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On November 27, Tadashi Yanai, CEO of Uniqlo and GU parent company Fast Retailing, publicly commented on a hot-button issue for the first time. In an interview with the BBC, he confirmed that the company does not source any cotton from China’s Xinjiang cotton industry, which has been accused of using forced labor from China’s minority Muslim Uyghur population.
Yanai declined to speak further on the subject, saying it would get “too political.” He was proven correct when, within days, there was a backlash from both the Chinese government and Chinese consumers. The Chinese government stated bluntly, through a spokesperson, that “Xinjiang cotton is among the best in the world, and businesses shall make decisions based on their own best interest instead of being swayed by political pressure.” Fast Retailing’s stock fell by 4.5% in the following days and has not yet recovered, based on fears that the comment will damage Fast Retailing’s reputation in China, one of its most lucrative markets.
While the Xinjiang issue has been a controversial one for brands since the accusations first emerged in 2022, the swift reaction to Fast Retailing’s statement shows that it’s still a sore spot for the Chinese market. But while not using Xinjiang cotton may anger China, doing the opposite risks angering the U.S. and its allies. The U.S. has its own censures for brands that do use cotton from Xinjiang in the form of the Uyghur Forced Labor Prevention Act — the legislation fines companies for buying materials from the Xinjiang region. The U.S. has already seized billions of dollars worth of merchandise based on UFLPA violations. And on Tuesday, U.S. lawmakers expanded the number of companies that are subject to the UFLPA, adding 29 new names and bringing the total up to 109.
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