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Shein has asked some of its Chinese suppliers to set up production capacity in Vietnam in a bid to bypass tariffs placed on China by the US, according to reports from Bloomberg.
The company is offering suppliers incentives including higher procurement prices of as much as 30% to make the move.
Alongside this, Shein hopes to take advantage of Vietnam’s lower labour costs and manufacturing infrastructure.
Vietnam also has a number of free-trade agreements like the EU-Vietnam Free Trade Agreement which will allow it to sidestep many duties.
It comes after the Trump administration placed a 10% tariff on all products made in China as part of an ongoing trade war with the nation.
He also removed the de minimis exemption which allowed all goods under $800 to come into America without customs checks or duties.
This expansion also reflects a wider trend in the fashion industry of diversifying supplies chains to mitigate risk from tariffs and other geopolitical instability.
The move comes as Shein abandoned its plans to open a warehouse in the Midlands, amid scrutiny of its business model, specifically from the EU.
It is understood that the EU is planning its own tax crackdown on the likes of Shein and Temu.
Furthermore, the company’s potential float on the London Stock Exchange has hit a number of hurdles as MP’s have criticised Shein’s lack of supply chain transparency after allegations surfaced that the group has benefitted from forced labour.
MPs accused Shein of “wilful ignorance” when officials refused to say whether it sources cotton from China before the business and trade committee.
Reports from last Friday (7 February) indicated that Shein may be reducing its valuation from £50bn to approximately £40bn.
Retail Sector has approached Shein for comment.
