Owner of Calvin Klein PVH in Black in China

China on the black list developed the owner of Calvin Klein and Tommy Hilfiger, which could force the company to close stores and produce in early repercussion Trade War of President Donald Trump.

China has been added PVH Corp. To the list of “unbelievable entities” on Tuesday, which allows the Chinese government to repeal a retailer, prohibit import and export activities, withdraw work permits and refuse employees the opportunity to enter the country, including deliberately unclear qualifications.

While the Chinese Trade Ministry He started investigating In September, PVH for the alleged refusal to obtain cotton from the Xinjiang region, which became known from Uyghur detection camps, Beijing officially placed the company on the black list on Tuesday. The announcement took place only a few days after Trump hit a 10% tariff on imports from China and came with a lot other retaliation against the United States, including new obligations regarding the import of energy and agricultural equipment.

“The Tit-For-Tat and (China) trading war is underway to show the United States that he is taking action to harm great American companies or companies with significant interest in the US,” said Michael Kaye, and a partner in Squire Patton Boggs, who practices international commercial law for over 30 years. “They are an example. … I guess (China) wanted to choose someone and wanted it to be someone who was a great visibility.”

Now, when PVH is on the list of unbelievable entities, China can force the company to close dozens of stores that operate in the region and prohibit the sale of their goods to Chinese online consumers, said Kaye. Kaye added that his employees – including those who built their lives in China – could be effectively deported and sent home.

It is not clear whether China will try to enforce PVH activities in the autonomous Hong Kong region, where the headquarters of Asia and the Pacific of the company is located. In 2020, China adopted a law that gave him greater power to enforce national provisions in Hong Kong, and “especially in the case of national security regulations”, which may include a list of unreliable entities, said Kaye.

From Thursday morning, eastern time the company seemed to run its activity as usual in China.

China could even forbid PVH production in the region, which can force him to transfer production to other countries and fight to meet customer orders.

It is not clear which steps will be exactly taking China, or whether Trump's administration will try to convince China not to punish the company.

In the PVH statement he said that “he was surprised and deeply disappointed when he learned about the decision of the Chinese Ministry of Trade.”

“During 20 years of work in China, and proudly serving our consumers, in accordance with politics, PVH maintains strict compliance with all relevant regulations and regulations and operates in accordance with established standards and industry practices. We will continue our commitment with the right organs and we are waiting for a positive solution, “said the company.

China constituted 6% PVH sales and 16% of its earnings before interest and taxes in 2023, but is more based on the country in production, which is a greater threat to its activities. PVH has more factories and suppliers in China than in any other region, which is about 18% of the production, as released in December.

“It can be very, very destructive for PVH,” said Globaldata managing director and retail analyst Neil Saunders. “They would certainly have to try to find a new capacity. Of course, they would be able to do it on time, but two things that are questioned are, because many supply chains are in the time to do it, they probably said that they failed to make a passage.

PVH has been operating in China for over 20 years and although it works with suppliers and factories in over 30 other countries, high -end goods that make production difficult to produce elsewhere due to the level of skill needed, said Saunders.

“Although you can easily change the production capacity, it is not so easy to guarantee quality, guarantee production processes. These things require time upstairs, “said Saunders. “China has this ability and have these skills because PVH has been operating there for centuries. Another country, another production plant, may not have these skills immediately. ”

In addition, PVH has seen China as a growth market and now he will have to look for new strategies to increase sales and profitability, because the demand for high -class dresses, intimate clothing and sweaters.

The list of unbelievable China entities is a relatively new law in the country, and experts say that it is intentionally opaque. The government has wide freedom to take action against PVH, but it remains unclear what exactly will do. Usually, the guidelines take place within a few days of placing the company on a black list, said Kaye.

China could add PVH to the list and do nothing to the company, but Kaye said that the chances of this are “very slim” because the government would want to avoid the perception of being withdrawing. China will use PVH more likely as a tender system at the negotiating table with Trump and use them as an example to show the power that pain must cause Other American companies with the main operations and customer bases in China, such as NikeIN AppleIN General MotorsIN Starbucks and others.

“They hang over her (PVH), hanging something of Damocles's icing sword, and that's how it is, because it's not really about PVH. The point is that PVH is caught in a gun between China and the USA, “said Saunders. “China uses PVH as an example, look, if the tariffs run forward, if other restrictions are introduced in China, we can make life difficult for American companies in the country. This is really the point. “