How trade wars put global fashion brands in the crossfire
Pranjal Chandra | THE TIMES OF INDIA NEWS SERVICE | Feb 06, 2025, 23:18 IST
( Image credit : TIL Creatives )
PVH Corp., the parent company of Calvin Klein and Tommy Hilfiger, has been blacklisted by China in response to trade tensions with the U.S. This move threatens PVH's operations, supply chains, and staff in China. The conflict arises from PVH's decision to distance itself from Xinjiang-sourced cotton due to forced labor allegations.
The fashion industry is no stranger to supply chain disruptions, but the recent blacklisting of PVH Corp., the parent company of Calvin Klein and Tommy Hilfiger, by China marks a significant turning point. As international tensions rise between the United States and China, major fashion brands find themselves caught in the middle of a geopolitical battle that threatens their operations, supply chains, and global growth strategies.
China’s decision to place PVH Corp. on its "unreliable entities" list comes as a direct response to escalating trade tensions with the U.S. This designation grants Beijing sweeping powers to impose financial penalties, restrict business operations, and revoke work permits for company employees. For PVH, this could mean store closures, manufacturing disruptions, and a potential exodus of staff from China. The move underscores the fragile position of global brands that rely heavily on Chinese markets and production facilities.
The conflict stems from PVH’s decision to distance itself from cotton sourced in China’s Xinjiang region, an area at the center of international scrutiny due to allegations of forced labor involving Uyghur Muslims. While Western governments and advocacy groups have pressured corporations to cut ties with suppliers linked to human rights violations, Beijing has aggressively retaliated against companies that comply with these demands. PVH’s placement on China’s blacklist follows similar struggles faced by other global retailers, such as H&M and Nike, which previously faced boycotts from Chinese consumers after taking similar stances.
The timing of China’s decision is also notable. Just days prior, former President Donald Trump imposed new tariffs on Chinese imports, escalating an already volatile trade war. The retaliation against PVH appears to be a calculated move by Beijing, signaling that it will not hesitate to target American businesses with significant interests in China. The inclusion of PVH, a company with a high-profile presence in both retail and manufacturing, sends a clear warning to other multinational corporations operating within the region.
The potential fallout for PVH is substantial. China accounts for 6% of its global sales and 16% of its pre-tax earnings. More critically, the company’s manufacturing network is deeply embedded in China, with nearly a fifth of its production sourced from Chinese factories. If Beijing enforces strict penalties or forces PVH to relocate operations, the company could face significant supply chain disruptions, increased costs, and quality control challenges. Alternative manufacturing hubs, such as Vietnam, Bangladesh, and India, may not immediately offer the same production efficiency and skilled labor force that China provides.
The broader implications extend beyond PVH. Other global brands that depend on Chinese consumers and supply chains are now on high alert, with fears that they too could be targeted. Companies like Apple, Nike, and General Motors all have deep ties to China and could face similar risks if trade tensions continue to escalate.
For PVH and others, the situation underscores a stark reality: doing business in China comes with growing geopolitical risks. As trade wars intensify, fashion brands must rethink their global strategies, diversify supply chains, and navigate an increasingly complex political landscape where economic power struggles dictate the future of retail and manufacturing.
China’s decision to place PVH Corp. on its "unreliable entities" list comes as a direct response to escalating trade tensions with the U.S. This designation grants Beijing sweeping powers to impose financial penalties, restrict business operations, and revoke work permits for company employees. For PVH, this could mean store closures, manufacturing disruptions, and a potential exodus of staff from China. The move underscores the fragile position of global brands that rely heavily on Chinese markets and production facilities.
The conflict stems from PVH’s decision to distance itself from cotton sourced in China’s Xinjiang region, an area at the center of international scrutiny due to allegations of forced labor involving Uyghur Muslims. While Western governments and advocacy groups have pressured corporations to cut ties with suppliers linked to human rights violations, Beijing has aggressively retaliated against companies that comply with these demands. PVH’s placement on China’s blacklist follows similar struggles faced by other global retailers, such as H&M and Nike, which previously faced boycotts from Chinese consumers after taking similar stances.
The timing of China’s decision is also notable. Just days prior, former President Donald Trump imposed new tariffs on Chinese imports, escalating an already volatile trade war. The retaliation against PVH appears to be a calculated move by Beijing, signaling that it will not hesitate to target American businesses with significant interests in China. The inclusion of PVH, a company with a high-profile presence in both retail and manufacturing, sends a clear warning to other multinational corporations operating within the region.
The potential fallout for PVH is substantial. China accounts for 6% of its global sales and 16% of its pre-tax earnings. More critically, the company’s manufacturing network is deeply embedded in China, with nearly a fifth of its production sourced from Chinese factories. If Beijing enforces strict penalties or forces PVH to relocate operations, the company could face significant supply chain disruptions, increased costs, and quality control challenges. Alternative manufacturing hubs, such as Vietnam, Bangladesh, and India, may not immediately offer the same production efficiency and skilled labor force that China provides.
The broader implications extend beyond PVH. Other global brands that depend on Chinese consumers and supply chains are now on high alert, with fears that they too could be targeted. Companies like Apple, Nike, and General Motors all have deep ties to China and could face similar risks if trade tensions continue to escalate.
For PVH and others, the situation underscores a stark reality: doing business in China comes with growing geopolitical risks. As trade wars intensify, fashion brands must rethink their global strategies, diversify supply chains, and navigate an increasingly complex political landscape where economic power struggles dictate the future of retail and manufacturing.