China said it would investigate US apparel maker PVH Corp for suspected boycotting of cotton sourced from Xinjiang, a probe that could lead to punishment for the parent company of Tommy Hilfiger and Calvin Klein.
The Chinese Ministry of Commerce asked PVH to submit a written response in 30 days on whether it had adopted “discriminative measures” against Xinjiang-related products in the past three years, according to a statement posted on the ministry’s Web site on Tuesday.
If found at fault, PVH could be added to an “unreliable entity list” that prevents offending foreign companies from trading with China, subjects them to fines or revokes their staff’s work permits, according to a 2020 order.
Photo: Reuters
In a separate statement, the ministry said the company is suspected of “boycotting Xinjiang cotton and other products for no reason,” accusing it of damaging Chinese companies’ rights and interests as well as China’s sovereignty, security and development interests.
PVH said in an e-mail that it is in contact with the ministry and “will respond in accordance with the relevant regulations.”
The company said it strictly complies with laws in all countries where it operates and declined to comment further.
A 2022 supply chain report from PVH said that it did not source from Xinjiang either directly or indirectly.
Tommy Hilfiger and Calvin Klein have a presence in China, and PVH still sees the country as “an important growth engine,” executives said on a recent earnings call.
However, its sales growth has suffered “a trajectory change” in China, falling to the high-single digits in the May quarter after a more than 20 percent rise during the fiscal year ending just a few months before, as weakening consumer sentiment persisted. In the most recent quarter, sales turned to a 1 percent decline.
Tommy Hilfiger’s official store on e-commerce platform Tmall posted annual sales of about 310 million yuan (US$44 million) for the 12 months ended last month — a drop of 12 percent year-on-year — according to data provider Hangzhou Zhiyi Technology Co (杭州知衣科技). Calvin Klein posted annual sales of 578 million yuan on its Tmall store for the same period, up 12 percent from a year earlier, according to the data. Tmall is owned by Alibaba Group Holding Ltd (阿里巴巴).
US and European companies have been under pressure to pull away from factories that make clothes and other products in Xinjiang, where labor groups have documented alleged forced labor camps and other poor working conditions. China disputes these claims.
The US enacted the Uyghur Forced Labor Prevention Act in 2021, which bars imported goods partly or wholly made in Xinjiang unless companies can prove the products have no ties to forced labor. Last month, the US expanded the list of Xinjiang-linked entities to 73 as worries over forced labor in China hang over the apparel industry.
China has so far publicly sanctioned five US companies using the entity list, including Lockheed Martin and Raytheon Technologies over their arms sales to Taiwan. However, such moves are largely symbolic as these firms do not do business in the country.
PVH, on the other hand, owns brands that have a large retail presence in the world’s second-largest economy.
“This investigation may target the textile sector, but now this door has been opened, companies in every sector are looking at this case and doing risk assessments of their own,” said Sean Stein, chair of the American Chamber of Commerce in China and the cochair of Covington and Burling’s China public policy practice.
With an approval rating of just two percent, Peruvian President Dina Boluarte might be the world’s most unpopular leader, according to pollsters. Protests greeted her rise to power 29 months ago, and have marked her entire term — joined by assorted scandals, investigations, controversies and a surge in gang violence. The 63-year-old is the target of a dozen probes, including for her alleged failure to declare gifts of luxury jewels and watches, a scandal inevitably dubbed “Rolexgate.” She is also under the microscope for a two-week undeclared absence for nose surgery — which she insists was medical, not cosmetic — and is
CAUTIOUS RECOVERY: While the manufacturing sector returned to growth amid the US-China trade truce, firms remain wary as uncertainty clouds the outlook, the CIER said The local manufacturing sector returned to expansion last month, as the official purchasing managers’ index (PMI) rose 2.1 points to 51.0, driven by a temporary easing in US-China trade tensions, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The PMI gauges the health of the manufacturing industry, with readings above 50 indicating expansion and those below 50 signaling contraction. “Firms are not as pessimistic as they were in April, but they remain far from optimistic,” CIER president Lien Hsien-ming (連賢明) said at a news conference. The full impact of US tariff decisions is unlikely to become clear until later this month
GROWING CONCERN: Some senior Trump administration officials opposed the UAE expansion over fears that another TSMC project could jeopardize its US investment Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is evaluating building an advanced production facility in the United Arab Emirates (UAE) and has discussed the possibility with officials in US President Donald Trump’s administration, people familiar with the matter said, in a potentially major bet on the Middle East that would only come to fruition with Washington’s approval. The company has had multiple meetings in the past few months with US Special Envoy to the Middle East Steve Witkoff and officials from MGX, an influential investment vehicle overseen by the UAE president’s brother, the people said. The conversations are a continuation of talks that
CHIP DUTIES: TSMC said it voiced its concerns to Washington about tariffs, telling the US commerce department that it wants ‘fair treatment’ to protect its competitiveness Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday reiterated robust business prospects for this year as strong artificial intelligence (AI) chip demand from Nvidia Corp and other customers would absorb the impacts of US tariffs. “The impact of tariffs would be indirect, as the custom tax is the importers’ responsibility, not the exporters,” TSMC chairman and chief executive officer C.C. Wei (魏哲家) said at the chipmaker’s annual shareholders’ meeting in Hsinchu City. TSMC’s business could be affected if people become reluctant to buy electronics due to inflated prices, Wei said. In addition, the chipmaker has voiced its concern to the US Department of Commerce
RSS