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FACTBOX-Foreign fashion retailers in China

(Adds section on owner of the Muji brand)

March 25 (Reuters) - Fashion brands, including H&M, Nike and Adidas, have come under fire on Chinese social media for past statements they have made expressing concern over labour conditions in Xinjiang province.

Internet users in China also targeted the Better Cotton Initiative (BCI), a group that promotes sustainable cotton production which said in October it was suspending its approval of cotton sourced from Xinjiang for the 2020-2021 season, citing human rights concerns.

BCI members include Nike, Adidas, H&M and Japan’s Fast Retailing.

Following are details of some of the foreign fashion companies’ business in China:

Inditex

The Spanish company’s annual report said it has 337 stores in mainland China - 141 from its flagship Zara brand, which opened its biggest store in Asia in Beijing’s Wangfujing neighbourhood last October. The company does not report sales by country.

It sources from 477 suppliers managing 2,318 factories in China, its website said.

The company has said that 100% of its cotton will be organic, recycled and sourced through the BCI by 2025.

H&M

The Swedish group has 505 stores in China.

China is H&M’s fourth-biggest market with sales of 9.75 billion Swedish crowns in the 12 months through November 2020.

China and Bangladesh are H&M’s largest production markets for clothing, H&M’s website said. The retailer either owns or has a contractual relationship with more than 1,300 factories in the country, based on data on its website.

H&M has said its cotton would no longer be sourced from Xinjiang after the BCI cut ties to the region in October 2020.

Nike

Nike said in its earnings statement that Greater China reported revenue growth of 51% to a total of $2.28 billion in the quarter to the end of February.

A statement on Nike’s website said it did not source cotton from Xinjiang but that “traceability at the raw materials level is an area of ongoing focus”.

Adidas

The German company said in its 2020 annual report that net sales in China in 2020, excluding the Reebok brand, were 4.3 billion euros, out of a total of 18.4 billion.

The annual report said 15% of Adidas’ footwear, 20% of its apparel and 36% of accessories and gear like balls and bags are produced in China.

In its 2020 social impact report, the company said that it had called on its suppliers to stop sourcing cotton yarn from Xinjiang, and that it supported the BCI decision to cut ties to the region and said that the group was its “primary source” of cotton.

Fast Retailing

Fast Retailing has about 800 Uniqlo stores in mainland China, roughly the same number as in its home market, Japan. It cited a large profit gain in mainland China in the fourth quarter of 2020.

The company reported 455.9 billion yen ($4.1 billion) of revenue in China, Hong Kong and Taiwan in the financial year ending August 31, 2020, 22% of total revenue.

More than half its fabric mills and sewing factories are located in China, Fast Retailing’s website said.

Fast Retailing has said no Uniqlo product was manufactured in the Xinjiang region and no production partners subcontracted to fabric or spinning mills in the region.

Muji

Japan’s Muji, owned by Ryohin Keikaku Co, operates 275 stores in mainland China, out of 975 worldwide.

The retailer was quoted as telling China’s The Global Times that it uses Xinjiang cotton, winning praise from Chinese internet users, who lauded the firm’s “survival instincts”.

In a statement to Reuters, Ryohin Keikaku said it was concerned about reports of forced labour and discrimination in the region.

It said it recently conducted due diligence for Xinjiang factories, with which it has an indirect relationship via its supply chain, and also commissioned an independent audit group to make onsite audits.

“The results confirmed that at this point, there is no significant issue identified except for those issues that can be corrected by farms or ginning factories taking actions on their own to make immediate improvements,” it said.

Reporting by Victoria Waldersee. Editing by Jane Merriman

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