- China has extended a massive crackdown it originally placed on Swedish retailer H&M to include other foreign retailers, such as Nike, Adidas, Calvin Klein, and more.
- The crackdown is in response to the companies’ refusals to source material from the Xinjiang region, where more than 1 million minority Muslims are being held in forced labor camps.
- Products for those companies have been blocked from appearing in online searches, and potential customers have even been prevented from hailing rides to their physical stores.
- While most brick-and-mortar stores do remain open, some were forced to shut down and have had their logos covered.
- Meanwhile, other foreign companies — including MUJI, Zara, and Hugo Boss — have seemingly reversed their stances on using materials from Xinjiang in an apparent attempt to avoid the crackdown.
China Widens Retailer Crackdown
After blocking online search results for Swedish clothing retailer H&M on Wednesday, China extended its crackdown on Western retailers to include Nike, Adidas, Burberry, Calvin Klein, and more.
Amid other restrictions, Chinese residents are unable to hail taxis to brick-and-mortar stores for the companies as of Friday. While most physical stores remain open, some have been shuttered. In fact, one photo from a Chinese media agency shows an H&M outlet in Urumqi, Xinjiang, closed with its logo covered.
China is targeting each of these companies because of their refusal to buy materials made in the Xinjiang region, where over a million minority Muslims have been detained in “re-education” camps. Those camps, more commonly referred to as internment camps outside of China, have been widely condemned for forced labor practices, for sterilizing women, and for genocide.
Frustrations Began With H&M
The boycotts started Wednesday when Chinese state media singled out H&M over a statement it made in September.
“H&M Group is deeply concerned by reports from civil society organisations and media that include accusations of forced labour and discrimination of ethnoreligious minorities in” Xinjiang, the statement read. H&M added that its third-party suppliers would no longer be sourcing cotton from farms in the region.
It’s unclear exactly why state media resurfaced these comments, but it may be connected to a fresh round of sanctions against Chinese officials made by Britain, Canada, the European Union, and the United States on Monday.
When China first launched its assault again H&M, it initially blocked searches for the retailer on the country’s largest online shopping platforms, including Alibaba. Searches for brick-and-mortar stores on online maps also no longer pulled up results. The same day, two Chinese brand ambassadors for H&M said they were cutting ties with the company, arguing that it was smearing lies against China.
Along with China’s more official crackdown, many social media users also began calling for full boycotts of the company.
In an online statement, H&M China said it respects Chinese consumers and that its practices as a brand “do not represent any political position.”
That statement didn’t seem to calm the rage, as calls for boycotts began extending to other brands, such as Nike, Adidas, Tommy Hilfiger, Converse, and Calvin Klein. Notably, like H&M, all five have also lost brand ambassadors.
Meanwhile, British luxury retailer Burberry was forced to give up a video game partnership it had with Tencent.
On Thursday, those brands all seemed to fall under the same online restrictions that had been employed against H&M. Now, many in China are urging consumers to only buy from domestic retailers that source materials from Xinjiang, including companies like Li Ning, Anta, Peak, and Meters/bonwe.
In the last two days, many of these companies have even trended positively on Weibo, China’s popular social media platform. Both Li Ning and Anta have also seen their stock shares surge amidst support from Chinese consumers.
Some Foreign Retailers Seemingly Change Stances on Using Xinjiang Materials
Among the foreign brands facing calls for a boycott was Japanese retailer MUJI; however, its Chinese branch stressed Thursday that it currently uses — and will continue to use — Xinjiang cotton.
In another move that has been interpreted to avoid a boycott or crackdown, Inditex — the parent company of Spanish retailer Zara — has reportedly deleted a previous statement it made calling reports of forced labor in Xinjiang “highly concerning.”
While German retailer Hugo Boss told NBC News in September that it requires its suppliers to prove they don’t use Xinjiang cotton, this week, the Chinese arm of the company seemingly reversed course when it told its Chinese market that it currently uses Xinjiang cotton.
