People walk past a Tommy Hilfiger store at a mall in Beijing on February 5, 2025. US firm PVH, which ... [+]
PVH, the owner of the Calvin Klein and Tommy Hilfiger brands, has been added to China’s Ministry of Commerce (MOFCOM) list of “unreliable entities.” It got blacklisted because the country has determined PVH “undermines market rules and violates Chinese laws,” according to a statement issued by the MOFCOM.
By being put on the Chinese Ministry’s blacklist, it could effectively shut down all PVH business in China. As of yet, MOFCOM announced no specific sanctions and the company is given a timeframe to present its defense.
PVH is the first fashion brand to be so blacklisted, a designation typically reserved for defense and biotech companies, such as Illumina, which was also just added to the unreliable entities list. Up until now, only a handful of U.S. companies have been put on that list and none that operate in the consumer market.
The decision follows the Trump administration’s move to impose a 10% tariff on Chinese imports, though MOFCOM has been conducting an investigation into PVH’s China business since September.
In effect, PVH, Calvin Klein and Tommy Hilfiger are the first U.S. fashion brands to fall victim to the accelerating U.S.-China trade war over tariffs. More U.S. fashion brands are expected to face the same scrutiny.
“We are surprised and deeply disappointed to learn of the decision from the Chinese Ministry of Commerce,” a PVH spokesperson said. “In our 20 years of operating in China and proudly serving our customers, 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. We will continue our engagement with relevant authorities and look forward to a positive resolution.”
Battle Over Xinjiang Cotton
The MOFCOM decision stems from PVH banning the use of cotton from China’s Xinjiang region in its clothing. In that, PVH followed the guidelines of the U.S. government, which banned imports of Xinjiang cotton in 2020.
“There’s this tit-for-tat trade war going on, and [China] wants to show the United States that it’s going to take action to hurt either big U.S. companies or companies with significant interests in the U.S.,” Michael Kaye, a partner at the law firm Squire Patton Boggs, shared with CNBC. “They’re being made an example. My guess is, [China] wanted to pick somebody and they wanted it to be somebody that was high visibility.”
While PVH CEO Stefan Larsson said the Chinese market is important for its retail growth – the Asia-Pacific region accounted for about 20% of PVH’s $9.2 billion revenues in most recent fiscal year 2023, though it doesn’t report sales by country – the greater threat to PVH’s business may be to its manufacturing capabilities. It operates 128 factories in China that produce approximately 20% of its goods.
PVH’s Manufacturing At Most Risk
“This has the potential to be very, very disruptive for PVH,” said GlobalData’s Neil Saunders to CNBC. “While you can shift manufacturing capacity reasonably easily, it’s not so easy to guarantee the quality, guarantee the production processes. Those things take time to upskill. China has that capacity and has those skills, because PVH has been operating there for ages.”
PVH also operates 88 factories in Vietnam and 81 in Turkey, plus over 400 in other countries around the world. On the other hand, it has only one factory in the U.S.
Experts speculate China chose PVH to target, instead of other U.S. brands such as Nike and Gap, which also have a stated policy against using Xinjiang cotton, because it’s just big enough to get noticed, but not so big as Nike or Gap to cause major disruptions at home.
According to company reports, Tommy Hilfiger operates some 1,300 stores in the Asia-Pacific region and Calvin Klein in 2,700 locations. PVH also has a Hong Kong headquarters.
“There’s a sort of sword of Damocles hanging over [PVH’s] head, and that is exactly what this is, because this isn’t really about PVH at all. This is about PVH being caught in the spat between China and the U.S.,” Saunders said. “China is using PVH as an example to say, look, if tariffs go ahead, if other restrictions are put in place on China, we can make life difficult for U.S. companies in the country. That’s really what this is about.”
