Shein finds there’s no place like China after Vietnam warehouse experiment disappoints
The company is pursuing a Hong Kong IPO while deepening its commitment to manufacturing in southern China.
The ultra-fast fashion retailer Shein, known for selling trendy clothing at affordable prices, made a significant move to Vietnam in 2024 to establish logistics hubs and encourage manufacturing. The company leased a massive 15-hectare bonded warehouse near Ho Chi Minh City, equivalent to 21 soccer pitches, with the aim of tapping into Vietnam's burgeoning apparel market.
However, this strategic gamble has now taken a dramatic turn as Shein dramatically reduces its presence in Vietnam. The once bustling warehouse now only employs a fraction of its original workforce, with mass layoffs taking place. This unexpected shift highlights the volatile nature of Shein's business model, which relies heavily on Chinese suppliers, many of which have previously proven reluctant to relocate to Vietnam due to practical difficulties and lower efficiency compared to their Chinese counterparts.
Adding to the setback, Shein must now contend with new US tariffs and trade policies that diminish the advantage of Vietnamese goods over Chinese ones. The company's struggles in Vietnam reinforce its commitment to its Chinese manufacturing base, and inform its strategic pivots towards China-focused supply chains.
Written by urgent.news from Straits Times Business's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
