Shein finds there’s no place like China after Vietnam warehouse experiment disappoints

Just over a year ago, Chinese fast fashion retailer Shein began leasing a vast 15-hectare warehouse complex near Ho Chi Minh City, aiming to establish Vietnam as a key export hub. The move seemed promising, as US duty exemptions for small parcels from China were set to expire and concerns of a trade war were mounting. Shein encouraged its Chinese suppliers to set up manufacturing bases in Vietnam, but the plan did not unfold as expected.

Now, Shein is drastically reducing its presence in Vietnam, according to multiple sources familiar with the situation. The 15-hectare bonded logistics hub, once bustling with thousands of employees, now covers only 6 hectares with only a fraction of the original workforce remaining. Mass layoffs began in April, with more expected, leaving only a handful of workers at the site during a recent visit by Reuters.

The decision to scale back in Vietnam follows the end of US duty-free exemptions for shipments under $800, implemented by Trump in July 2025, and the subsequent surge in US tariffs on Chinese goods. Vietnamese apparel remains subject to lower tariffs than Chinese clothing, but the advantage has diminished. Additionally, finding Vietnamese workers willing to work long hours for low wages has been challenging, as Shein's Chinese suppliers produce clothing at extremely low margins.

Many suppliers that moved to Vietnam have returned, finding the efficiency and low production costs in China more advantageous. Shein is now focusing on expanding its operations in Guangzhou and Guangdong province, pledging over 10 billion yuan for a smart supply-chain system. However, domestic suppliers are not necessarily following suit, with orders from Shein either stagnant or showing minimal growth.