Chinese sports retailer Anta is continuing to use Xinjiang cotton, rebuffing international scrutiny of forced labor in the Xinjiang cotton industry as the Chinese government denies allegations of human rights violations there.
Why it matters: Anta is the official Olympics uniform supplier and refuses to say if it uses Xinjiang cotton in them. Its products have not been directly tied to forced labor. Due to the opacity of supply chains in China and the secrecy surrounding forced labor factories, it's very difficult to determine which products are tainted.
- But if they are, it further signals that China's leaders intend to host the 2022 Winter Olympics on their own terms.
Context: The Chinese government has implemented a campaign of forced assimilation and genocide in its northwest region of Xinjiang, putting more than 1 million Uyghurs and other Muslim ethnic minorities into mass internment camps and conscripting detainees to work in factories and agricultural production.
- The cotton and textile industries in Xinjiang are especially affected. Much of China's cotton comes from Xinjiang; and since Chinese factories are deeply integrated with global supply chains, numerous multinational companies including Nike, Asics, H&M, and Apple have found themselves facing reports of forced labor in their supply chains.
Details: In October 2019, the International Olympics Committee (IOC) announced Anta would supply uniforms, shoes and accessories for the Tokyo Olympics, the Beijing Olympics, and several other events — becoming the first Chinese company to supply sportswear for IOC members and staff.
- That same month, Anta announced it had also become the first Chinese company to join the Better Cotton Initiative (BCI), an international cotton watchdog organization with operations in Xinjiang.
- In 2020, BCI announced it was ceasing operations in Xinjiang because it couldn't engage ethically there. After Chinese state media criticized BCI's actions in March 2021, Anta announced it would withdraw from the organization.
- Amid a recent Chinese state-fanned consumer backlash against foreign companies that had publicly disavowed the use of Xinjiang cotton, Anta said that it used Xinjiang cotton and would continue to do so.
What they're saying: "We have always bought and used cotton produced in China, including Xinjiang cotton, and in the future we will continue to do so,” Anta said in a statement in late March.
- Anta did not respond to multiple emailed requests for comment, and did not reply when asked if they use Xinjiang cotton in Olympic uniforms.
- An IOC spokesperson tells Axios, "For our uniforms in Tokyo, no cotton was used and we have been working closely with Anta to monitor the conditions in the factories producing our goods. The IOC is committed to continue its due diligence efforts with Anta."
Background: Anta, founded in 1991, has become one of China's top sports retailers in recent years through a series of shrewd moves.
- It broke into the NBA by signing stars Klay Thompson and Gordon Hayward, among others, to signature deals.
- It also acquired Japanese ski brand Descente (2016), South Korean outdoors brand Kolon Sport (2017) and Finnish sporting goods company Amer Sports (2019), helping it expand globally without needing to introduce foreign consumers to a relatively unknown Chinese brand.
The state of play: Since last month, Anta's stock has risen 21% as Chinese consumers angrily flee brands like Nike and Adidas over their refusal to use Xinjiang's cotton.
- Anta has used nationalism as a marketing strategy for years now, so doubling down on the cotton controversy by pulling out of the BCI was par for the course as they continue trying to eat into competitors' market share.
The big picture: By fanning nationalism and harnessing the power of its massive consumer markets to punish companies that support basic human rights and reward those who instead support the party's bottom lines, the Chinese Communist Party has created an unprecedented challenge to global human rights norms.
- Beijing has clearly communicated the economic costs it will impose on any country or company that takes a stand against China's hosting of the 2022 Winter Olympics.