Shein seeks Vietnam expansion to offset U.S. tariffs

Fast-fashion leader Shein is encouraging key Chinese suppliers to establish production facilities in Vietnam, offering temporary incentives such as higher procurement prices of up to 30 percent and larger order guarantees, according to a Bloomberg report. The move comes in response to recent U.S. trade policy changes, including the removal of the “de minimis” rule, which previously allowed duty-free imports on low-value goods.

By expanding its supply base, Shein aims to mitigate the impact of U.S. tariffs that threaten its core business model. Economists at Nomura Holdings estimate these tariffs could reduce China’s GDP growth by 0.2 percentage points in 2025. Although Shein has previously set up supply chains in Brazil and Turkey, China remains central to its operations, accounting for the majority of its fast-turnaround production.

Amid these trade tensions, Shein’s valuation has fluctuated significantly. After filing for a U.S. IPO last year with a target valuation of up to 90 billion dollars, the company’s private valuation dropped to approximately 50 billion dollars in late 2023. As it pivots to a potential London listing, Shein’s expansion into Vietnam signals a broader trend among fashion giants seeking supply chain diversification to weather geopolitical risks.

As rising U.S. tariffs on goods from China and Europe continue to reshape global supply chains, Vietnam stands poised to become a key beneficiary, particularly in the fashion industry. With its well-established manufacturing infrastructure, competitive labour costs, and increasing focus on sustainability, Vietnam offers an attractive alternative for brands seeking to mitigate tariff-related risks.

The country’s numerous free trade agreements—such as the EU-Vietnam Free Trade Agreement (EVFTA)—further enhance its appeal, enabling brands to sidestep costly duties while maintaining access to both Western and Asian markets. For luxury and fast-fashion players alike, Vietnam’s growing technical expertise in high-end garment production is a critical advantage. If investments in digitalization and eco-friendly manufacturing continue, Vietnam could cement its role as a vital hub in the global fashion supply chain, capitalising on the shifting geopolitical and economic landscape.