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When a fashion industry sustainability group called out China over its treatment of Uyghur Muslims, the idea was to nudge Beijing toward human-rights reforms while cleaning up a troubled corner of the $60 billion global cotton business. Western brands have learned the hard way that things don’t work that way in China.

In the 12 months since the Better Cotton Initiative (BCI) — whose members range from Uniqlo owner Fast Retailing Co. to Nike Inc. and Walmart Inc. — published a statement on allegations of forced labor in China’s cotton-growing Xinjiang region, several brands have suffered major setbacks in the country, which one of the world’s biggest producers and consumers of the fabric.

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