Shein's Cautious Shift: From Guangzhou to Vietnam

The meteoric rise of Shein, bolstered by advantageous trade rules and a responsive supply chain, is facing challenges. Orders from China's Shein villages are declining as production diversifies to Vietnam. This move, driven by high tariffs, poses questions on the future of Guangzhou's factories and Shein's business model.

Shein's explosive growth, pivotal to the prosperity of urban villages near Guangzhou, appears to be facing turbulence. Known as 'Shein villages,' these areas have thrived on the ultra-fast fashion model, with factories responding swiftly to dynamic online orders. However, local orders are waning as Shein diversifies production to Vietnam.

Amidst Guangzhou's industrial uncertainty, factory owners report a sharp decline in Shein's local orders due to moves towards Vietnam. This shift aims to navigate hefty tariff challenges and the end of de minimis exemptions, critical components of Shein's global strategy. Factory owner Mr. Li sees a dramatic 50% drop in orders, expressing concerns over the sustainable future of their operations.

Despite Shein's official denial of a mass shift out of China, factory bosses confirm substantial incentives for suppliers to establish operations in Vietnam. The diversification represents a strategic attempt by Shein to maintain competitive pricing in the U.S. market, yet it risks complicating the existing supply chain efficiencies and business model.

(With inputs from agencies.)