China announces first investigation under PRC sanctions regime into US apparel company on Xinjiang supply chain issues

On 24 September 2024, the Unreliable Entity List (“UEL”) Working Mechanism Office (the “UEL Office”) of China’s Ministry of Commerce issued the first ever investigation notice pursuant to the Provisions on the Unreliable Entity List (the “Provisions”), citing China’s Foreign Trade Law, National Security Law and the Anti-Foreign Sanctions Law, against U.S. apparel company PVH Group (“PVH”). 

The announcement marks a departure from the PRC authorities’ past enforcement of the UEL and related sanctions legislation, which have largely focused on Taiwan related arms sales by non-Chinese entities. This development highlights the delicate balance that multinationals must manoeuvre in supply chain de risking.

For multinationals, Xinjiang-related supply chain issues have mainly been examined from the US perspective over the past several years, with particular focuses on: (1) the Uyghur Forced Labour Prevention Act as enforced by the U.S. Department of Homeland Security regarding goods entering the U.S.; (2) Xinjiang-related sanctions under the Global Magnitsky Human Rights Accountability Act and U.S. Executive Order 13818; and (3) export controls on Xinjiang-related entities on the Entity List administered by the U.S. Department of Commerce’s Bureau of Industry and Security. The UEL Office’s investigation into PVH presents an additional layer of supply chain compliance challenges for multinationals doing business in China.

For more information, see our more detailed briefing.