🌏 H&M and Nike boycotted in China. Why?

In the US, a sneaker is purchased on eBay every 4 seconds, a smartphone every 6, and a watch every 7.

Much of the money is processed through PayPal, but that tide has begun to shift toward eBay’s in-house payments service.

It all started when eBay bought PayPal in 2002

For 13 years following the acquisition, the duo never truly became one:

• Sellers had to have different eBay and PayPal accounts
• PayPal had its own customer service
• PayPal charged fees on top of those from eBay

PayPal split off in 2015, leaving eBay to start from scratch

Building a payments system is hard when your sellers come from 190 markets and include everyone from big-name retailers to your neighbor Jim.

But eBay did it, and its platform, Managed Payments, has seen some success:

• In 2020, 1m+ of eBay’s 19m sellers had moved over, including 50% of US sellers
• Over 38% of Q4 revenue was processed in-house

The company says it’ll complete the US migration by the end of 2021, and that the changes could drive an incremental $500m in operating income in 2022.

The shift has come with its fair share of risks

Before PayPal left, it oversaw fraud on its eBay transactions.

That responsibility now lies with eBay, and the company has been building up a payments and risk team that includes 400+ employees.

In the wise words of Weird Al’s “eBay” parody to the Backstreet Boys’ “I Want It That Way”:

🎶 “Got PayPal or Visa, whatever’ll please ya, as long as I’ve got the dough” 🎶

• Google’s supreme win: The highest court in the land sided with Google in a $9B copyright battle with Oracle, which had accused Google of copying 11k+ lines of code to build Android.
• Tim Cook stirs the pot: The Apple CEO hinted at the company’s auto efforts in an interview with the New York Times’ Kara Swisher in which he also expressed admiration for Elon Musk and Tesla.
• Indian unicorn: Bangalore-based Meesho raised $300m at a $2.1B valuation as it looks to be the go-to platform for small businesses to connect with customers online.
• Can’t stop. Won’t stop. GameStop. The company could raise hundreds of millions of dollars from stock sales as it looks to kick-start a digital transformation.
• Global tax: Treasury Secretary Janet Yellen pushed for a global minimum corporate tax rate, citing a “30-year race to the bottom” in which countries have lowered the tax limbo bar to attract businesses.
• Knotel Kno-more: In a letter, ousted Knotel co-founder Amol Sarva criticized the firm that bought out his company, saying they “hired a group of Adam Neuman-era WeWork bros to lead the company forward.”
• Automate this: SoftBank in talks to take a 40% stake in AutoStore. The deal would value the warehouse-automation firm at $8B including debt.
• Supreme Court Justice Clarence Thomas laid out his case for regulating Twitter.
• Social audio app Clubhouse will allow tipping with a nice catch…creators get to keep 100% of the proceeds.
• Leading executives at Credit Suisse (including its chief risk officer) will leave the firm following the Archegos Capital meltdown that saw investor Bill Hwang lose $8B in 10 days.

The allure of China’s market — which boasts 400m+ middle-class citizens — is nearly impossible for any global corporation to ignore.

But selling in China isn’t always an easy affair, particularly when geopolitics gets in the way.

On March 22, the EU, US, UK, and Canada announced coordinated sanctions for individuals involved with forced labor camps in China’s Xinjiang region, home to the Uyghur Muslim minority population.

Xinjiang is home to 90% of the country’s cotton production

According to The Economist, the $12B industry is immaterial to China’s GDP (0.1%). However, China works with many global fashion brands and is responsible for ~40% of the world’s textile exports.

Decrying the labor practices in the region, the previous US administration placed a wholesale ban on Xinjiang cotton.

Feeling Western pressure, Swedish fast-fashion retailer H&M had issued a statement on Xinjiang prior to the sanctions… making it an easy retaliation target.

H&M’s clothes were blocked from ecommerce apps…

… landlords canceled its leases, and the retailer received opprobrium from internet trolls. Per The Economist, 5% of H&M’s global sales (~$1B) could be lost if China shuts it out.

Nike and Adidas are facing similar boycotts for previous statements about Xinjiang.

There is no easy solution

Fashion brands can’t guarantee that their textiles are free of forced labor, namely because Chinese governments won’t allow on-the-ground audits.

The renewable energy industry may soon face similar Xinjiang questions: ~50% of the world’s polysilicon for solar panels come from the region.

We often get asked what it feels like to work at The Hustle. The Daily email you are reading right here is created in a Google Doc.

Contributors include writers, copy editors, UX designers, and more… which means there is always an anonymous Google animal watching our every move.