Industry News
Esquel-Linked Vietnam Factories Selling Clothes to U.S. Despite Sanctions
Three garment manufacturers in Vietnam with close ties to the sanctioned Chinese textile company Esquel Group have exported at least $5 million in cotton goods to the United States since Esquel was blacklisted in November 2024, according to Reuters.
Hong Kong-based Esquel Group was added to a U.S. sanctions list under the Uyghur Forced Labor Prevention Act over alleged ties to forced labor programs in China's Xinjiang region. The company denies the allegations. Under the designation, customs officers may treat its goods as products of forced labor, placing the burden of proof on importers to show otherwise.
Each of the three Vietnamese manufacturers — An Loi Apparel, Tessellation Binh Duong, and Tessellation Hoa Binh — previously bore a geographically distinct version of the Esquel Garment Manufacturing Vietnam name before undergoing rebranding in October 2022, Reuters reported. Edgar Tung, who served as Esquel's chief executive between 2021 and 2022, was listed in corporate filings as an owner's representative at all three factories. According to customs data, roughly 70% of the $34 million in cotton Esquel exported from China from November 2024 through June 2026 went to the three manufacturers. Those ties are "likely sufficient" for customs authorities to conclude the manufacturers operate within Esquel's ecosystem, according to Joshua Kagan, a former assistant U.S. trade representative who now practices at Washington's Kelley Drye & Warren and reviewed Reuters' findings. Esquel Group, a representative for the three Vietnamese makers, and Tung did not respond to requests for comment. Clothing shipped by the Vietnamese factories reached the U.S. under brands including Japanese retailer Muji and New Zealand menswear label Rodd & Gunn. Both companies confirmed they sourced from the makers but said they were unaware of any links to Esquel. Muji said it plans to audit one plant this year; Rodd & Gunn said it requires partners to source cotton exclusively from the U.S., Brazil, and Australia. Neither said whether it planned to take further action. Reuters could not determine whether any cotton in the goods shipped to the U.S. originated with Esquel or came from Xinjiang. The three manufacturers also source cotton from other suppliers. Standard practice in the sector, however, is to mix cotton from multiple origins together, two supply-chain experts and two U.S. trade lawyers said. Enforcement of the forced labor import ban has been limited. Of the $28 billion in apparel that Vietnam shipped to the U.S. during that period, U.S. Customs and Border Protection detained only about $2.6 million for inspection under the Uyghur forced labor law. More than half of those detained goods were subsequently released. In a December 2025 letter to CBP leadership, Democratic members of Congress said enforcement had "dropped drastically in recent months despite no evidence that shipments of goods prohibited by the law have slowed." A CBP spokesperson said the agency prioritizes both forced labor enforcement and tariff implementation. Source: Yahoo!Finance
Each of the three Vietnamese manufacturers — An Loi Apparel, Tessellation Binh Duong, and Tessellation Hoa Binh — previously bore a geographically distinct version of the Esquel Garment Manufacturing Vietnam name before undergoing rebranding in October 2022, Reuters reported. Edgar Tung, who served as Esquel's chief executive between 2021 and 2022, was listed in corporate filings as an owner's representative at all three factories. According to customs data, roughly 70% of the $34 million in cotton Esquel exported from China from November 2024 through June 2026 went to the three manufacturers. Those ties are "likely sufficient" for customs authorities to conclude the manufacturers operate within Esquel's ecosystem, according to Joshua Kagan, a former assistant U.S. trade representative who now practices at Washington's Kelley Drye & Warren and reviewed Reuters' findings. Esquel Group, a representative for the three Vietnamese makers, and Tung did not respond to requests for comment. Clothing shipped by the Vietnamese factories reached the U.S. under brands including Japanese retailer Muji and New Zealand menswear label Rodd & Gunn. Both companies confirmed they sourced from the makers but said they were unaware of any links to Esquel. Muji said it plans to audit one plant this year; Rodd & Gunn said it requires partners to source cotton exclusively from the U.S., Brazil, and Australia. Neither said whether it planned to take further action. Reuters could not determine whether any cotton in the goods shipped to the U.S. originated with Esquel or came from Xinjiang. The three manufacturers also source cotton from other suppliers. Standard practice in the sector, however, is to mix cotton from multiple origins together, two supply-chain experts and two U.S. trade lawyers said. Enforcement of the forced labor import ban has been limited. Of the $28 billion in apparel that Vietnam shipped to the U.S. during that period, U.S. Customs and Border Protection detained only about $2.6 million for inspection under the Uyghur forced labor law. More than half of those detained goods were subsequently released. In a December 2025 letter to CBP leadership, Democratic members of Congress said enforcement had "dropped drastically in recent months despite no evidence that shipments of goods prohibited by the law have slowed." A CBP spokesperson said the agency prioritizes both forced labor enforcement and tariff implementation. Source: Yahoo!Finance
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