It is time for H&M to prioritize ethics over growth?

Continuing trouble with China and Southeast Asian countries has put H&M in a difficult position. Now could be the time for the retailer to take a stand and prove that ethics come before immediate profits.

A host of humanitarian and political crises involving China, Myanmar, and Vietnam have left H&M struggling to decide between ethics and profits.

So far, 2021 has seen H&M facing political and humanitarian crises in China and South East Asia. It started in February when Myanmar saw its democracy threatened and authoritarian military take over. H&M condemned the following violence and paused production operations in the country. That decision was met with a mix of praise — for stopping the money flow to garment factories that are owned by the military — and criticism — for abandoning the people of Myanmar. While a complicated situation, H&M handled it without too much outrage. Then March came, and a statement that the Swedish retailer released in September started circulating on Chinese social media. In the statement, H&M announced it would stop sourcing cotton from the Xinjiang province following reports of forced labor and genocide by the Chinese government. The Chinese government responded that H&M was "spreading lies" and suggested a boycott of the retailer's products as punishment. H&M has since tried to walk the tight rope between taking a stand but not offending China. After their original statement on Xinjiang cotton came back into the spotlight, H&M said it is "dedicated to regaining the trust and confidence of our customers, colleagues, and business partners in China" without specifically mentioned why they had lost "trust" in the first place. This response seemed to have carefully walked the line between activists' demands for social sustainability and Chinese demands for loyalty. But, a few weeks later, H&M found itself in another tricky position, and finally, the retailer could no longer please everyone. The Cyberspace Administration of China "summoned" H&M when a map on the retailer's website was deemed "problematic". H&M's map did not line up with the Chinese map, which shows a disputed region in the South China Sea as being under Chinese rule. The region has caused political strifes for years. H&M finally caved and corrected the website's map to line up with want Chinese officials wanted. That decision led to outrage in Vietnam. Online there was a call for Vietnamese consumers to boycott H&M until the map was reverted to its original display. The retailer now finds itself in a lose-lose situation between China and Vietnam — two countries vital to manufacturing and sales.

There is no indication that customers are actually turning away from brands that stand up for ethics.

While H&M tries to appease both consumers concerned about ethics and governments concerned about politics, there is no hard proof that the brand has to cater to both. The retailer is making accommodations for China specifically because the government has threatened to block sales. But, in reality, it is less clear what the consequences for H&M sales will be. The Chinese government and related organizations like the Communist Youth League have led the retaliation against fashion brands. Influencers and e-commerce sites followed, cutting partnerships and removing products for sale. But, consumers have not shown the same level of hatred for brands. Soon after the boycotts were suggested, The South China Morning Post said the protest was "losing steam" with Nike's — who also stopped sourcing from the Xinjiang region — sales increasing. It's been suggested that consumers still want brand-name products and are "rushing to buy" them before the Chinese government imposes bans. While H&M has seen more criticism and fewer profits than Nike, it is still too early to say that the retailer standing up for social sustainability will hurt its sales. Suggesting that H&M's sales will suffer also perpetuates the idea that Chinese consumers don't care about ethics or sustainability, which is false and short-sighted. Much like Western consumers, Chinese shoppers are well aware of the sustainable fashion movement, with younger consumers being more inclined to shop with ethics in mind. If sustainability continues to become as important in China as it is worldwide, then H&M will benefit by putting humanitarian and political ethics above immediate profits.

The Bottom Line:

Now is the perfect time for H&M to take a stance and distance itself from those nasty greenwashing rumors. Standing up for ethics, even if it harms short-term growth, will resonate with sustainability-focused consumers worldwide.

Keep Reading:

Is China’s Nike Boycott Backfiring? (Sourcing Journal)

Do Chinese Consumers Care About Sustainable Fashion? (Jing Daily)

H&M’s ‘Problematic Map’ Fix to Appease Chinese Draws Vietnam Backlash (Sourcing Journal)

Is China’s Nike Boycott ‘Backfiring’? (Sourcing Journal)

What’s Going On With China, Cotton and All of These Clothing Brands? (The New York Times)

H&M Latest Statement on Xinjiang Cotton is Very Careful Not to Mention Xinjiang (Quartz)