Shein, a leading fast fashion retailer, is urging key Chinese suppliers to establish production facilities in Vietnam, offering temporary incentives such as procurement prices up to 30% higher, along with guaranteed larger orders, according to a recent report.
This strategic shift responds to recent changes in US trade policy, particularly the removal of the “de minimis” rule. Previously, this provision exempted direct-to-consumer shipments under $800 from import duties, benefiting online retailers like Shein.
A 2023 report estimated that Shein and Temu accounted for over 30% of daily US package deliveries under the de minimis clause. It also highlighted that roughly 50% of all shipments qualifying for this status originated from China. The removal of this exemption aligns with former US President Donald Trump’s broader trade agenda, which includes an additional 10% tariff on Chinese goods. However, Trump has temporarily delayed the duty-free status removal until US customs finalises a new tariff collection process.
By diversifying its supply base, Shein aims to mitigate the impact of these tariffs, which threaten its core business model. Economists at Nomura Holdings estimate these measures could reduce China’s GDP growth by 0.2 percentage points in 2025. Despite previous supply chain expansions in Brazil and Turkey, China remains Shein’s primary production hub, owing to its fast-turnaround manufacturing capabilities.
Shein’s market valuation has seen significant fluctuations due to evolving trade policies and financial pressures. Initially targeting a US IPO with a valuation of up to $90 billion, the company’s private valuation declined to around $50 billion by late 2023. Now considering a London listing, Shein is refining its supply chain strategy, including expansion into Vietnam, to mitigate geopolitical and tariff-related risks.
Reports suggest it may further adjust its IPO valuation as it awaits regulatory approval from UK and Chinese authorities. While formal approval from the UK’s Financial Conduct Authority (FCA) remains pending, government sources indicate strong interest in supporting the listing, with Shein having confidentially submitted documents as early as June last year.
Shein’s ability to navigate shifting trade policies and geopolitical uncertainties will be crucial in sustaining its competitive edge. Strategic moves such as supply chain diversification and valuation adjustments will play a key role in shaping its long-term growth in an evolving global market.
Recently, Shein’s sustainability standards have come under scrutiny, with concerns raised over labour conditions, environmental impact, and supply chain transparency.
