China has announced that it is investigating the company that owns American fashion brands Tommy Hilfiger and Calvin Klein for suspected “discriminatory measures” against cotton companies in Xinjiang. This marks a new effort by Beijing to counter allegations from Western officials and human rights activists that cotton and other goods in the region have been produced using forced labor from the Uyghur ethnic group.
Here's ads banner inside a post
In 2021, the US banned imports from this region due to concerns about forced labor. China’s Ministry of Commerce accused the company of “boycotting Xinjiang cotton and other products without any factual basis.” PVH, which owns the two brands and has a significant presence in both China and the US, has not yet responded to the matter.
The company previously stated that it complies with the laws in the regions where it operates, including the US Xinjiang law. PVH has 30 days to respond to the Chinese authorities; otherwise, it may be added to the country’s “unreliable entities” list, raising the risk of further penalties.
On Wednesday, a Chinese Ministry of Commerce official denied that the investigation was linked to US plans to ban certain Chinese electric vehicle technologies. They emphasized that China has always handled the issue of the unreliable entity list cautiously, targeting only a very small number of foreign entities that undermine market rules and violate Chinese laws. They asserted, “Honest and law-abiding foreign entities have nothing to worry about.”
Here's ads banner inside a post
Cullen Hendrix, a senior fellow at the Peterson Institute for International Economics, indicated that it is unclear what prompted the investigation into PVH at this time. However, he suggested that this announcement could damage the company’s reputation among Chinese consumers and serve as a broader warning to global firms about the risks of merely bowing to Western concerns.
“China is flexing its muscle to remind not just Western governments but Western firms that actions have consequences,” he said. “This same kind of naming-and-shaming tactic used by Western human rights organizations can be weaponized here.”
The investigation of PVH comes amid rising tensions between China and the West on various issues, including electric cars and manufacturing. On Monday, the US proposed rules to ban certain technologies in Chinese and Russian cars, citing security threats.
Here's ads banner inside a post
In its annual report, PVH warned investors about revenue and reputational risks stemming from the conflict over Xinjiang, noting that the issue has attracted significant scrutiny and contention in China, the United States, and elsewhere, resulting in criticism against multinational companies, including itself.
