Esquel Group linked to $5M in US cotton exports despite sanctions

Source published 2h 46m agoTerminal published 2h 43m ago

Summary

In July, a shipment of cotton shirts from southern Vietnam was unloaded at the port of Los Angeles, linked to garment manufacturers with ties to the Chinese textile giant Esquel Group, which has been sanctioned by the U.S. since November 2024 over alleged forced labor connections in Xinjiang. Despite Esquel's blacklisting, three Vietnamese manufacturers have exported at least $5 million in cotton goods to the U.S., maintaining close ties with Esquel, which previously supplied the majority of their cotton. Major brands like Muji and Rodd & Gunn, which sourced apparel from these manufacturers, stated they were unaware of these ties and adhere to policies prohibiting forced labor. The blending of cotton from various sources complicates efforts to trace the origins and assure that supplies are free from forced labor involvement.

Analysis

Edgar Tung: Edgar Tung served as chief executive of Esquel Group from 2021 to 2022 and later became CEO of Tessellation Group. He has been listed in corporate filings as an owner’s representative for the three Vietnamese garment makers connected to Esquel. Tung is relevant to the news as a key executive linking the sanctioned Chinese company to the Vietnam operations that continue exporting to the United States. Esquel Group: Esquel Group is a Hong Kong-based textile company operating as a vertically integrated seed-to-shirt enterprise with cotton processing, mills, and apparel manufacturing. The firm maintains commercial ties to garment production in Vietnam through historical supply relationships and shared ownership structures. In the news, Esquel is the sanctioned entity whose post-sanction cotton exports to Vietnam-based manufacturers are reported to support continued U.S.-bound apparel shipments despite the U.S. ban. An Loi Apparel: An Loi Apparel is one of three Vietnam-based garment manufacturers previously operating under Esquel Garment Manufacturing Vietnam branding before rebranding. The company maintains commercial ties to Esquel Group through shared ownership history and supply arrangements. It is cited in the news for exporting cotton apparel to U.S. customers while sourcing from the sanctioned entity. Tessellation Hoa Binh: Tessellation Hoa Binh is a Vietnam garment manufacturer with prior Esquel branding and ownership ties to the other two makers in the group. Workers at its plant reported no management or operational changes following the rebrand. It is named in the news for its ongoing commercial relationship with Esquel and exports of cotton goods to U.S. brands. Tessellation Binh Duong: Tessellation Binh Duong is a Vietnam garment maker formerly known as Esquel Garment Manufacturing Vietnam and linked to the same offshore ownership as the other two makers. It continues to source cotton from Esquel and ships finished apparel to the U.S. market. The firm appears in the reporting as part of the network allegedly operating within Esquel’s ecosystem after the sanctions. Brand Sourcing: Major retailers including Muji and Rodd & Gunn have confirmed sourcing cotton apparel from the Vietnamese manufacturers while stating they were previously unaware of the Esquel connections and maintain policies requiring suppliers to avoid forced labor. Sanctions Status: Esquel Group has been subject to U.S. sanctions since November 2024 under the Uyghur Forced Labor Prevention Act due to alleged ties to forced labor in Xinjiang, with goods presumed to involve forced labor unless proven otherwise. Supply Chain Practices: Industry norms include blending cotton from multiple origins, which can complicate tracing of Xinjiang-origin fiber in finished apparel even when manufacturers source from both sanctioned and non-sanctioned suppliers.

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