Beijing threatens to block Calvin Klein owner’s access to China
Summary
The possible inclusion of PVH on an “unreliable entities list” comes as the U.S. challenges Chinese firms.Beijing said it is investigating PVH, the owner of Calvin Klein and Tommy Hilfiger, for alleged discrimination against products from the Xinjiang region—setting up a potential block on the American apparel firm’s sales in China just as the U.S. introduces measures to limit Chinese access to its own market.
China’s Commerce Ministry said Tuesday that the probe would determine whether PVH is placed on an “unreliable entities list" over allegations that it boycotts cotton products from Xinjiang. Being blacklisted would prohibit the company from selling to and buying from China, as well as investing in the country.
The investigation escalates Beijing’s use of its “unreliable entities" tool, previously used against American defense contractors with already limited access to the world’s second-largest economy.
The move follows steps by the Biden administration to combat what it sees as threats from China in U.S. markets—whether through trade practices or technology.
The U.S. Commerce Department on Monday proposed a ban on the use of Chinese and Russian components in connected vehicles on U.S. roads, while the Biden administration said earlier this month that it would take executive action to limit the use of a trade provision that lets China-founded e-commerce companies such as Temu and Shein more easily ship to the U.S.
The U.S. banned imports of cotton products from Xinjiang in 2021 over reports of forced labor. It has also blocked imports from dozens of Chinese textile companies over alleged ties to coercive labor practices.
PVH said in 2020 that it would cease all relationships with any factories or mills that use Xinjiang cotton or produce garments of fabric in the region. The company has said, in its July 2022 guidelines on supply-chain standards and a separate statement, that it doesn’t source from Xinjiang and that it complies with U.S. government policy on Xinjiang.
PVH has called China an “important growth engine" where its revenue grew by more than 20% last year in local currency terms. The company said that it wanted to focus on brand awareness in the country, particularly for Calvin Klein and Tommy Hilfiger.
Xinjiang is a cotton-producing area where China’s ruling Communist Party has carried out a forced-assimilation campaign against Uyghurs and other predominantly Muslim minority groups. The Chinese Commerce Ministry said Tuesday that the probe of PVH was prompted by complaints alleging that the company was “boycotting Xinjiang cotton and other products without any factual basis."
Such alleged practices would violate “normal market trading principles," cause severe damage to the legitimate rights and interests of Chinese companies, and infringe upon China’s sovereignty and security, the ministry said.
During the probe, PVH would be allowed to argue its case with Chinese authorities, and has 30 days to provide documentation on whether it has carried out any discriminatory measures against Xinjiang-related products within the past three years, according to the Commerce Ministry notice.
China has used its “unreliable entities list" to sanction a number of U.S. companies in the past two years, targeting American defense contractors over their arms sales to the island democracy of Taiwan, which Beijing claims as its territory.
Lockheed Martin and an arm of Raytheon Technologies, now known as RTX, were blacklisted in early 2023, while three more U.S. defense companies—including Boeing’s defense, space and security arm—were added to the list in May. Such sanctions have little real effect on these contractors as American defense firms are broadly barred from making military sales to China.