Xinjiang’s long-stapled cotton is one of the best in the world,” the company said on Chinese social media. “We will continue to purchase and support Xinjiang cotton.”
As a result, some have accused all three companies of hypocrisy and turning a blind eye to human rights abuses in order to continue operating in China’s massive consumer market.
See what others are saying: (BBC) (NBC News) (South China Morning Post)
Nike To Clean and Resell Used Sneakers at a Discounted Price
- At least 15 Nike retail locations in the U.S. are participating in a new program the company calls “Nike Refurbish,” which is aimed at reducing waste.
- As part of it, Nike will restore shoes with manufacturing flaws, as well as donated or returned shoes, and resell them at a discounted price.
- Shoes at the end of their wear will be recycled into Nike Grind materials that are used to construct running tracks, gym floors, playgrounds, other Nike products, and more.
Nike announced a new program on Monday called “Nike Refurbish” that will help boost sustainability and reduce waste.
As part of the program, the brand will take donated and returned shoes that are like new or gently used, as well as shoes with cosmetic manufacturing flaws, then clean and restore them to resell at a discounted price. Returned shoes must have been brought back within Nike’s 60-day return period in order for them to be resold.
All the refurbished shoes will have labeling on the box with information about their condition grade. Plus, they are also covered under Nike’s 60-day return policy.
Nike’s Recycling Efforts
Nike didn’t say what it previously did with returned sneakers in its announcement, but the new plan is part of its wider attempts to recycle materials.
On its website, it markets the initiative as a way for customers to “help keep shoes out of landfills.” and join Nike’s efforts towards, “Zero carbon and zero waste to help protect the future of sport.”
Shoes that are truly at the end of their wear will be recycled into Nike Grind materials that are then used for tons of other projects, including running tracks, gym floors, playgrounds, outdoor courts, as well as other Nike apparel and footwear.
So far, 15 Nike retail locations across the U.S. are confirmed to be participating in this model, but there are plans in place to expand this list over the course of 2021.
See what others are saying: (FOX Business) (Footwear News) (Miami Herald)
Uber Sees Record Ride Demand But Doesn’t Have Enough Drivers Available
- Demand for Ubers outpaced driver availability in March, according to a Monday statement from Uber.
- On top of seeing its best-performing month since the beginning of pandemic closures, the company also received more bookings last month than any other month in its entire history.
- In an attempt to attract more drivers, Uber announced a $250 million, one-time stimulus payment last week to “boost” driver earnings.
- While Uber said it believes it will turn a profit for 2021, the company could be set back more than $500 million because of a U.K. Supreme Court ruling that gives the country’s drivers minimum wage, holiday pay, and pension.
Uber Posts Record-Setting Growth
Uber announced Monday that its ride requests for the month of March were the highest it has ever recorded in its 12-year history.
According to a filing with the SEC, last month, the company crossed “a $30 billion annualized Gross Bookings run-rate.” Alongside that, average daily Gross Bookings grew 9% from the previous month.
Notably, this also marked the company’s best month since March of last year, when pandemic closures began in the U.S.
On top of that, Uber said its delivery business crossed “a $52 billion annualized Gross Bookings run-rate in March, growing more than 150% year-over-year.”
In fact, that demand over the past month was so high that Uber didn’t have enough drivers to meet it.
“As vaccination rates increase in the United States, we are observing that consumer demand for Mobility is recovering faster than driver availability, and consumer demand for Delivery continues to exceed courier availability,” the company said.
$250 Million Driver Stimulus
Monday’s filing is in line with another announcement from Uber, which said last week that it is opening up a $250 million driver stimulus to “boost” earnings for drivers.
“In 2021, there are more riders requesting trips than there are drivers available to give them—making it a great time to be a driver,” the company said at the time. “We want drivers to take advantage of higher earnings now because this is likely a temporary situation.”
