Dozens of Chinese celebrities have terminated their contracts or said they will sever ties with brands, while H&M, the world’s second-largest clothing retailer, has been withdrawn from major e-commerce sites.
Investor presentation: Nike shares fell more than 3% on Wall Street on Thursday, while Adidas sank more than 6% in Frankfurt. In London, Burberry lost more than 4%. H&M shares also fell by almost 2% in Sweden.
The outrage was sparked by a post on social media by a ruling Communist Party group, which reappeared in a statement made by H&M in September about reports of forced labor in Xinjiang. The state media has since targeted other major brands that have previously spoken out.
Human rights groups have repeatedly accused Beijing of arresting Uighurs and other Muslim minority groups in “re-education” camps, where they are being forced to make products that find their way into global technology and retail supply chains.
According to Bernstein analyst Aneesha Sherman, it could go back to China against companies that talked about Xinjiang. H&M shares rose 1% at the start of trading on Friday, while Nike shares rose about 1.5% in premarket trading.
But the episode is a reminder of the challenges facing Western brands as they judge the immense spending power of Chinese consumers.
“It’s a difficult position to manage, because they can’t back down [stances]”but at the same time they want to make sure they don’t abandon the Chinese customer,” Sherman told me.
China accounted for about 5% of H&M sales in 2019. Sherman estimates that this figure will increase to about 10% in 2020, as China’s economy has recovered faster from coronavirus than its domestic market in Europe.
“In a year like this, even getting a 5% haircut from the top line is a big hit when H&M tries to recover,” Sherman said.
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.
Overview: US-China tensions that gained momentum during the Trump era have not disappeared, with the Biden administration and allies taking a heavy 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 are better exploited by regional tastes and can avoid politically generated controversies, she said.
This powerful oil lobby has changed its tone based on a carbon tax
But the devil will be in the details, says my CNN Business colleague Matt Egan. The American Petroleum Institute has established a set of principles that must be met before the century-old group approves a carbon price.
Proponents of carbon prices say it is crucial to tackling the climate crisis, as it would accelerate efforts to reduce global warming emissions and force investors, companies and individuals to bear the costs of pollution.
But API opposed the last serious effort to impose a price on carbon in 2010. Since then, ExxonMobil, Chevron and other industry leaders have publicly supported carbon prices – paving the way for others to follow.
“This is a pretty big deal for the industry. There’s a broad 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 with the Biden administration and others in Congress who are serious about taking on this challenge.”
However, there is skepticism among climate groups that the API’s change of heart will translate into support for significant legislation.
“A statement of theoretical support for a market-based carbon price is far from agreeing on what will likely have to be strong and binding rules to limit fossil fuel consumption [and] methane emissions, “said Dylan Tanner, executive director of InfluenceMap, a think tank focused on energy and climate change.
WeWork eventually becomes public by merging with a SPAC
Last: The Wall Street Journal was the first to report that WeWork had agreed to merge with a special purpose procurement company or SPAC.
Merger with BowX Acquisition Corp. would value WeWork at $ 9 billion. This is a fraction of the $ 47 billion private market valuation the company previously obtained.
Remember: WeWork was plunged into crisis in 2019, as investors dressed in the company’s IPO documents, which revealed the uncontrolled power of former CEO Adam Neumann and numerous potential conflicts of interest, as well as startup losses. of.
The company had to postpone its IPO, accept help from SoftBank and reconfigure its business.
Now, he could raise money by accessing the SPAC boom. In recent months, investors have rushed to set up so-called “blank check” companies, which simply exist to find private companies to merge with, 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 join the board of WeWork.
It follows
Data on personal income and expenses for February posts at 8:30 ET, along with a key measure of inflation.
Next week: The US employment report for March is a crucial economic indicator as the recovery picks up steam.