China said on Tuesday that it would investigate whether PVH, the American retailer that owns the Calvin Klein and Tommy Hilfiger brands, has taken “discriminatory measures” against products from Xinjiang in China’s far west.
The announcement, by China’s Ministry of Commerce, is a new escalation of China’s effort to fight bans or consumer boycotts of goods from Xinjiang.
Many Western governments have begun restricting or banning products from Xinjiang following mass arrests and evidence of forced labor among the region’s predominantly Muslim ethnic groups, particularly the Uyghurs. Researchers have cited evidence that cotton production in Xinjiang has been tainted by coercion.
Beijing is sending a message to multinational corporations that if they comply with consumer boycotts or government bans on products from Xinjiang, they may face retaliation in China.
China’s action underlines how big companies increasingly find themselves sandwiched between pressures from the Chinese government, which defends its policies in Xinjiang, and Western countries and human rights advocacy groups. PVH, which is based in New York, did not immediately reply to emails seeking comment.
On Friday, the Inter-Parliamentary Alliance on China, a group with lawmakers from at least 22 countries and the European Union, issued a statement calling for Volkswagen to withdraw from Xinjiang. Volkswagen, Germany’s largest automaker, has a 190-employee joint venture in Xinjiang with a carmaker owned by the Shanghai municipal governments. Chinese state-owned enterprises like Volkswagen’s partner follow Beijing’s lead in opposing any withdrawal from Xinjiang.
The alliance issued its statement after Adrian Zenz, the director in China studies at the Victims of Communism Memorial Foundation, issued a report that cited a leaked audit that Volkswagen had commissioned. His report said the automaker had failed to properly investigate accusations of complicity in Xinjiang’s coercive policies toward Uyghurs. Volkswagen rejected Mr. Zenz’s claims.
Volkswagen said on Monday that it was not building cars in Xinjiang, where workers prepare cars for delivery to dealerships.
China is not only a large consumer market but also the world’s largest manufacturer. Many companies, particularly apparel retailers, depend heavily on factories in China and could be vulnerable if Beijing decided to impose sanctions on their subsidiaries or suppliers.
In the United States, the Uyghur Forced Labor Prevention Act bans the import of any goods from Xinjiang unless the importer can prove to American customs officials that the products were made without forced labor. The law took effect in June 2022.
Proving that has become practically impossible, as China has banned independent investigations of labor practices in Xinjiang. Advocacy groups say that forced labor is widely used in Xinjiang’s vast cotton fields, which supply textile factories all over China. Xinjiang produces more than 90 percent of all the cotton grown in China.
The European Union is in the process of imposing a ban similar to the Uyghur Forced Labor Prevention Act.
When consumer and human rights groups in the West began organizing boycotts several years ago of brands that used cotton from Xinjiang, big clothing brands initially tried to shun Xinjiang suppliers. PVH said in July 2020 that within the next 12 months, it would cease all business relationships with factories and mills that produced garments or fabric in Xinjiang, or that supplied cotton from the region.
China responded the next year by allowing nationalist groups to use the country’s heavily censored internet to organize their own boycotts of Western brands that did not buy from Xinjiang. H&M soon found shoppers were shunning its stores.
Influential personalities who had endorsed Tommy Hilfiger and Calvin Klein, as well as Adidas, Nike and Converse, in China quickly stopped working on behalf of the brands. Burberry had to give up an online video game partnership.
Western companies quickly stopped saying much about their policies in Xinjiang. But the Uyghur Forced Labor Prevention Act has given them a strong incentive to avoid Xinjiang products anyway.
China has quietly passed its own laws that ban compliance with laws, sanctions or boycotts in other countries. The commerce ministry has authority to deem commercial decisions as a threat to China’s national security.
The Ministry of Commerce said Tuesday that it would allow PVH 30 days to provide documents regarding whether it had avoided buying from Xinjiang. If PVH is found to have violated China’s laws, the ministry said, the penalties could include a halt to the company’s imports and exports from China, restrictions or bans on investments in China, restrictions or bans on PVH employees from working or entering China, and possibly fines on the company.
China’s strong threat to PVH comes as the Chinese government has been trying to woo foreign investors. The ministry tried to send a reassuring message, saying that its actions against PVH were aimed at preserving free trade, not suppressing it.
“The Chinese government is determined to promote high-level opening-up, firmly safeguard the multilateral trading system, and firmly safeguard the legitimate rights and interests of various market operators,” the ministry said. “Honest and law-abiding foreign entities have nothing to worry about,” it added.
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