Calvin Klein and Tommy Hilfiger could be forced out of China after the parent company, PVH Corp was placed on their “unreliable entities” list.
CNBC reported that PVH was added to the list on 4 February. This allows the Chinese retailer to fine the retailer, prohibit import and export activities, revoke work permits, and deny employees entry into China among other deliberately vague powers.
China added the company to the “unreliable companies” list after China’s Ministry of Commerce began investigating in September for allegedly refusing to source cotton from the Xinjiang region, which is known for its Uyghur detention camps.
This also comes days after Trump imposed 10% tariffs on imports from China. China retaliated to the tariffs by imposing their own 15% tariffs on coal and liquefied natural gas imports from the U.S. as well as other new duties on energy important and farm gear.
In a statement, PVH said they were surprised by the decision and aimed to find a positive resolution.
"In our 20 years of operating in China and proudly serving our consumers, as a matter of policy, PVH maintains strict compliance with all relevant laws and regulations and operates in line with established industry standards and practices,” the statement said.
While being added to the list could mean PVH retailers won’t be able to operate in China, they are currently doing business as usual in the country.
China represented 6% of PVH’s sales and 16% of its earnings before interest and taxes. However, manufacturing is where PVH relies on China the most as it represents 18% of production, more than any other region.
According to Investopedia, biotech firm Illumina was also placed on the “unreliable entities” list.
"Illumina has a long-standing presence in China, where we serve the local market through our advances in genomics that help improve human health," it said in a statement.
"Wherever Illumina operates, we comply with all laws and regulations.”
At the time of writing, PVH Corp (NYSE: PVH) stock was trading at US$79.18, down 0.21% from the previous close of $79.35. It reached a day high of 82.08 and a low of 78.91. The company's market cap is $4.41 billion.
