Will Consumers Pay More To Not Source from China?

| September 2020
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Retailer H&M will stop relying on Chinese garment factories and suppliers located in Xinjiang, over concerns about the use of Uyghers as forced labor. The company will also end relationships with suppliers elsewhere in China that utilize forced labor or inputs from Xinjiang.

It is not immediately clear if this will add costs to the clothing and fashion sold in its stores. However, if higher costs are marketed as part of the price for ending ties with Chinese suppliers over human rights concerns, will consumers respond?

The first set of responses to the second poll issued by the U.S. Global Engagement Program have been tabulated, and seem to support the H&M decision. 43.3 percent of respondents said that it matters “a great deal” that close trading partners should be democracies and share our values, with another 51.4 percent agreeing that this should be one factor.  69.5 percent agreed with the principle that consumers should be willing to pay a premium (up to 20 percent) to purchase a good made in another democracy instead of a cheaper alternative from a non-democratic country.  Assuming that any increase in price for stopping sourcing from China is not too onerous, there may be support among consumers for having goods and services come from other suppliers–and this, in turn, suggests that there may be some prima facie public support for the “democratic community” narrative … To some extent, both the Biden and Trump campaigns seem to be tapping into this sentiment with regards to reorienting American trade away from China, not simply on economic but also on the grounds of values–so it will be interesting to test what resonance this message may have among voters.

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