Shein scales back Vietnam operations

Chinese ultra-fast fashion retailer Shein is drastically scaling back its operations in Vietnam, reversing a year-old experiment to make Vietnam a major export base. The company had leased 15 hectares of warehouse facilities near Ho Chi Minh City, but has now reduced the lease to 6 hectares and begun mass layoffs since April. The reversal is attributed to the end of the U.S. de minimis duty-free exemption for small parcels, which eroded the tariff advantage of manufacturing in Vietnam, as well as difficulties in finding Vietnamese workers willing to work long hours for low wages. Shein is now deepening its commitment to its Chinese manufacturing base, investing over 10 billion yuan ($1.5 billion) in a smart supply-chain system in China — Guangdong, and pursuing a China — Hong Kong IPO. However, some Chinese suppliers are diversifying away from Shein due to thin margins and slowing demand, with many opening stores on PDD Holdings — Temu or Amazon (company).