The U.S. Commerce Department announced plans to ban Chinese-manufactured internet-connected automotive software and hardware. In response, the Chinese Ministry of Commerce stated on Tuesday, September 24th, that they will launch an investigation into the PVH Group, a major clothing giant, for its boycott of Xinjiang cotton. Xinjiang cotton has been accused of using forced labor, leading to increasing boycotts by Western companies.
PVH is a global clothing powerhouse, owning popular brands such as Calvin Klein (CK) and Tommy Hilfiger (TH). Like many Western companies, they are striving to eliminate “Xinjiang forced labor” from their supply chains and are now under scrutiny by the Chinese government.
The Chinese Ministry of Commerce stated that PVH is suspected of “unjustified boycott” of Xinjiang cotton and other products, triggering an investigation under the “Unreliable Entity List.” This list was initiated in 2019 by China in response to the U.S. blacklisting Huawei for national security reasons.
The day before, the U.S. Commerce Department announced a ban on the use of Chinese-manufactured software and hardware in internet-connected cars for national security reasons.
The Chinese Ministry of Commerce did not specify why they are investigating PVH now but have demanded the American company to provide documents and evidence within 30 days detailing any “discriminatory measures” taken against Xinjiang products in the past three years. U.S. defense companies previously placed on the “Unreliable Entity” list were banned from conducting any import or export-related business with China. However, these companies, like Lockheed Martin and Raytheon Missiles & Defense, primarily engaged in business unrelated to China.
Since 2021, the U.S. has prohibited the import of products from Xinjiang, citing suspicions of forced labor in cotton and other products from the region. In their 2022 corporate responsibility report, PVH stated that Xinjiang is one of the regions where the group prohibits direct or indirect procurement.
In the “Global Compliance Statement of the Xinjiang Uyghur Autonomous Region” on their official website, PVH emphasized adhering to relevant laws and regulations of the regions where they operate, including U.S. government policies concerning Xinjiang.
The United Nations, U.S., UK, and others have recognized the persecution of Uyghur Muslims in Xinjiang by China, including detaining them in concentration camps for forced labor. China, however, insists that what Western countries and human rights organizations refer to as concentration camps are actually “vocational training centers.”
As attention grows towards the persecution of Xinjiang’s Uyghur Muslims by China, clothing brands are seeking to distance themselves from the region. Apart from PVH, companies like Nike and Burberry have pledged to stop sourcing cotton from Asia and are scrutinizing their suppliers.
Swedish fashion brand H&M, targeted by Chinese state media for not using Xinjiang cotton, has been followed by international brands like Adidas, New Balance, and UNIQLO in declaring a cessation of Xinjiang cotton usage.
Meanwhile, as China’s economic recovery falters and the wallets of its people shrink, more Western companies are withdrawing from or contemplating exiting the Chinese market due to declining revenues or even losses.
In a financial report, PVH noted a 4.3% year-on-year decline in international revenue for Calvin Klein and Tommy Hilfiger, amounting to $1.38 billion by August 4th, primarily influenced by challenges in the Asia-Pacific region, especially in China.