Shein's production shift from China to Vietnam impacts local factories and future growth

From Yahoo Finance: 2025-04-16 00:27:00

The rise of ultra-fast fashion retailer Shein has transformed villages on the outskirts of Guangzhou into “Shein villages”, where factories produce cheap clothing for global consumers. However, Shein’s move to diversify production to Vietnam has led to a decline in local orders, impacting Chinese factories and Shein’s future.

Shein’s success is built on efficient supply chains in Guangzhou, but recent moves to shift production to Vietnam have raised concerns about tariffs and supply chain disruptions. While Shein denies reports of moving capacity out of China, the impact on Chinese suppliers remains uncertain.

Shein’s plans to incentivize major suppliers to move production to Vietnam could lower tariff rates for U.S. shipments, but this shift poses challenges for the company’s business model and supply chain. Experts warn that changing the model could lead to higher costs for consumers and longer turnaround times.

Factory owners in Guangzhou are facing tough decisions as Shein’s move to Vietnam threatens their businesses. With the potential capital investment and less productive labor in Vietnam, some owners may have to choose between bankruptcy and relocating to Vietnam to survive in the changing fashion industry landscape.

Read more: Shein’s tariff-busting shift hits home in Chinese factory hub