Vietnamese Manufacturers Linked to Sanctioned Chinese Firm
Brands sourcing from these factories face new supply chain compliance risks regarding cotton origins.
Updated on Oct. 7, 2026 in Manufacturing
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Between November 2024 and June 2026, three Vietnamese apparel manufacturers exported $5 million in goods to the U.S. while maintaining corporate links to the sanctioned Chinese firm Esquel Group. These factories previously operated under the Esquel brand before rebranding in 2022.
Why it matters
The complex ownership and production structures used by these entities highlight the difficulty of verifying cotton origins under forced labor regulations. For operators, this demonstrates that supply chain mapping must look beyond current corporate names to identify legacy institutional ties.
From November 2024 to June 2026, 70% of $34 million in cotton shipped from China by the sanctioned Esquel Group was directed to these three Vietnamese factories. Customs officials inspected just $2.6 million of the $28 billion in total apparel exports from Vietnam during that period.
The players
Esquel Group
A major Chinese textile manufacturer and global garment supplier facing U.S. sanctions.
Muji
A Japanese retail company that sells a wide variety of household and consumer goods.
Rodd & Gunn
A New Zealand-based clothing and lifestyle brand focused on premium apparel.
U.S. Customs and Border Protection
The federal law enforcement agency responsible for regulating and facilitating international trade.
The details
The three factories—An Loi Apparel, Tessellation Binh Duong, and Tessellation Hoa Binh—blend cotton from various global suppliers during the manufacturing process, obscuring the path of raw materials. Despite the U.S. sanctions placed on Esquel in November 2024, these facilities maintained shared offshore ownership structures with the Chinese company. This setup allows goods potentially tainted by restricted supply lines to enter the U.S. market, complicating compliance efforts for retail brands like Muji and Rodd & Gunn.
Timeline
2022: Three factories rebranded from Esquel Garment Manufacturing Vietnam.
November 2024: The United States sanctioned the Chinese company Esquel Group.
November 2024 - June 2026: Period for export and inspection data of Vietnamese apparel.
Market Landscape
This situation follows a pattern set by the Uyghur Forced Labor Prevention Act, which mandates strict scrutiny of imports potentially tied to forced labor regions. It illustrates the ongoing regulatory challenge of verifying raw material origins when suppliers blend inputs from multiple jurisdictions.
Operators should review their tier-two and tier-three supplier contracts to identify any shared offshore ownership with sanctioned entities. Given the low inspection rates of total apparel imports, firms should not rely on customs clearances as definitive proof of supply chain compliance.
The takeaway
Legacy corporate ties can create hidden liabilities that persist long after a factory rebrands. Conduct due diligence that tracks common ownership structures across international borders rather than just checking current factory names against restricted lists.
Further reading
For broader trends in production oversight, see the Manufacturing section.
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