SHEIN, the Singapore-based fast-fashion giant, is relocating its production to Vietnam as it adapts to evolving US trade regulations. The company is encouraging key suppliers in China to establish manufacturing facilities in Vietnam by offering incentives such as larger order guarantees and procurement prices up to 30 per cent higher.
This strategic pivot comes in response to recent adjustments in US trade policies, including the removal of the ‘de minimis rule that previously permitted duty-free imports of low-value goods. As the US tightens its trade regulations, SHEIN aims to diversify its supply chain and mitigate the impact of rising tariffs on its low-cost, rapid-production business model.
Economists at Nomura anticipate that these tariffs could lead to a 0.2 per cent reduction in China’s GDP growth by 2025. While SHEIN has already established manufacturing hubs in Brazil and Turkey, China continues to play a crucial role in its fast-turnaround supply chain.
The company’s valuation has experienced significant volatility amidst these geopolitical uncertainties. After initially targeting a US $ 90 billion valuation in its US IPO filing last year, SHEIN’s private valuation has reportedly fallen to around US $ 50 billion by late 2023. As a result, the company is now considering a potential listing on the London Stock Exchange, reflecting a broader trend among fashion leaders to lessen their reliance on Chinese manufacturing by exploring alternative markets like Vietnam.
SHEIN’s recent initiatives underscore a pivotal shift in the global fashion industry as companies navigate complex trade policies, supply chain challenges and geopolitical tensions to maintain their competitive advantage.
