Dozens of Chinese celebrities have terminated contracts or said they will cut ties with brands, while H&M, the world’s second largest clothing retailer, has been pulled from major e-commerce sites.
Investor’s view: Nike shares plunged more than 3% on Thursday on Wall Street, while Adidas plunged more than 6% in Frankfurt. In London, Burberry lost more than 4%. H&M’s shares also fell nearly 2% in Sweden.
The outrage was sparked by a post on social media by a group linked to the Communist Party, which reappeared a statement made by H&M in September about allegations of forced labor in Xinjiang. Since then, the state media has targeted other important brands that have already manifested themselves.
Human rights groups have repeatedly accused Beijing of detaining Uighurs and other Muslim minority groups in “re-education” camps, where they are forced to make products that reach the global technology and retail supply chains.
The coup in China against companies that spoke about Xinjiang could pass, according to Bernstein analyst Aneesha Sherman. H&M shares were up 1% at the beginning of Friday’s trading session, while Nike shares were up about 1.5% in the pre-market.
But the episode is a reminder of the challenges that Western brands face in courting the immense purchasing power of Chinese consumers.
“It is a difficult position to manage, because they cannot really back down in their [stances], but at the same time they want to make sure they don’t abandon the Chinese customer, “said Sherman.
China accounted for about 5% of H&M sales in 2019. Sherman estimates that number has grown to around 10% in 2020, as China’s economy has recovered faster from the coronavirus than its domestic market, the Europe.
“In a year like this, even cutting the top 5% haircut is a huge success when H&M is trying to recover,” said Sherman.
Luxury brands like Burberry are even more exposed, she added. Burberry listed “any significant change in Chinese consumer spending habits” as a key sales risk in its most recent annual report.
General picture: the US-China tensions that gained prominence during the Trump era have not disappeared, with the Biden government and the allies taking a hard line with Beijing. This creates challenges for Western companies operating in the Chinese market.
“It affects those marks,” said Sherman. In addition, weeks like this only strengthen local competitors, who are more geared to regional tastes and can avoid politically generated controversies, she noted.
This powerful oil lobby has changed its tone in relation to the carbon tax
But the devil will be in the details, reports my CNN business colleague Matt Egan. The American Petroleum Institute has established a number of principles that must be followed before the centennial group endorses the price of carbon.
Proponents of carbon pricing say it is crucial to tackling the climate crisis, as it would accelerate efforts to curb emissions that heat the planet and force investors, companies and individuals to bear the cost of pollution.
But API opposed the latest serious effort to impose a price on carbon in 2010. Since then, ExxonMobil, Chevron and other industry leaders have publicly supported carbon pricing – paving the way for others to follow.
“This is big business for the industry. There is widespread recognition that the country obviously has to do something about climate change,” API CEO Mike Sommers told CNN Business. “We want to be a voluntary partner of the Biden government and others in Congress who are serious about this challenge.”
Still, there is skepticism among climate groups that API’s change of opinion will translate into its support for meaningful legislation.
“A theoretical support statement for a market-based carbon price is a long way from agreeing with what is likely to be strong, binding rules to limit the use of fossil fuels [and] methane emissions, “said Dylan Tanner, executive director of InfluenceMap, a study group focused on energy and climate change.
WeWork is finally going public by merging with SPAC
The most recent: The Wall Street Journal was the first to report that WeWork agreed to merge with a special purpose acquisition company, or SPAC.
The merger with BowX Acquisition Corp. would value WeWork at $ 9 billion. This is a fraction of the $ 47 billion private market valuation that the company previously sought.
Remember: WeWork plunged into the crisis in 2019 when investors combed through the company’s IPO paperwork, which revealed the uncontrolled power of former CEO Adam Neumann and several potential conflicts of interest, as well as the startling startling losses.
The company was forced to postpone its IPO, accept a bailout from SoftBank and reconfigure its business.
Now, he could raise money by taking advantage of the SPAC boom. In recent months, investors have rushed to create so-called “blank check” companies, which exist purely to find private companies to merge with, effectively making them public.
Details, details: BowX Acquisition Corp., which raised $ 420 million from investors last year, is led by Vivek Ranadivé, who founded Tibco Software and now owns the Sacramento Kings. Ranadivé will serve on the WeWork board.
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Personal income and spending data for February postings at 8:30 am ET, along with a key inflation measure.
Next week: the US jobs report for March is a crucial economic indicator as the recovery gains momentum.