Fast-fashion giant SHEIN is enticing major Chinese suppliers to set up production facilities in Vietnam by providing short-term incentives like larger order guarantees and higher procurement costs of up to 30 per cent, says a report. The action is a reaction to recent changes in U.S. trade policy, such as the elimination of the “de minimis” criterion, which permitted duty-free imports of low-value items.
SHEIN is expanding its supply base to reduce the impact of US tariffs on its business model. Nomura economists project these tariffs could cut China’s GDP growth by 0.2 per cent in 2025. While SHEIN has set up supply chains in Brazil and Turkey, China still plays a key role in its fast-turnaround production.
SHEIN’s value has changed a lot in the midst of these trade disputes. The company’s private valuation fell to about US $ 50 billion in late 2023 after it filed for a US initial public offering (IPO) last year with a target valuation of up to US $ 90 billion.
SHEIN’s move into Vietnam as it prepares for a possible listing in London is indicative of a larger trend among fashion industry titans looking to diversify their supply chains in order to mitigate geopolitical risks.
