Shein is able to base on cheap prices and favorable trade rules (such as the U.S. “Minimis de Minimis” exemption, allowing low-cost imports to enter the country’s duty-free giants to sell goods worth more than $30 billion.
But the supply chain efficiency, real-time response from hundreds of buzzing factory floors in these villages, for online orders for leopard-print palazzo pants or farmer tops at unrivalled prices, is also the key to its success.
However, when recently visiting the village of Shein in Panyu District, the mood was Glum. Three factory owners and four local downstream suppliers said Sean’s local orders were falling, pointing out the movement of his fingers to diversify production.
As the company relied on China’s production reels, from the 145% tariff rate and the De Minimis threshold from China’s parcels were lifted, questions were asked about Good Times that could continue rolling – for the Guangzhou factory as well as Shein.
Factory owner Mr. Li has been engaged in business since 2006, using the manufacturing of clothing in China and international markets. He has worked with Shein for five years and said the company’s orders have dropped 50% this year as Vietnam has more orders. “The impact is obvious,” he said. “Tariffs are not the end we see for the moment, and we don’t know what will happen next.” Here, thousands of small contract manufacturers have produced several batches of cut tops and mini skirts, as a few people, and then quickly shipped to young consumers around the world to pay a few dollars for the same item.
“To be honest, cross-border (e-commerce) has been crazy for the past two years. “He made it appear. ”
Hu and Li refuse to use their full name for privacy reasons.
Shein, who recently received approval from the UK’s London IPO, had to nod to Chinese regulators, also invested in 10 billion yuan ($1.37 billion) of industrial projects in southern China, including a $500 million supply chain in Zengchchen’s Zengchend district.
Both factory owners confirmed earlier media reports that Shein has begun to incentivize its largest suppliers to transfer production to Vietnam with promised minimum orders and longer lead times, and Shein is notified directly by Shein, or by other suppliers who have briefly introduced the plan.
“Since the Lunar New Year, when Trump came to power, Shane has been asking many of the leading factories to find ways to open factories in Vietnam,” said Beard, adding that his company employs about 100 people during busy periods and 200,000-300,000 pieces per month for Shein, and during the busy period, his company is too small to be considered a candidate for a motivating and driven move.
Shein said in a statement on Reuters’ issues that it was transferring supply chains from China to China “unreal” and pointed to the growth of suppliers in China, up from 5,800 species last year’s up to 7,000.
The company did not answer questions about incentives for major Chinese suppliers to open other factories in Vietnam, nor did it affect order volumes from other Chinese suppliers.
Capture 22
Migration from Vietnamese sources could help Shein continue to send goods to the United States at lower tariff rates, or there is no responsibility for importing, as per the packages sent by De Minimis – although there is no guarantee that goods sent from Vietnam will remain in place.
But this also creates 22 trap situations for the company – a potentially expensive and time-consuming industry where price and time are crucial.
“The diversification of its procurement base and significant changes in its business model will have to work hand in hand with Shein,” said Sheng Lu, a professor of fashion and clothing studies at the University of Delaware.
Lu said that without fundamentally changing the thousands of new styles in small batches and shipping quickly to end consumer business models, Shein could not diversify its supply chain, and without diversifying the supply chain from China, it would no longer ship products directly to U.S. consumers at low, priceless prices.
“When you think about it, the model is really genius…but moving the entire business model is sure to play a ic in turnover time and cost,” said Alison Layfield, director of product development at Epost Global.
She added: “Of course, they want to transfer these fees to consumers, but … consumers won’t order in past quantities and prices.”
For factory owner Lee, the involvement of capital investment in moving to Vietnam, coupled with what he calls a lower productivity labor compared to China, makes it an unattractive option.
“Here we can finish 1,000 pieces of clothing in one day, which takes a month,” he said.
Lee said that while he plans to rely more on his own factories to provide the domestic market, Lee said there were few options for some of his fellow countrymen: “They only have two options. One is bankruptcy and the other is going to Vietnam.”
