Calvin Klein’s owner, PVH, in the blacklist in China

China has included in the blacklist the owner of Calvin Klein and Tommy Hilfiger, which could force the company to close the stores and manufacturing in an early impact of President Donald Trump’s trade war.

China added PVH Corp. To its list of “unreliable entities” on Tuesday, which allows the Chinese government to the retailer, prohibit import and export activities, revoke work permits and deny employees the ability to enter the country, among other powers deliberately lazy.

While the Ministry of Commerce of China He began to investigate PVH in September for allegedly refusing to get cotton from the Xinjiang region, which has become known for its Uyghur detention camps, Beijing officially placed the company on its blacklist on Tuesday. The announcement occurred a few days after Trump slapped a 10% tariff on China imports, and arrived with a large number of Other reprisal measures Against the United States, including new tariffs on energy imports and agricultural equipment.

“There is this Tit-For-OT trade war, and (China) wants to show the United States Squire Patton Boggs, who has been practicing the International Trade Law for more than 30 years. “They are giving an example … I guess (China) wanted to choose someone and they wanted someone of high visibility.”

Now that PVH is on the list of unreliable entities, China could force the company to close the dozens of stores that operate in the region and prohibit their sale of their products to Chinese consumers online, Kaye said. His staff, including those who have built lives in China, could be deported and sent effectively, Kaye added.

It is not clear if China would try to enforce the actions against PVH in the Autonomous Region of Hong Kong, where the company’s-Pacific headquarters are located. In 2020, China approved a law that gave it more power to enforce national laws in Hong Kong, and that is “particularly the case with the laws applicable to national security”, which could include the list of unreliable entities, he said Kaye

As of Thursday morning, the company seemed to be operating its business as usual in China.

China could even prohibit PVH of manufacturing in the region completely, which could force it to transfer production to other countries and fight to comply with customer orders.

It is not clear what steps exactly China will take, or if the Trump administration will try to convince China not to punish the company.

In a statement, PVH said he was “surprised and deeply disappointed when he learned of the decision of the Ministry of Commerce of China.”

“In our 20 years of operating in China and proudly serve our consumers, as a policy issue, PVH maintains strict compliance with all relevant laws and regulations and operates in line with the established standards and practices of the industry. We will continue With our participation with the relevant authorities.

China represented 6% of PVH sales and 16% of its profits before interest and taxes in 2023, but it depends more on the country for manufacturing, which is the greatest risk for its business. PVH has more factories and suppliers in China than in any other region, which represents approximately 18% of production, according to a dissemination it issued in December.

“This has the potential to be very, very harmful to PVH,” said Globaldata Retail Managing Director and Analyst, Neil Saunders. “They would certainly have to fight to find a new capacity. They could do it on time, of course, but the two things that are in question are that, because many supply chains are just in time, they would do it. I probably find that they stayed Short in the inventory while they made the transition.

PVH has operated in China for more than 20 years, and although it works with suppliers and factories in more than 30 countries, the high -end goods they make can be difficult to manufacture elsewhere due to the necessary skill level, Saunders said.

“While you can change the manufacturing capacity reasonably easily, it is not so easy to guarantee quality, to guarantee production processes. Those things take time to increase,” Saunders said. “China has that capacity and has those skills, because PVH has been operating there for years. Another country, another manufacturing center, may not have those skills immediately.”

In addition, PVH has seen China as a growth market and will now have to look for new strategies to increase sales and profitability, since demand rejects for its high -end dresses, clothing and intimate sweaters.

China’s unreliable entities are a relatively new law in the country, and experts say it is deliberately opaque. The Government has a broad freedom to take measures against PVH, but it is not clear what it will do exactly. In general, orientation occurs a few days after the placement of a company on the blacklist, Kaye said.

China could add PVH to the list and do nothing to the company, but Kaye said that the possibilities are “very thin” because the government will want to avoid the perception that it is going back. China is more likely to use PVH as a negotiation chip at the Trump negotiation table, and use it as an example to show the power in which you have to inflict pain Other US businesses with important operations and customer bases in China, such as Nike, Apple, General Motors, Starbucks and others.

“There is a kind of Damocles sword hanging on the head (PVH), and that is exactly what this is, because this is not really pvh. This is about PVH being trapped in the dispute between China and the USA”. Saunders said. “China is using PVH as an example to say, look, if tariffs continue, if other restrictions are implemented in China, we can hinder the lives of US companies in the country. That’s what really really treated.”