Firms Linked to Sanctioned Chinese Textile Giant Esquel Shipping Apparel to US, Records Show

Vietnamese manufacturers with close ties to sanctioned Chinese textile giant Esquel Group have shipped at least $5 million in cotton apparel to the United States since the company was blacklisted. The findings, based on a review of shipment and corporate records by Reuters, raise questions about the effectiveness of U.S. sanctions targeting alleged forced labor in China's Xinjiang region.

A Web of Corporate Ties

Esquel Group, a Hong Kong-based textile producer, was added to a U.S. sanctions list in November 2024 over its alleged connections to forced labor programs in Xinjiang, a charge the company denies. Since then, three Vietnamese garment makers have continued to export to the U.S. while sourcing significant amounts of cotton from Esquel.

Corporate records show deep links between the firms. The three manufacturers—An Loi Apparel, Tessellation Binh Duong, and Tessellation Hoa Binh—all formerly operated under variations of the name "Esquel Garment Manufacturing Vietnam" before rebranding in October 2022. Furthermore, Edgar Tung, who served as Esquel's chief executive, was also listed in corporate filings as an owner’s representative at the three facilities. This rebranding occurred around the same time Esquel spun off some operations into a new entity called Tessellation Group.

Supply Chain and US Imports

Despite the name changes, the commercial relationship remains strong. Customs data shows that between November 2024 and June 2026, Esquel sent approximately 70% of its $34 million in cotton exports from China to these three Vietnamese manufacturers. During the same period, these factories shipped finished apparel to U.S. customers, including Japanese retailer Muji and New Zealand menswear brand Rodd & Gunn.

Ad

Both Muji and Rodd & Gunn confirmed they sourced from the Vietnamese makers but told Reuters they were unaware of any links to the sanctioned Esquel Group. While Reuters could not establish whether the specific products sent to the U.S. contained cotton from Esquel or Xinjiang, supply-chain experts note it is common industry practice to blend cotton from different sources.

Enforcement and Market Implications

This situation highlights the challenges in enforcing the Uyghur Forced Labor Prevention Act (UFLPA), which presumes that goods from listed entities like Esquel are produced with forced labor and are therefore barred from U.S. entry. According to a former U.S. trade official who reviewed the findings, the documented connections are "likely sufficient" for U.S. Customs and Border Protection (CBP) to conclude the manufacturers operate within Esquel's ecosystem.

However, enforcement remains a significant hurdle. Between November 2024 and June 2026, CBP detained for inspection only $2.6 million of the $28 billion in apparel shipped from Vietnam to the U.S. The findings underscore the potential legal and reputational risks for importers and brands, who face increasing pressure to ensure their supply chains are free from entities linked to forced labor.