Shein, the leader in ultra-low-cost fashion, is considering Vietnam as a production hub to mitigate the impact of the new tariff policy proposed by President Donald Trump. According to the Bloomberg Agency, the company has asked some of its main suppliers in China to transfer part of their production to Vietnam, offering incentives such as a 15-30% price increase.
Specifically, Shein has committed to making larger orders to suppliers who decide to transfer their production to Vietnam, as well as accepting longer delivery deadlines. The company is also offering to help suppliers build new facilities and transport Chinese fabrics to Vietnam. However, these incentives will only be maintained during the initial months of installation and settlement in Vietnamese territory, as reported by Bloomberg. It is unclear whether these suppliers would reduce their production capacity in China, and conversations are still in the initial phase, with room for changes in plans.
The decision comes after Trump signed an executive order ending the “de minimis” exemption, which allowed for the free admission of tariffs and inspections of packages valued under $800. This exemption was part of the imposition of 10% tariffs on Chinese products. According to a 2023 report by the US Congress, Shein and its competitor Temu represented over 30% of all packages sent daily to the US under this exemption.
Assessment Cut
In parallel, Shein has announced that it will cut its valuation to approximately $50 billion in its expected initial public offering (IPO) in London, as reported by Reuters. This figure represents a quarter less than the company’s valuation in its 2023 financing round. The eventual valuation of the Shein IPO will depend on the impact of the “de minimis” level on its business. This reduction marks the second consecutive downward round for Shein, after its value fell to $66 billion in 2023, a third less than its peak the previous year.
Shein presented confidential documents to the UK’s Financial Conduct Authority (FCA) in June, but the regulator has taken longer than expected to approve the pricing, generating uncertainty in the process. Although the FCA has not made a definitive decision, experts indicate that such evaluations may take several months to complete. The British government is interested in attracting Shein to the London Stock Exchange, but the pricing will also need the approval of Chinese regulators, particularly the China Securities Regulatory Commission (CSRC), adding another layer of complexity to the process.