Doing business in China is difficult. A clash over human rights is making it harder

Companies that want to do business in China have long made compromises in the pursuit of success. Now an escalating diplomatic dispute over human rights is underscoring the stark choice facing Western executives: put profit or principles first. The strains over Xinjiang — where US, EU and UK authorities have accused the Chinese government of repressing Uyghurs and other minority groups through forced labor, mass detention and sterilization — has ensnared a growing number of businesses and trade relationships in recent months.

Beijing has vehemently denied all the allegations, and says its camps in the region are "vocational training centers" designed to combat terrorism and religious extremism. But last week, a landmark investment dealbetween the European Union and China was cast into doubt after officials traded sanctions over Xinjiang.

Days later, H&M (HNNMY), Nike (NKE), Adidas (ADDDF) and other Western retailers were threatened with a boycott in China because of the stand they had taken against the alleged use of forced labor to produce cotton in Xinjiang. H&M (HNNMY) was even dropped by major Chinese e-commerce stores.

Read more