What: Shein offers 30% procurement price increases to incentivise Chinese manufacturers' relocation to Vietnam, responding to US tariff pressures and regulatory challenges.

Why it is important: This development reflects the broader transformation of fast-fashion business models, as companies balance regulatory compliance, manufacturing costs, and market access in an increasingly complex global trade environment.

Shein is implementing a strategic initiative to relocate part of its production to Vietnam, offering Chinese manufacturers substantial incentives including up to 30% higher procurement prices and enhanced order guarantees. This move comes in direct response to recent changes in US trade policy, specifically President Trump's elimination of the Section 321 de minimis rule that previously allowed duty-free shipment of low-value packages from China to the US.

The policy shift threatens to increase prices for Chinese goods in the American market, affecting not only Shein but also competitors like Temu and Amazon Haul. While Shein views Vietnamese expansion as a way to mitigate the impact of US tariffs on its business model, the company faces additional challenges in Vietnam, where local authorities recently mandated e-commerce service registration amid concerns about deep discounting practices and potential counterfeit sales. This complex situation highlights the delicate balance fast-fashion retailers must maintain between cost management, regulatory compliance, and market access.

IADS Notes: The manufacturing relocation strategy follows a series of significant developments in Shein's global operations. In December 2024, the company faced regulatory hurdles in Vietnam with suspended operations, while February 2025 brought the elimination of US de minimis rules, fundamentally challenging its business model. This move aligns with broader industry trends, as evidenced by the EU's implementation of stricter platform liability measures and Shein's successful adaptation in India through local manufacturing partnerships. The strategy represents a significant shift in fast-fashion supply chains, balancing regulatory compliance with operational efficiency.

Shein offers Chinese manufacturers incentive to move to Vietnam