Shein Expands to Vietnam Amid U.S.-China Trade Tensions

Fast-fashion giant Shein is leasing nearly 15 hectares of warehouse space near Ho Chi Minh City, marking its first major logistics move into Vietnam. This strategic expansion comes as the company looks to reduce its reliance on Chinese suppliers and navigate ongoing U.S.-China trade tensions. Sources told Reuters the facility, roughly the size of 26 football fields, will store clothing from contractors before export.

While Shein hasn’t confirmed whether products in the warehouse will be locally sourced or shipped from China, its suppliers in southern China have reported a shift of orders to Vietnam. The move aligns with Shein’s broader strategy to diversify supply chains, as it previously announced plans to source from Turkey and Brazil.

Vietnam offers logistical advantages with its proximity to major ports and an international airport, facilitating exports to the U.S. However, Washington has accused some Chinese goods of being rerouted through Vietnam to evade tariffs, prompting Hanoi to tighten import regulations.

Despite a recent softening in trade tensions, analysts warn the risk of renewed tariffs remains high. The U.S. recently adjusted its de minimis rule, reducing duties on low-value imports from China, but Shein packages could still face up to 54% in tariffs. Vietnam shipments under $800 continue to enjoy duty-free status, though this may change.

Shein, which generates over $30 billion in annual sales, is also investing $1.37 billion in new supply chain hubs in southern China, including a massive 49-hectare project near Guangzhou. Nonetheless, industry experts say the company must diversify to mitigate geopolitical risk and protect its business model built on low-cost, rapid delivery.

As Shein pursues a potential London IPO, its shift to Vietnam underscores its effort to future-proof its global supply chain.