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Business trends

Japanese apparel makers join boycott of China's Xinjiang cotton

Sanyo Shokai, TSI among those responding to allegations of forced labor

Japanese apparel makers Sanyo Shokai and TSI Holdings have decided to stop using Xinjiang cotton. (Source photos by Kaisuke Ota, Getty Images and screenshot from TSI Holdings) 

TOKYO -- Japanese apparel makers are part of a growing international trend to shun cotton from China's western Xinjiang Uyghur Autonomous Region, as reports of forced labor and human rights abuses mount in the region, which produces some of the world's highest grade cotton.

Japanese clothing makers, including Sanyo Shokai and TSI Holdings, have decided to stop using Xinjiang cotton, following in the footsteps of Mizuno, a major sports equipment and sportswear company, and others. The moves of Japanese clothing names with clout within the industry could create a ripple effect for the entire textile supply chain.

Sanyo Shokai, which sells clothing under the Paul Stuart, Epoca and Mackintosh Philosophy brands, will stop using Xinjiang cotton, starting in the 2022 spring-summer season. Sanyo Shokai President Shinji Oe has told Nikkei that the company has gathered information on human rights issues in Xinjiang, but has been unable to pin down the facts. "As long as there is doubt, we have no choice but to stop" using Xinjiang cotton, Oe said.

TSI, which has a raft of apparel brands, including Nano Universe, has learned that cotton sourced from the region was used in some of its products. It has eliminated Xinjiang cotton from its products for this autumn-winter season. "We will not use [Xinjiang cotton] until the human rights issues are resolved," said TSI President Tsuyoshi Shimoji. King, known for its Pinore a women's clothing brand, has followed suit.

Sanyo Shokai is influential in the Japanese apparel industry because of its business partnerships with a number of large retailers, mainly department stores. TSI, which also sells popular Margaret Howell brand clothes, had 134 billion yen ($1.17 billion) of sales in the year ended in February.

Besides Mizuno, Gunze, a major underwear maker, has also stopped sourcing cotton from Xinjiang. Sanyo Shokai and TSI use a wide variety of fabrics for their small-lot production of a broad array of products. The decision was difficult for these manufacturers because it creates challenges for their supply chain management and product development. But they have been forced to take the step amid a growing consumer backlash over allegations that members of the mostly Muslim Uyghur minority group are being used as forced labor in China.

China is the world's second-largest cotton grower, with Xinjiang accounting for 80% to 90% of the country's production. Many industry executives say it is impossible to eliminate Xinjiang cotton entirely from the global supply chain. Some Japanese clothing manufacturers, including women's underwear maker Charle, are responding by reducing the amount they use.

This issue is a sensitive, if familiar, one for foreign brands. They have a challenge in trying to sell to China's vast market while satisfying global customers' growing demands that they do business ethically.

H&M, a Swedish fast-fashion brand, has seen sales in China nosedive as nationalistic consumers have called for a boycott of its products over the company's comments on alleged human rights abuses in Xinjiang.

Some big industry players are opting to take no action. Muji brand operator Ryohin Keikaku has decided to continue using Xinjiang cotton in the same volumes as before. "We have been unable to confirm the problem [of forced labor], as far as our investigation is concerned," the company says. It also pointed to concerns about the likely impact of halting the use of Xinjiang cotton on the local economy. Yamato International, an Osaka-based apparel maker, has decided to continue using only Xinjiang cotton that is "properly managed."

Some Japanese clothing brands are also stepping up their efforts to ensure socially responsible conduct by suppliers.

Fast Retailing, which operates the Uniqlo casual clothing brand, has established a system to directly monitor production of the materials it uses, including cotton, for possible human rights abuses and other ethical violations. Tadashi Yanai, the company's chairman and CEO, has pledged to "secure high levels of traceability" throughout the supply chain, down to cotton farmers, to ensure ethical production.

United Arrows next year will start demanding confirmation that no human rights abuses or other ethical problems are occurring in its supply chain, including at sewing factories and other suppliers.

The growing international movement to rethink the use of Xinjiang cotton reflects a global movement that places greater importance on companies' environmental, social, and corporate governance (ESG) standards. Global ESG investment last year totaled $35.3 trillion, an increase of 15% compared with 2018, according to the Global Sustainable Investment Alliance. It is becoming increasingly difficult for companies to attract investors unless they show a strong commitment to socially responsible management.

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