For Companies in China, Pulling Out of Xinjiang Poses ‘Messy Dilemma’

Published On Oct 4, 2024, 12:00 AM

China is investigating PVH Corp, the parent company of Calvin Klein and Tommy Hilfiger, for allegedly discriminating against cotton products from Xinjiang, a region known for forced labor issues. This inquiry signals that China strictly adheres to its regulations, particularly against firms that withdraw from Xinjiang sourcing to comply with foreign laws. Multinational companies now face increased operational risks in China as a result of this investigation, which reinforces the challenges of adhering to ethical sourcing practices in the face of conflicting national laws.

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Stock Forecasts

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Negative

Given the investigation's potential to escalate tensions between the company and Chinese regulatory authorities, and considering the risk of reputational damage, PVH Corp may face declining sales and stock performance. Investors should be cautious about buying or holding PVH stocks in the near term.

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