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Corporate Update

Esquel Sanctions, Vietnam Factories And A Traceability Gap

• By  Textile Excellence
• September 30, 2026

US restrictions on Chinese textile giant Esquel Group were supposed to keep goods linked to alleged forced labour in Xinjiang out of the American market. But a Reuters investigation has found that companies closely linked to Esquel continued to ship cotton garments to the US through Vietnam.

Three Vietnamese manufacturers - An Loi Apparel, Tessellation Binh Duong and Tessellation Hoa Binh - have exported at least US$5 million worth of cotton goods to the US since Esquel was sanctioned in November 2024.

The three factories had previously operated under variations of the Esquel Garment Manufacturing Vietnam name before being rebranded in 2022. Corporate records also show links involving Esquel's former CEO Edgar Tung and the same offshore ownership structure.

The cotton trail gets complicated

The bigger issue is the cotton itself.

Customs data show that Esquel shipped about US$ 34 million of cotton from China between November 2024 and June 2026, with roughly 70% going to the three Vietnamese manufacturers. Yet Reuters could not establish whether cotton in the garments subsequently shipped to the US came from Esquel or Xinjiang.

That is where traceability gets difficult. The Vietnamese factories also buy cotton from other suppliers, while cotton from different origins can be blended during production.

The garments reached the US under brands including Muji and Rodd & Gunn. Both confirmed sourcing from the Vietnamese manufacturers but said they were unaware of their links to Esquel.

A bigger problem for global sourcing

The case highlights a problem facing textile supply chains worldwide: a factory can move, change its name and diversify its suppliers, but proving the origin of the fibre can remain extremely difficult.

US Customs and Border Protection inspected only about US$ 2.6 million of the US$ 28 billion of apparel Vietnam shipped to the US between November 2024 and June 2026 under the Uyghur Forced Labor Prevention Act. More than half of the detained goods, by value, were subsequently released.

For textile companies selling into the US, the lesson is increasingly clear: supplier names and factory audits are not enough. The cotton itself has to be traceable.

US Customs and Border Protection inspected only about US$ 2.6 million of the US$ 28 billion of apparel Vietnam shipped to the US between November 2024 and June 2026 under the Uyghur Forced Labor Prevention Act. More than half of the detained goods, by value, were subsequently released. For textile companies selling into the US, the lesson is increasingly clear: supplier names and factory audits are not enough. The cotton itself has to be traceable.