China Accuses PVH of ‘Improper Practices’ in Xinjiang
Updated at 4:16 p.m. E.T. Jan. 16
China’s Ministry of Commerce has made a preliminary determination that PVH Corp. “engaged in improper practices” related to the Xinjiang region, according to Xinhua, the country’s official news source.
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What impact that will have on the company remains unclear, but investors were taking a cautious stance and sent shares of PVH down 6.9 percent to $92.20 on Thursday.
Chinese officials have “repeatedly heard statements and defenses from PVH Corp. and reviewed the written materials submitted by the U.S. company,” Xinhua said. “The final investigation results will be made public in accordance with the law.”
PVH said in a statement: “As a matter of company policy, PVH maintains strict compliance with all relevant laws and regulations in all countries and regions in which we operate and in line with established industry standards and practices. We are in communication with the Chinese Ministry of Commerce and will respond in accordance with the relevant regulations.”
The company, which owns Tommy Hilfiger and Calvin Klein, came under the microscope of the Chinese government in September, when officials said they were looking into “discriminatory measures” the company had taken against products from Xinjiang.
The region has been a hot button political issue in both countries.
More than a million Uyghurs and other Turkic Muslims are said to be under internment in Xinjiang, with many allegedly forced to work. The region supplies more than 80 percent of China’s cotton, but it’s illegal to bring goods made of Xinjiang cotton into the U.S.
In 2021, PVH prohibited licensees from producing finished goods in Xinjiang and also stopped working with factories that used cotton from the area.
In itself, that was not unusual for Western fashion firms producing goods in China and looking to ship them to the U.S.
So it appears that PVH is being singled out as an example with the investigation, which falls under China’s Unreliable Entity List.
“China has always handled issues related to its Unreliable Entity List with caution, and the list targets only a handful of foreign entities that jeopardize China’s national security,” said Xinhua, citing a spokesperson for the Ministry of Commerce.
It’s not unusual for companies to get called out as Beijing and Washington square off on any number of geopolitical issues. TikTok, for instance, is set to be banned in the U.S. starting on Sunday due to national security concerns.
And on Wednesday, the U.S. added sanctions for one of China’s largest textile manufacturers, putting it on a forced labor blacklist for alleged ties to the persecution of Muslim minorities in Xinjiang.
According to the Forced Labor Enforcement Task Force, which is headed by the U.S. Department of Homeland Security, there is “specific and articulable” evidence that Huafu Fashion Co. uses cotton from Xinjiang.
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