China threatens sanctions on Calvin Klein owner over Xinjiang cotton boycott

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Beijing says it’s investigating fashion retailer PVH Corp, the owner of Calvin Klein and Tommy Hilfiger, for refusing to source cotton from the Xinjiang region, in a move that could lead to sanctions on an American company with major business interests in China.

Tuesday’s announcement from the Commerce Ministry came a day after the Biden administration proposed a possible ban on the sale or import of smart vehicles in the United States that use specific Chinese or Russian technology because of national security concerns.

The ministry said in a statement that New York-based PVH (PVH) is suspected of “violating normal market transaction principles” by boycotting cotton sourced from China’s far western region of Xinjiang. It could be sanctioned by being placed on the country’s so-called “unreliable entities list,” which would bar the firm from doing business in China.

There are currently five American companies on the list, first announced in 2019, none of which do much business in China because they are largely defense manufacturers. Their presence on the list means they’re banned from importing, exporting and investing in China.

In a statement sent to CNN on Wednesday, PVH said it “maintains strict compliance with all relevant laws and regulations in all countries and regions in which we operate. We are in communication with the Chinese Ministry of Commerce and will respond in accordance with the relevant regulations.”

According to the retailer’s supply chain guidelines, it prohibits direct or indirect sourcing from Xinjiang. The US began banning all goods produced in the region in June 2022, following the enactment of a forced labor law signed by President Joe Biden the year before.

According to a 2018 International Religious Freedom Report from the State Department, up to 2 million Uyghurs and members of other Muslim-majority ethnic groups have been detained since 2017 in “specially built or converted detention facilities in Xinjiang and subjected … to forced disappearance, torture, physical abuse, and prolonged detention without trial because of their religion and ethnicity.”

China has described the facilities as “vocational training centers,” and claimed in 2019 such centers had been closed. Officials have consistently denied all allegations of human rights abuses in Xinjiang.

Being banned by China would deal a big blow to PVH, which, like other global fashion firms, sources extensively in the country. Calvin Klein also has a physical presence in virtually every Chinese province.

It said in its 2023 annual review that “China is an important growth engine, which grew over 20% in local currency for the year.”

“We continue to focus on driving overall brand awareness, especially in China, where both Calvin Klein and Tommy Hilfiger are underpenetrated,” it added.

Western apparel brands have faced pressure in China over their position on Xinjiang cotton before. In March 2021, Swedish multinational H&M was pulled from major e-commerce stores in China and blocked by several major navigation, review and rating apps. But the backlash ended about a year later and its products were reinstated online.

CNN’s Joyce Jiang contributed reporting.