“As the recovery continues, we expect more drivers will be hitting the road, which means that over time earnings will come back to pre-Covid levels.”
Can Uber Become Profitable?
In February, Uber reported $6.8 billion in losses for 2020, and for years, many have questioned if its business model is even profitable at all; however, in this latest filing, Uber said it believes it’ll become profitable by the end of 2021.
That said, last month, the Supreme Court of the United Kingdom handed drivers a major win by ruling that they need to be reclassified as “workers,” guaranteeing them minimum wage, holiday pay, and pension.
While big news, the U.K. classifies “workers” and “employees” separately. As a result, U.K. drivers still aren’t granted full benefits.
The decision will also likely be a setback for Uber, as Bank of America has estimated that it could cost the company more than $500 million.
Uber’s Vaccine Access Fund
In other Uber news, the company — along with PayPal and Walgreens — has launched a “Vaccine Access Fund.”
Through that fund, customers can donate money that will be used to help people who normally lack transportation get to their vaccination appointment.
Notably, all three companies have said they’ll donate a joint $11 million.
That’s on top of the $5 million PayPal previously donated, as well as the 10 million free and discounted rides Uber promised to give in December.
Uber users are able to donate in-app, and PayPal has launched a donation page on its website.
See what others are saying: (The Wall Street Journal) (CNBC) (CNET)
China Hits Alibaba With $2.8 Billion Antitrust Fine
- Chinese regulators slapped Alibaba with a $2.8 billion fine for monopolistic practices on Saturday, which amounts to 4% of the e-commerce mega-giant’s domestic sales.
- Regulators accused the company of specifically engaging in a policy known as “choose one out of two,” where Alibaba would penalize sellers who also used other platforms to sell their goods.
- CEO Daniel Zhang believes the company won’t be negatively affected by the fine, which could have been set as high as 10% of all sales.
- Despite the fine, the company’s stock rose over 6% by Monday’s closing of the Hong Kong stock exchange.
Dominating the Marketplace
The Chinese e-commerce giant Alibaba was hit with a $2.8 billion antitrust fine by Chinese regulators on Saturday for using its dominant position in the market to punish merchants and rivals.
In particular, it engaged in a policy known as “choose one out of two,” where a seller on Alibaba would be penalized in a variety of ways if they were found to be selling on another platform.
While the $2.8 billion fine seems large, it only accounts for 4% of the company’s domestic sales. The fine could’ve been far worse, as antitrust fines in China can go as high as 10% of the company’s annual sales.
Alibaba has agreed to take the fine, not fight it, and will fully comply with the demands of the regulators. Those demands include three years of “self-examination compliance reports” to ensure the company isn’t engaging in the same practices.
The news comes after the company’s founder, Jack Ma, has been under intense scrutiny from Chinese officials. Ma has not been seen in the public eye for months and his Ant Group, a sister company to Alibaba, is being forced by Chinese regulators as of Monday morning to become a financial holding company; therefore facing much stricter banking regulations.
Clear Sailing From Here
Fortunately for Alibaba, the company has managed to dodge much of the scrutiny Ma faces as he isn’t really involved with the business anymore. Its current leadership also doesn’t think the fine will really affect the company at all. Unlike Ma’s past rhetoric that was dismissive of regulators, CEO Daniel Zhang released a statement on Saturday that struck a conciliatory tone.
“Alibaba would not have achieved our growth without sound government regulation and service, and the critical oversight, tolerance and support from all of our constituencies have been crucial to our development,” he said.
Zhang added Monday morning that he doesn’t expect any negative impacts from the situation, which possibly helped Alibaba’s stock to rise sharply from $223 per share to $241 as of Monday’s closing of the Hong Kong Stock Exchange, where the shares are traded.
There are a plethora of reasons that could explain the stock’s rise just after it was the target of a major antitrust fine, but notably, there doesn’t seem to be any more antitrust fines in the pipeline, leading investors to be confident that the worst is behind the company.