"Shein's tariff-busting shift hits home in Chinese factory hub", 16 April 2025

The rapid rise of...Shein has been so key to the fortunes of a group of urban villages on the outskirts of China's southern metropolis of Guangzhou that they have been colloquially dubbed "Shein villages".

Shein was able to become a behemoth selling over $30 billion worth of goods annually on a foundation of cheap prices and advantageous trade rules, such as the U.S. "de minimis" exemption that allows low-cost imports to enter the country duty-free...

On a recent visit to Shein villages in Panyu District, however, the mood was glum. Three factory bosses along with four local downstream suppliers said Shein's local orders were in decline, pointing the finger at moves to diversify production to Vietnam.

As companies reliant on China for production reel from tariff rates of 145% and cancellation of the de minimis threshold for packages from China, questions are being asked about how long the good times can keep rolling - for Guangzhou's factories, and also for Shein.

Factory owner Mr Li... has been working with Shein for five years and says orders from the firm this year have dropped by 50% as more orders have moved to Vietnam.

"The impact is quite obvious," he said. "Tariffs are not something that we can see an end to for the time being, and we don't know what will happen next."...

Both factory bosses confirmed earlier media reports that Shein has begun incentivising its biggest suppliers to move production to Vietnam with promised minimum orders and longer lead times, having been told directly by Shein or informed by other suppliers who were briefed on the plans.

"Since Chinese New Year, when Trump came to power, Shein has been asking many leading factories to find ways to open factories in Vietnam," Hu said, adding that his firm, which employs about 100 people and manufactures 200,000-300,000 pieces per month for Shein during busy periods, was too small to be considered a candidate for an incentivised move.

In a statement replying to Reuters questions, Shein said reports that it was shifting supply chain capacity out of China were "untrue" and pointed to a growth in suppliers in China, up to 7,000 from 5,800 last year.

The firm did not answer questions relating to incentives for major Chinese suppliers to open additional factories in Vietnam, nor the impact this might have on order volumes for other Chinese suppliers.

A move to source more from Vietnam could help Shein to continue sending goods to the U.S. at lower tariff rates or without import duties at all for packages sent under de minimis - though there is no guarantee the threshold will remain in place for goods sent from Vietnam.

But it also creates a Catch-22 situation for the company - a potentially costly and time-consuming one in an industry in which price and time are essential...