Two other men who were working on the investigation have been missing since Sunday, according to China Labor Watch, a New York-based non-governmental organisation.
"In 17 years (since our organisation was founded), we have done countless such investigations and have never had any problems," China Labor Watch director Li Qiang told AFP.
"But this is the first time we've investigated Ivanka Trump (manufacturers), so it may very well be related to the brand."
Trump lambasted China over its trade practices during the US presidential campaign, but he has established a friendly rapport with President Xi Jinping since they met at Trump's Mar-a-Lago resort in April.
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"We appeal to President Trump, Ivanka Trump herself, and to her related brand company to advocate and press for the release of our activists," Li said.
Hua Haifeng, who was working undercover with the two other men in Jiangxi province, has been held by police and accused of illegally using "eavesdropping equipment," Li said.
"The accusation from Jiangxi police has no factual basis," Li said.
He noted the activists were probing two factories owned by major footwear producer Huajian Group -- one in the city of Dongguan in southern Guangdong province, the other in Jiangxi's Ganzhou.
They discovered that employees were required to work overtime while being paid less than the minimum wage, according to Li, who alleged that the factory issued fake pay slips that showed wages greater than the workers' actual compensation.
Aside from Ivanka Trump, the factory also manufactures products for other overseas brands, including Coach, Nine West, Karl Lagerfled, and Kendall + Kylie.
Huajian Group and the Ivanka Trump brand did not immediately return messages seeking comment.
People connected to the Trump administration have repeatedly come under fire for business dealings in China.
Last month, the real estate company owned by the family of White House advisor Kushner sparked an uproar after his sister, Nicole Kushner Meyer, headlined events in Beijing and Shanghai to seek more than $150 million in investment in a US luxury apartment complex.
Donald Trump has himself sought dozens of trademarks in China.
Xi has overseen a tightening of controls on civil society since assuming power in 2012, with arrests that have drawn international condemnation.
Patrick Poon, a China researcher for Amnesty International said the activists' predicament is "extremely worrying" because labour activism, which mainly targets companies rather than the government, is "usually considered less sensitive than other human rights and political activism".
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