiang cotton has been at the center of a geopolitical battle between China and the US since US Customs and Border Protection imposed a ban on goods from the region in 2021. The US said it was concerned about alleged exploitation of Uyghur minorities in the autonomous region.

In the past, brands that complied with the US ban were blacklisted by the Chinese government.

E-commerce searches and ads for H&M products were reportedly temporarily blocked and at least six physical stores were forced to close due to “landlord decisions.” Nike, Adidas, Burberry and Hugo Boss were also targeted.

Beijing has categorically denied any abuses in the region and punished those who made public comments about alleged forced labor in Xinjiang.

It is unclear why China appears to have softened its stance toward those who refuse to work with Xinjiang cotton.

The Greater China region is of great importance to Fast Retailing and accounted for around 21.8 percent of total sales in the last quarter. It is also the company’s largest market outside of Japan.

For the fiscal year ended August 31, 2024, Fast Retailing reported full-year sales in Greater China increased 9.2 percent to 677.0 billion yen, or $4.51 billion. Operating profit also rose 0.5 percent to 104.8 billion yen, or $698 million.

While Yanai may be distancing itself from Xinjiang cotton, its Japanese slow-living counterpart Muji is doing the opposite. It relies on first-class cotton from Xinjiang.

In 2021, “Xinjiang cotton” was even added as a keyword in the product descriptions of all e-commerce channels.

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