Calvin Klein owner PVH has been blacklisted in China

China has blacklisted Calvin Klein and Tommy Hilfiger owners. President Donald Trump’s Trade War.

China added Pvh Corp. Tuesday’s “unreliable entities” list will allow the Chinese government to fine retailers, ban import and export activities, revoke work permits and deny employees the ability to enter the country.

China’s Ministry of Commerce The investigation has begun In September, PVH allegedly refused to procure cotton from the infamous Xinjiang region for its Uyghur detention camp, and Beijing officially blacklisted the company on Tuesday. The announcement comes days after Trump slapped 10% tariffs on imports from China and came in a massive amount. Other retaliation measures Includes new obligations to the United States regarding energy imports and farm equipment.

“This tough trade war is underway and (China) wants to show the US that it will take action to hurt either a large company or a company that has a great interest in the US. ” said Michael Kay. A partner at Squire Patton Boggs, who has practiced international trade law for over 30 years. “They are modelled… My guess is (China) wanted to choose someone.

Now that PVH is on an unreliable entity list, China has forced it to close dozens of stores operating in the region, banning it from selling its products online to Chinese consumers. Kay said there. Staff, including those who have made a living in China, could be effectively deported and sent home, Kay added.

It is unclear whether China will attempt to carry out actions against PVH in the autonomous region of Hong Kong, where its Asia-Pacific headquarters is located. In 2020, China passed a law that gave more power to enforce Hong Kong’s national law. That’s especially true in cases of laws that are applicable to national security,” Kaye said, which could include unreliable entities lists.

As of Thursday morning Eastern time, the company appeared to be running its business in China as usual.

China could even ban production in the region entirely, moving production to other countries and having trouble meeting customer orders.

It is unclear which steps will be taken precisely by China, or whether the Trump administration will try to persuade China not to punish the company.

In a statement, PVH said, “I am very disappointed and disappointed to learn of the decision from China’s Ministry of Commerce.”

“In its 20 years of business in China, PVH has proudly served consumers as a policy issue, and has maintained strict compliance with all relevant laws and regulations and has established industry standards and operates in line with practice. We will continue to engage with relevant authorities and look forward to a positive resolution,” the company said.

China accounted for 6% of PVH sales and 16% of revenue before interest and taxes in 2023, but manufacturing is heavily dependent on the country. This is a huge risk for your business. PVH has more factories and suppliers in China than in other regions, which account for around 18% of production, according to a disclosure issued in December.

“This can be very, very disruptive for PVH,” said Neil Saunders, managing director and retail analyst at GlobalData. “They will certainly need to scramble to find new abilities. Of course they can do that, but since many supply chains are just in time, they probably have to stock them There is a shortage, but of course the other problem is quality.”

PVH has been operating in China for over 20 years and works with suppliers and factories in over 30 other countries, but manufacturing elsewhere can be difficult due to the required skill level.

“It’s possible to shift manufacturing capacity reasonably easily, but it’s not that easy to guarantee quality and guarantee the production process. These things take time to mature,” says Sanders. Ta. “China has that ability, they have those skills, because PVH has been operating there for years. Another manufacturing facility, which is another country, has quickly had those skills. It may not be there.”

Furthermore, PVH sees China as a growing market and as demand for high-end dresses, intimate apparel and sweaters drops, it needs to look for new strategies to improve sales and profitability.

China’s unreliable entity list is a relatively new national law, and experts say it is intentionally opaque. The government has a wide latitude to take action against PVH, but what exactly it will do remains unknown. Guidance usually takes place within days of a company’s blacklisting, Kaye said.

China added PVH to the list and did nothing to the company, but Kaye said the possibility is “very slim” as he wants to avoid the perception that the government is in a retreat. China is likely to use PVH as a negotiation tip at the negotiation table with Trump, and using it as an example to show the force that must inflict pain Other US companies It has major operations and customer base in China. Nike, apple, General Motors, Starbucks others.

“There’s a sort of Damocles sword hanging above the head (of PVH). That’s precisely because this isn’t about PVH at all. Sanders said, “China uses PVH as an example. See. And if tariffs go further, if other restrictions are being introduced in China, we can make life difficult for our businesses in the country. That’s really what this is. ”