Dozens of Chinese celebrities have terminated their contracts or said they will cut ties with brands, while H&M, the world’s second-largest clothing retailer, has been removed from major e-commerce sites.
Investor knowledge: Nike shares fell more than 3% on Thursday on Wall Street, while Adidas sank more than 6% in Frankfurt. In London, Burberry lost more than 4%. H&M shares also fell almost 2% in Sweden.
The outrage was sparked by a post on social media from a group linked to the ruling Communist Party, which resurfaced in a statement H&M made in September on reports of forced labor in Xinjiang. State media have since turned to other major brands that have previously spoken out.
Human rights groups have repeatedly accused Beijing of detaining Uyghurs and other Muslim minority groups in “re-education” camps where they are forced to manufacture products that open up to global technology supply and retail chains.
According to Bernstein analyst Aneesha Sherman, it may strike in China against companies that have talked about Xinjiang. Shares of H&M rose 1% on Friday at the start of trading, while shares of Nike rose about 1.5% in pre-market operations.
But the episode is a reminder of the challenges Western brands face when courting the immense purchasing power of Chinese consumers.
“It’s a difficult position to manage, because they really can’t back down [stances], but at the same time they want to make sure they don’t leave the Chinese customer, ”Sherman told me.
China accounted for about 5% of H&M sales in 2019. Sherman estimates that figure grew to about 10% in 2020, as the Chinese economy recovered faster from the coronavirus than its domestic market. ‘Europe.
“In a year like this, even pulling a hair 5% off the top line is a big hit when H&M tries to recover,” Sherman said.
He added that luxury brands like Burberry are even more exposed. Burberry included “any significant change in Chinese consumers’ spending habits ”as a key risk for sales in its most recent annual report.
Overview: Tensions between the United States and China that gained prominence during the Trump era have not disappeared, with the administration and Biden’s allies taking a hard line with Beijing. This creates challenges for Western companies operating in the Chinese market.
“It affects those brands,” Sherman said. In addition, weeks like this only strengthen the hand of local competitors, who take more into account regional tastes and can avoid politically generated controversies, he noted.
This powerful oil lobby has changed its mind about a carbon tax
But the devil will be in the details, according to my CNN Business colleague Matt Egan. The American Petroleum Institute established a number of principles that must be followed before the centennial group approves a carbon price.
Proponents of carbon prices say it is crucial to fighting the climate crisis, as it would accelerate efforts to curb global warming emissions and force investors, businesses and individuals to bear the cost of pollution.
But API opposed the last serious effort to impose a carbon price in 2010. Since then, ExxonMobil, Chevron and other industry leaders have publicly supported the carbon price, paving the way for others.
“This is a pretty big issue for the industry. There’s a big recognition that obviously the country needs to do something about climate change,” API CEO Mike Sommers told CNN Business. “We want to be a willing partner in the Biden administration and other people in Congress who are serious about taking on this challenge.”
Still, there is skepticism among climate groups that the API’s change of heart will translate into its support for meaningful legislation.
“A statement of theoretical support for a market-based carbon price is far from accepting what will likely have to be strong and binding rules to limit the use of fossil fuels [and] methane emission, ”Dylan Tanner, executive director of InfluenceMap, a think tank focused on energy and climate change, said in a statement.
WeWork is finally made public by merging with a SPAC
The latest: The Wall Street Journal was the first to report that WeWork has agreed to merge with a special-purpose acquisition company, or SPAC.
The merger with BowX Acquisition Corp would value WeWork at $ 9 billion. It is a fraction of the $ 47 billion private market valuation the company previously earned.
Remember: WeWork was plunged into a crisis in 2019 when investors were combed by the company’s IPO documentation, which revealed the uncontrolled power of former CEO Adam Neumann and numerous possible conflicts of interest. , as well as the startup’s staggering losses.
The company was forced to postpone its IPO, accept a SoftBank bailout and reconfigure its business.
Now, he could raise money by taking advantage of the SPAC boom. In recent months, investors have rushed to create companies called “blank checks,” which exist exclusively 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 run by Vivek Ranadivé, who founded Tibco Software and now owns Sacramento Kings. Ranadivé will join the WeWork board.
Until next time
Personal income and expenditure data for February publications at 8:30 am ET, along with a key measure of inflation.
Next week: The U.S. jobs report in March is a crucial economic indicator as the recovery picks up strength.