On February 5, 2025, people buy in a shop in Calvin Klein in a shopping center in Beijing.
ADEK Berry | AFP | Getty pictures
China put the owner of Calvin Klein and Tommy Hilfiger on the black list, which could force the company to close business and to process President Donald Trump's trade war early.
China added PVH Corp. On the list of “unreliable units” on Tuesday, which enables the Chinese government to punish the retailer, prohibit import and export activities, to revoke work permits and to refuse the ability to enter the country, among other things, vaguely vaguely Powers.
While the Chinese Ministry of Commerce was investigating PVH in September because it allegedly refused to procure cotton from the Xinjiang region, which has become known for its Uyghur prison camp, Beijing officially put the company on its black list on Tuesday. The announcement was made only a few days after Trump had a tariff of 10% on imports from China and accompanied with a number of other retaliation against the USA, including new tasks on energy imports and farm equipment.
“There is this Tit-for-Tat-Traden War and and and and and [China] wants to show the United States that it will take measures to violate large US companies or companies with significant interests in the USA. ” … my guess is [China] Wanted to choose someone and they wanted it to be someone who was a high visibility. “
After PVH is on the list of unreliable companies, China could force the company to close the dozens of shops that work in the region and prohibits selling its goods to Chinese consumers online, said Kaye. The employees – including those who have built life in China, could be effectively deported and sent home, added Kaye.
It is unclear whether China would try to enforce measures against PVH in the Autonomous region of Hong Kong, in which the company's Asian-Pacific headquarters are located. In 2020, China adopted a law that had more authorized to enforce the national laws in Hong Kong, and this is “especially in the case of laws that apply to national security”, which could include the list of unreliable companies, said Kaye.
Until Thursday morning in Eastern Time, the company in China was in operation as usual.
China could even prohibit PVH from manufacturing in the region, which might force to shift production to other countries and try to fulfill customer orders.
It is unclear which steps are taking China or whether the Trump government will try to convince China not to punish the company.
In a statement, PVH said that it was “surprised and deeply disappointed to find out about the decision of the Chinese Ministry of Commerce”.
“In our 20 years of operation in China and pride to serve our consumers from politics proudly, PVH strictly maintains compliance with all relevant laws and regulations and works in accordance with the established industry standards and practices. We will be our commitment to those responsible Authorities are continuing and looking forward to a positive solution, “said the company.
In 2023, China made 6% of the sales of PVH and 16% of its profit from interest and taxes, but is more based on the country for the production, which is the greater risk of his business. PVH has more factories and suppliers in China than in any other region, which corresponds to about 18% of production. This emerges from a disclosure published in December.
“This has the potential to be very, very disruptive for PVH,” said Neil Saunder's Neil Saunders, Managing Director of Globaldata. “You would certainly have to try to find new capacities. Of course, you would be able to do this in good time, but the two things that are in question probably have the inventory shortly before the transition. The other problem is of course quality.”
PVH has been working in China for more than 20 years. While it works with suppliers and factories in more than 30 other countries, the high -quality goods that make it can be difficult due to the necessary skills, said Saunders.
“While you can shift the manufacturing capacity somewhat easily, it is not so easy to guarantee the quality of guaranteeing production processes. These things take time to Upskill,” said Saunders. “China has this capacity and has these skills because PVH has been working there for ages. Another country, another production facility, may not have these skills.”
In addition, PVH China viewed the growth market and now has to look for new strategies to increase sales and profitability because the demand for its high-end dresses, intimate clothing and pullovers falls.
China's unreliable company list is a relatively new law in the country, and experts say that it is intentionally opaque. The government has a wide range of scope to take PVH measures, but it remains unclear what exactly it will do. As a rule, the instructions come on the blacklist within a few days after the placement of a company, said Kaye.
China could add PVH to the list and do not do anything to the company, but Kaye said that the chances for it were “very slim” because the government wants to avoid perception that it is withdrawing. China will use PVH as a negotiating table with Trump and use as an example of the force that has to add pain to other US companies with large operations and customer base in China, such as: B. NikePresent ApplePresent General MotorsPresent Starbucks and other.
“There is a kind of sword of Damocles who hang over [PVH’s] Head, and that's exactly what, because it is not really about PVH. This is about PVH being caught in the spit between China and the USA, “said Saunders.” China uses PVH as an example to say whether the tariffs are progressing when other restrictions are introduced to China, we can make life difficult for US companies in the country. That's what it's really about. “
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