Vietnamese Factories Helped Sanctions Firm Supply Clothing to U.S

At least $5 million worth of cotton products were shipped to the United States by three Vietnamese apparel manufacturers affiliated with Chinese corporation Esquel. This writes Reuters with reference to customs data.

Washington put Esquel on sanctions lists in November 2024 over suspicions of using forced Uighur labor in Xinjiang. The company is based in Hong Kong and denies all the allegations. Due to the sanctions, Esquel is officially banned from working with American customers.

Despite this, three Vietnamese enterprises continued to purchase raw materials from the company and export ready-made clothing to the US market. According to the agency, for the period from November 2024 to June 2026, the Chinese corporation sold to these factories about 70% of its cotton (for a total of $ 34 million), exported from China.

The investigation revealed a close corporate bond between the parties. Until October 2022, all three plants used Esquel Garment Manufacturing Vietnam in their names. In addition, according to corporate documents, they were owned by the same three offshore firms both before and after the rebranding. Former Esquel CEO Edgar Tung (held the post in 2021-2022) was also named as the representative of the owner of these Vietnamese productions.

“These connections are probably enough for customs authorities to consider producers as part of the Esquel ecosystem,” said Joshua Kagan, a former assistant U.S. Trade Representative who now represents Kelley Drye & Warren.

Ready-to-wear from these suppliers went to major international brands, including Japanese retailer Muji and New Zealand brand Rodd & Gunn. Both networks confirmed the purchases.

Muji said it was not aware of its counterparties’ ties to Esquel Group. At the same time, archival data show that the American subsidiary Muji has been cooperating with one of the plants since its operation under the Esquel brand. Now the brand has promised to audit one of the enterprises this year, and its suppliers have given guarantees against the use of forced labor. When asked whether additional steps would be taken after the Reuters investigation, Muji did not respond.

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