BEIJING, (Reuters) – Sam’s Club (NYSE:) Inc, in response to China’s furore over claims that it had removed Xinjiang products from its app in a deliberate move, denies the claim in a conference call with analysts. They called the incident “a misunderstanding.”

Sam’s Club was criticized by Chinese social media users as well as local news outlets for its members-only warehouse club offering products and services. Last week, the club removed the products from the company’s domestic online store. China’s anti-graft office accused Sam’s Club, a U.S. retail chain, and of “stupidity & shortsightedness” regarding the matter.

In a conference call last week, a Sam’s Club representative stated that Chinese customers couldn’t find products in Xinjiang due to the fact that the app doesn’t support searching for products based only on name of place.

One participant recorded the call and shared it with Reuters. Zhang introduced Zhang as Sam’s Club’s regional e-commerce lead.

Zhang declared that this matter had been misunderstood.

Zhang said, “We didn’t defend ourselves because, there isn’t reason to fear of things we haven’t done.” Zhang’s statements on the phone call were also confirmed by another participant who spoke out about Sam’s Club’s China plans.

Walmart refused to comment on a request. Sam’s Club and Walmart have not commented on China’s backlash. Zhang also declined to comment about the Walmart situation. Walmart was accused of taking products from western China from its app and offline stores.

The Sam’s Club controversy that led to a wave Sam’s Club members in China cancelling their memberships underscores how foreign companies balance geopolitical tensions in China with China’s market and supply-base importance.

Xinjiang, which has been a source of increasing conflict between China’s governments and Western countries, is now being investigated by U.N. rights experts. They estimate that over a million Uyghurs as well as members of other Muslim minority groups, have been held there.

China denies any allegations of forced labor or other abuses in Xinjiang. It describes the camps as vocational centers designed to combat extremism and, in late 2019, stated that all camp residents had “graduated”.

MEMBERSHIP CANCELLED

Besides Walmart, Swedish fashion retailer H&M and U.S. chipmaker Intel (NASDAQ:) have come under fire in China in recent months for making adjustments to their businesses over Xinjiang. U.S. rights organizations criticized Tesla’s (NASDAQ:), for opening a showroom at Xinjiang in December 31.

After U.S. President Joe Biden’s Dec. 23 legislation banning imports of Xinjiang, Chinese social media users vented against Sam’s Club. This was in response to concerns over forced labor.

Zhang stated that Sam’s Club in China has around 500 members who cancelled their cards. Zhang did not provide a national number.

He said, “It has a negative impact on the membership base but time will prove it all in the future.”

“We believe that China’s potential is enormous.”

China was a big market for Walmart. It generated $11.43 billion in revenue during its fiscal year, which ended on Jan. 31. According to Walmart’s website, 36 of the 423 stores it operates in China are Sam’s Club locations.