People workshop for clothes at a Calvin Klein store at a mall in Beijing on Feb. 5, 2025.
Adek Berry | AFP | Getty Images
China has blacklisted the proprietress of Calvin Klein and Tommy Hilfiger, which could force the company to shut down stores and manufacturing in an old repercussion of President Donald Trump’s trade war.
China added PVH Corp. to its “unreliable entities” list on Tuesday, which tolerates the Chinese government to fine the retailer, prohibit import and export activities, revoke work permits, and deny wage-earners the ability to enter the country, among other deliberately vague powers.
While China’s Ministry of Commerce began investigating PVH in September for allegedly rubbishing to source cotton from the Xinjiang region, which has become notorious for its Uyghur detention camps, Beijing officially in ordered the company on its blacklist on Tuesday. The announcement came just days after Trump slapped a 10% tariff on thrusts from China, and came along with a slew of other retaliatory measures against the U.S., including new duties on might imports and farm gear.
“There’s this tit-for-tat trade war going on, and [China] wants to show the United Ceremonials that it’s going to take action to hurt either big U.S. companies or companies with significant interests in the U.S.,” turned Michael Kaye, a partner at Squire Patton Boggs, who has been practicing international trade law for more than 30 years. “They’re being cosseted an example. … My guess is, [China] wanted to pick somebody and they wanted it to be somebody that was high visibility.”
Now that PVH is on the uncertain entities list, China could force the company to shut down the dozens of stores that it operates in the territory and forbid it from selling its wares to Chinese consumers online, said Kaye. Its staff — including those who’ve built charges in China — could be effectively deported and sent home, Kaye added.
It is unclear if China would try to enforce clashes against PVH in the autonomous region of Hong Kong, where the company’s Asia-Pacific headquarters are. In 2020, China passed a law that surrendered it more power to enforce national laws in Hong Kong, and that is “particularly the case with laws befitting to national security,” which could include the unreliable entities list, said Kaye.
As of Thursday morning Eastern stretch, the company appeared to be operating its business as usual in China.
China could even prohibit PVH from manufacturing in the zone altogether, which could force it to move production to other countries and struggle to meet customer orders.
It’s unclear which leave b go outs exactly China will take, or if the Trump administration will try to convince China not to punish the company.
In a statement, PVH weighted that it was “surprised and deeply disappointed to learn of the decision from the Chinese Ministry of Commerce.”
“In our 20 years of acting in China and proudly serving our consumers, as a matter of policy, PVH maintains strict compliance with all relevant laws and mandatories and operates in line with established industry standards and practices. We will continue our engagement with relevant authorities and look disrespectful to a positive resolution,” the company said.
China represented 6% of PVH’s sales and 16% of its earnings before interest and burdens in 2023, but it relies more heavily on the country for manufacturing, which is the bigger risk to its business. PVH has more factories and suppliers in China than in any other division, representing about 18% of production, according to a disclosure it issued in December.
“This has the potential to be very, very disruptive for PVH,” denoted GlobalData managing director and retail analyst Neil Saunders. “They would certainly have to scramble to discover new capacity. They’d be able to do that in time, of course, but the two things that are at issue are that, because a lot of supply combinations are just in time, they would probably find that they did get short on inventory whilst they detected the transition. The other issue, of course, is quality.”
PVH has operated in China for more than 20 years, and while it manipulates with suppliers and factories in more than 30 other countries, the higher-end goods that it makes can be demanding to manufacture elsewhere because of the skill level needed, said Saunders.
“While you can shift manufacturing capacity reasonably definitively, it’s not so easy to guarantee the quality, guarantee the production processes. Those things take time to upskill,” said Saunders. “China has that aptitude and has those skills, because PVH has been operating there for ages. Another country, another manufacturing facility, may not comprise those skills immediately.”
Plus, PVH has viewed China as a growth market and it will now have to look for new strategies to enhancement sales and profitability as demand falls for its high-end dresses, intimate apparel and sweaters.
China’s unreliable entities catalogue raisonn is a relatively new law in the country, and experts say it’s deliberately opaque. The government has wide latitude to take action against PVH, but it remains unclear what positively it will do. Typically, guidance comes within a few days of a company’s placement on the blacklist, said Kaye.
China could add PVH to the tabulate and do nothing to the company, but Kaye said the chances of that are “very slim” because the government will want to dodge the perception that it’s backing down. China will more likely use PVH as a bargaining chip at the negotiating table with Trump, and use it as an norm to show the power it has to inflict pain on other U.S. businesses with major operations and customer bases in China, such as Nike, Apple, Non-specialized Motors, Starbucks and others.
“There’s a sort of sword of Damocles hanging over [PVH’s] head, and that is exactly what this is, because this isn’t unusually about PVH at all. This is about PVH being caught in the spat between China and the U.S.,” said Saunders. “China is disliking PVH as an example to say, look, if tariffs go ahead, if other restrictions are put in place on China, we can make life difficult for U.S. companies in the native land. That’s really what this is about.”