People buy clothes on February 5, 2025 at a Calvin Klein store in a shopping mall in Beijing.
Adek Berry | AFP | Getty Images
China blacklists Calvin Klein and Tommy Hilfiger owners, which could force companies to close stores and manufacturing President Donald Trump’s trade war.
China added PVH Corp. On Tuesday’s list of “unreliable entities”, the Chinese government could fine retailers, ban import and export activities, revoke work permits, and deny employees’ ability to enter the country, among other deliberately vague powers.
The Ministry of Commerce of China Start investigation PVH was notorious for allegedly refusing to purchase cotton from Xinjiang region, which was notorious for its Uyghur detention facility, and Beijing officially blacklisted the company on Tuesday. The news comes days after Trump’s 10% tariff on imports from China and with a group of Other retaliation measures New responsibilities for the United States, including energy imports and agricultural equipment.
“There is this trade war in progress and (China) hopes to show the United States that it will take action to harm large American companies or companies with significant interest in the United States.” Squire Patton Boggs’ partners have been engaged in international trade law for 30 years Years of history. “They are an example. …My guess is that (China) wants to pick someone and they want it to be a very high visibility.”
Now that PVH is listed on the unreliable entity list, China can force the company to close dozens of stores operating in the region and ban it from selling its merchandise to Chinese consumers online, Kaye said. Kaye added that its employees — including those who built their lives in China — can be effectively deported and sent home.
It is unclear whether China will take action against PVH in the Hong Kong Autonomous Region, where the company’s Asia-Pacific headquarters are located. In 2020, China passed a law that gave more power to enforce national laws in Hong Kong, “especially in the case of laws that apply to national security” that could include unreliable lists of entities .
As of Eastern Time, the company appears to be operating as usual in China.
China could even ban PVH’s manufacturing industry entirely in the region, which could force it to transfer production to other countries and work hard to meet customer orders.
It is unclear which steps China will take or whether the Trump administration will convince China not to punish companies.
“It was surprised and disappointing to learn about the decision of China’s Ministry of Commerce,” PVH said in a statement.
“In our 20 years of operation in China and proudly serve consumers, PVH strictly abides by all relevant laws and regulations in policy and complies with established industry standards and practices. We will continue to participate with relevant authorities and Looking forward to positive resolutions,” the company said.
China accounts for 6% of PVH sales and 16% of earnings before interest and taxes in 2023, but it relies more on the country’s manufacturing sector, which is a greater risk to its business. According to a disclosure released in December, PVH has more factories and suppliers in China than any other region, accounting for about 18% of production.
“This can be very, very disruptive for PVH,” said Neil Saunders, managing director and retail analyst at GlobalData. “Of course, they have to scramble to find new capabilities. Of course, they can do it in time, but there are The two things that are problematic are because a lot of supply chains are just timely, they will of course, they do find that they do lack stocks.”
Saunders said PVH has been operating in China for more than 20 years and while it works with suppliers and factories in more than 30 other countries, the high-end goods it manufactures may be difficult to produce elsewhere due to the required level of skill.
“While you can easily transfer manufacturing capabilities reasonably, it’s not easy to ensure quality and ensure production processes. These things take time to improve skills,” Sanders said. “China has this capability, and has these skills, Because PVH has been operating there for a long time. Another country, another manufacturing plant may not have these skills.”
Additionally, PVH sees China as a growth market and now it must find new strategies to improve sales and profitability as demand for its high-end dresses, private clothing and sweaters declines.
China’s unreliable entity list is a relatively new law in the country, and experts say it’s intentionally opaque. There are broad latitudes in government action on PVH, but it is not clear what exactly it will do. Normally, guidance is within a few days of a company’s blacklist, Kaye said.
China could add PVH to the list without any effect on the company, but Kai said it was an opportunity “very slim” as the government would want to avoid a perception of its backup. China is more likely to use PVH as a bargaining chip on the negotiation table for negotiations with Trump, and use this as an example to show that it must exert painful force Other U.S. businesses Main business and customer bases in China, e.g. Nike,,,,, apple,,,,, General motor,,,,, Starbucks There are others.
“There is a handful of Damocles hanging on the head of (PVH) and that’s exactly what it is because it’s not really about PVH at all.” Sanders said. “China is taking PVH as an example, please see if the tariffs are Continue, if other restrictions are imposed in China, we can make life difficult for American companies in the country. That’s true. ”
