Beijing versus Calvin Klein: Tensions Over Boycott Allegations

China's government has accused PVH, the parent company of Calvin Klein, of using cotton from the boycotted western Xinjiang region and is threatening for the first time to place a US company with substantial interests in the country on a national security blacklist. The move to put PVH, a manufacturer of brands such as Calvin Klein and Tommy Hilfiger, on the "unreliable entity list" could alarm international businesses, as China is currently grappling with attracting foreign investors. According to a statement from the Chinese Ministry of Commerce, PVH has 30 days to explain to authorities whether the company has discriminated against Xinjiang products in the past three years. In a separate notice, the ministry accused PVH of "violating normal market trade principles and unjustifiably boycotting Xinjiang cotton and other products without factual basis." International apparel companies are increasingly under conflicting pressures from China and Western governments regarding sourcing cotton from the cotton-rich Xinjiang region. Beijing strongly denies allegations from the UN High Commissioner for Human Rights and independent monitoring organizations of human rights violations against the predominantly Muslim Uyghur ethnic group in Xinjiang, including the widespread use of forced labor. According to the Chinese Ministry of Commerce, PVH is being investigated by the "Unreliable Entity List Working Mechanism Office," a national security agency established five years ago during the trade war with the USA. China's "unreliable entity list" is akin to the US Commerce Department's "entities list," which targets companies accused of violating human rights and other American laws. Beijing's implementation of the blacklist followed heightened US restrictions and sanctions against Chinese technology and export companies, particularly telecommunications equipment supplier Huawei. However, foreign lawyers argue that the provisions of the Chinese blacklist are too vague and target companies accused of "endangering China's national sovereignty, security, or development interests." So far, China has publicly listed five US companies, including military equipment suppliers Lockheed Martin and Raytheon Technologies, which sell weapons to Taiwan. However, these groups have little or no business operations in China. PVH could face fines, restrictions on its activities in China, or other unspecified sanctions. The New York-based company, which has subsidiaries in China as well as stores and warehouses in the country, did not immediately respond to requests for comment. The ministry stated that PVH's alleged discrimination against Xinjiang products "seriously violated the legitimate rights and interests of the affected Chinese companies and endangered China's sovereignty, security, and development interests." Under the US Uyghur Forced Labor Prevention Act passed in 2021, the US prohibits goods from Xinjiang unless importers can prove they were not produced under forced labor. In a company announcement this year, PVH stated it had "made efforts" to ensure that materials subject to measures like the US law are "not present in our supply chain." The Chinese Ministry of Commerce dismissed any suggestion that the use of its blacklist could deter foreign investors. China handles the issue of the Unreliable Entity List "prudently and targets only a very small number of foreign companies that undermine market rules and violate Chinese laws," it said. "Honest and law-abiding foreign companies have nothing to fear.