The parent company of Uniqlo, Fast Retailing Co Ltd, on Monday morning traded down as much as 4.4% at one point after the group’s chairman said the retailer doesn’t use cotton sourced from Xinjiang, a region allegedly engaging in labour abusive practices, reported Bloomberg.
The 4.4% plunged this morning is the biggest drop since Sept 30.
Around 10:30am Malaysian local time, the stock of the Tokyo-listed fashion house traded at around ¥49,880 to ¥49,920, down more than 2% from its previous close at ¥51,110.
The controversial stemmed from the British Broadcasting Corporation (BBC)’s interview broadcast on Thursday where Tadashi Yanai, the chairman of Fast Retailing, was asked if the Japanese retailer sourced cotton from the Xinjiang region. Some media report said Yanai initially responded by saying that the retailer “not using”, then declined to elaborate further as the question was “too political”.
His remark came after Beijing said in September that it would investigate the parent company of Tommy Hilfiger and Calvin Klein for suspected boycotting of cotton from Xinjiang.
A spokesperson for Fast Retailing told Bloomberg on Nov 30 that the company was “watching the situation carefully” to see whether Yanai’s remarks would lead to a fall in demand for, or boycott of, its products in China.
The Greater China region accounted for more than a fifth of ¥3.1 trillion (US$27.7 billion, RM123.0 billion) of the Fast Retailing’s revenue in the year ended August 2024, according to exchange filings. Uniqlo was operating 2,509 stores worldwide as of the end of September, including 1,031 in Hong Kong, Taiwan and China’s mainland.
Cotton trading from China’s Xinjiang region has been restricted by the US over human rights abuses against the Uyghur population, and the cotton supply has been a geopolitical minefield for global apparel firms with a large presence in China.
Beijing denies any abuses in the Xinjiang region, the place of origin for the vast majority of Chinese-produced cotton.
In 2021, Uniqlo’s rival, H&M, faced a consumer boycott in China for a statement on its website that expressed concern about allegation of forced labour in Xinjiang and saw its stores removed from China’s major e-commerce platforms and store locations removed from map apps.
Other Western brands such as Nike, Puma, Burberry, Adidas and more were also caught up in the controversy.
