Shein is ramping up its production base in Vietnam to mitigate the impact of rising US tariffs on its supply chain.
The fast-fashion giant is offering key Chinese suppliers temporary incentives, including up to a 30% increase in procurement prices and larger order guarantees, as it shifts some of its production outside of China.
The move comes after the President Trump removed the “de minimis” rule, which allowed duty-free imports of low-value goods. Shein hopes that expanding in Vietnam will help mitigate the impact of tariffs on its business model, which relies heavily on Chinese production.
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Vietnam’s competitive labour costs and manufacturing infrastructure make it an attractive alternative.
The country’s free trade agreements, like the EU-Vietnam Free Trade Agreement, also offer Shein the ability to sidestep costly duties while maintaining access to both Western and Asian markets.
While the fashion giant continues to rely on China for most of its fast-turnaround production, its expansion into Vietnam reflects a broader trend in the fashion industry toward diversifying supply chains to reduce risks from rising tariffs and geopolitical instability.
Shein’s efforts to diversify its supply chain come amid increasing pressure on its valuation. It is reportedly considering cutting its valuation ahead of its planned London IPO, with estimates suggesting a reduction from $90bn to $50bn.
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