Fast fashion retailer Shein is renting a huge warehouse in Vietnam, two people familiar with the agreement, the first in the country, told Reuters, to a extent that it could reduce its exposure to unpredictable commercial tensions between the United States and China.
Shein, founded in China and sells products that include 5 dollars cycling shorts and summer dresses of 18 dollars, agreed to lease almost 15 hectares of industrial land for a warehouse near the city of Ho Chi Minh, Vietnam’s shopping center and business, the two sources said, which they asked not to be identified because the information was not public.
The online retailer, which depends almost completely on China’s headquarters to make garments for the United States and other markets, has been caught in the sights of an eyewood by eye between China and the United States that threatens to disrupt world supply chains, despite a recent de -escalation.
One of the sources and a third person said that Shein had been looking to rent more storage space in southern Vietnam, in addition to the large warehouse, equivalent to about 26 soccer fields, which would store clothes and garments of the contractors before export.
Reuters could not determine where the products stored in the rented warehouse would come from.
The retailer had previously announced plans to obtain some products from Turkey and Brazil, and Shein’s suppliers of their traditional production base in southern China told Reuters that they are losing orders in Vietnam because some Chinese manufacturers opened factories there.
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Shein, who seeks to quote on the London Stock Exchange, did not answer Reuters questions about the warehouse lease. He had previously denied that he was moving his production capacity outside of China.
The area around the city of Ho Chi Minh houses an International Airport, the largest Vietnam port for imports from China and another port that manages most maritime exports to the United States.
Before the American threat of punitive tariffs, Vietnam is taking energetic measures against some imports from China, which according to Washington have been illegally diverted for a long time through Vietnam to the United States to avoid higher tariffs.
Reuters did not have access to the details of the warehouse lease and could not establish if Shein could review his plans if commercial tensions between the United States and China were further reduced, which would reduce the attractiveness of diversification abroad.
However, given the current instability of the situation, analysts say that Shein has no choice but to reduce his dependence on China.
“It would be dangerous for them not to diversify,” said Manish Kapoor, executive director and founder of the Growth Catalyst Group electronic supply chain.
SUPPLIER ARMY
The fashion giant has built in China a formidable army of suppliers capable of producing crop tops and other fast fashion garments for a few yuan each to meet the demand for cheap clothing of consumers of the gene generation of the world.
Shein has announced that he is expanding his network of contractors in China and is also investing 10,000 million yuan (1,370 million dollars) in industrial projects in the south of the country, including a 500 million dollars supply center near Canton. The first phase of this center, currently under construction, will cover about 49 hectares, approximately the size of the city of the Vatican.
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Shein became a giant that sold products worth more than 30,000 million dollars annually on the basis of cheap prices and advantageous commercial rules, such as the exemption “of minimis” of the US that allowed the free ticket for taxes for low -cost imports for a value of 800 dollars or less.
The Trump administration eliminated that exemption for Chinese products on May 2, effectively exposing the Shein packages to a 120% tax, before the United States agreement with Beijing earlier this week reduced 54% tariffs for packages with a value of 800 dollars or less, and at 30% for low -value commercial shipments.
The thaw between the United States and China has generated concern in countries that benefit from these tensions, but the current American taxaries on Beijing keep Vietnam competitive since China’s shipments still enjoy tax free treatment if they are worth 800 dollars or less.
However, this solution could be ephemeral. Kapoor advises its customers not to depend on direct shipping for minimal imports from anywhere as a fundamental part of its logistics strategy.
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“We are warning people that it is possible that this exemption” of minimis “disappears completely (in a short time),” he said.
The other Vietnam exports to the United States face a 10% tariff until July, when the tax would increase to 46% if Hanoi does not reach an agreement with the White House.
With Reuters information
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