Beijing has initiated an investigation into PVH Group, the parent company of Calvin Klein and Tommy Hilfiger, over alleged disruptions in its supply chain related to the Xinjiang region.
China’s Ministry of Commerce announced on Tuesday that it was looking into claims that PVH has implemented “discriminatory measures” against products from Xinjiang, in violation of market trading principles.
The probe falls under China’s “unreliable entities” list mechanism, a tool established in 2019 following the US blacklisting of Chinese tech giant Huawei. If PVH is added to this list, the American apparel company could face restrictions on trade, investment, and operations in China, including a potential ban on selling and buying goods from the country. The Ministry of Commerce has given PVH 30 days to submit documentation defending its actions.
PVH is one of several Western companies that have faced scrutiny in China over concerns about forced labor practices in Xinjiang. The region is a major cotton producer and has been at the center of international controversy regarding the treatment of Uyghur Muslims. Western governments, including the US, have implemented restrictions on Xinjiang-linked goods due to concerns over human rights abuses, with the US banning imports of Xinjiang cotton in 2021.
In response to these pressures, PVH stated in 2020 that it would cease sourcing cotton or other products from the region. However, China’s Commerce Ministry argues that the company’s actions may have infringed upon the sovereignty and legitimate interests of Chinese businesses. PVH has yet to comment on the investigation.
This development comes as tensions between the US and China escalate, with both nations imposing trade and technology-related restrictions. The US Commerce Department recently proposed a ban on the sale of vehicles containing Chinese or Russian hardware and software. Meanwhile, China’s use of its “unreliable entities” list has previously targeted US defense contractors, further complicating relations between the two economic powers.
PVH has considered China an important market for growth, with significant sales from its Calvin Klein and Tommy Hilfiger brands. However, if found guilty of the alleged violations, the company may face significant disruptions to its operations in the country.
With input from CNBC, the Wall Street Journal, and the New York Times.
