Shein returns to China after Vietnam warehouse experiment disappoints

Shein, the fast-fashion giant, has abandoned its ambitious experiment to make Vietnam a major export hub after facing challenges. The company once leased a vast 15-hectare warehouse complex near Ho Chi Minh City, employing thousands. However, the venture has been disappointing.

Just over a year ago, Shein began this bold move as a potential workaround to US duty-free exemptions for small parcels from China, which were set to end. The US under Trump had imposed tariffs on Chinese goods, skyrocketing to 145% by April 2025. Despite this, Shein encouraged its Chinese suppliers to set up manufacturing bases in Vietnam.

However, the experiment did not go as planned. Only 6 hectares of the original 15-hectare site are now operational, with mass layoffs beginning in April and more expected. Only a handful of workers were present during a Reuters visit in late July, and only a few trucks were seen at the warehouses.

This shift reflects the unpredictable nature of US trade policies and highlights Shein's heavy reliance on Chinese suppliers. The company is now focusing more on its manufacturing base in southern China and pursuing a Hong Kong IPO. Despite investing further in Guangzhou and the broader Guangdong province, Shein's business model is increasingly tied to China.