Shein Finds There's No Place Like China after Vietnam Warehouse Experiment Disappoints

Employees work on a production line at a garment factory in Panyu District, Guangzhou, Guangdong province, China, July 27, 2026. REUTERS/Go Nakamura
Employees work on a production line at a garment factory in Panyu District, Guangzhou, Guangdong province, China, July 27, 2026. REUTERS/Go Nakamura
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Shein Finds There's No Place Like China after Vietnam Warehouse Experiment Disappoints

Employees work on a production line at a garment factory in Panyu District, Guangzhou, Guangdong province, China, July 27, 2026. REUTERS/Go Nakamura
Employees work on a production line at a garment factory in Panyu District, Guangzhou, Guangdong province, China, July 27, 2026. REUTERS/Go Nakamura

Just over a year ago, Chinese ultra-fast fashion retailer Shein began leasing 15 hectares of warehouse facilities — equivalent in size to 21 soccer pitches — near Ho Chi Minh City, part of a grand experiment to make Vietnam a major export base.

When it was formulating those plans in late 2024, it seemed like a bet that, while risky, was worth making.

US exemptions for duties on small parcels from China that underpinned its business model looked as if they would be abolished, Donald Trump had just been elected US president for a second term and fears of a heightened trade war were soon realized, with US tariffs on many Chinese goods rocketing to 145% by April 2025.

Shein started encouraging its biggest Chinese suppliers to set up manufacturing bases in Vietnam.

But things did not go to plan.

Today, IPO-bound Shein, known for selling $5 tops and $10 dresses, is drastically scaling back in Vietnam, six people familiar with its operations there said.

At 15 hectares, the bonded logistics hub was the largest of its kind in the country and used to employ thousands. The lease now covers 6 hectares, according to two of the sources. A separate person with direct knowledge of the matter said a third of the originally planned site is in use.

Mass layoffs began in April and more are expected, warehouse workers said, adding that some teams have retained one in four employees, while others lost even more. During a Reuters visit to the site in late July, only a handful of workers were present and just a few trucks were parked ⁠at its warehouses. ⁠Nearby warehouses operated by other tenants were bustling with activity.

Shein did not respond to Reuters requests for comment.

Its sharp U-turn in Vietnam, which has not previously been reported, reflects abrupt changes in US trade policies while underscoring how dependent Shein's business model is on Chinese suppliers which put up with terms that manufacturers in other countries won't — a pattern Shein has also seen play out in Brazil.

It also highlights how Shein is hewing more closely to its Chinese roots. Having unsuccessfully sought listings in New York and London and moved its headquarters to Singapore as it expanded globally, the company is now pursuing a Hong Kong IPO while deepening its commitment to its manufacturing base in southern China.

The first and biggest hit to Shein's Vietnam plans was the end of the US de minimis duty-free exemption for shipments under $800 from all countries, not just China. Trump ordered the move on July 30, 2025, and it took effect a month later, only a few months after the exemption for shipments ⁠from China ended.

Then, sky-high US tariffs on Chinese goods gradually came down. Vietnamese apparel is still subject to smaller tariffs than Chinese clothing, but the advantage is no longer as large as it used to be.

A knit polyester dress, for example, imported from either Vietnam or China is subject to a 16% duty, but the Chinese item would be hit with Section 301 tariffs imposed for alleged unfair trade practices that could lift the effective rate to around 33.5%.

Last month, both China and Vietnam were hit with new US tariffs of 12.5% for allegedly failing to prevent imports of goods made with forced labor — a decision that puts Vietnam at a disadvantage to other Southeast Asian nations with big apparel sectors and further undermines the case for Shein's suppliers to set up shop there.

It's not all about tariffs. Finding Vietnamese workers willing to work long hours for low wages has proven difficult, sources at Shein's Chinese suppliers say.

Shein's vast network of suppliers in China produces millions of styles in small batches at margins of as little as 1 yuan ($0.15) per piece, with orders fulfilled in days and quickly reordered if the company's 273 million shoppers take a liking to them.

"Sourcing diversification beyond China has practical limits, especially for companies like Shein whose competitive advantage depends on speed, flexibility, and extremely small production runs," said Sheng Lu, professor of fashion and apparel studies at the University of Delaware.

Many suppliers that went to Vietnam have come back, said a factory manager with the surname Wen ⁠in Guangzhou's Panyu district, home to "Shein villages" that comprise ⁠thousands of small garment factories.

"They realized that despite the smaller US tariff rate on Vietnamese goods compared to Chinese ones, the low efficiency still makes it less viable than manufacturing in China," Wen added. He declined to give his full name, saying Shein had warned suppliers not to speak to media.

Authorities in Guangzhou, keen to protect local jobs, were also not happy with Shein's efforts to subsidize Chinese manufacturers opening plants in Vietnam, and in mid-2025 warned it against moving orders significantly away from the region, according to a source with direct knowledge of the matter.

The Guangzhou Municipal Commerce Bureau did not respond to a request for comment.

Shein is now investing further in Guangzhou and the broader Guangdong province, with CEO Sky Xu making a rare public appearance in February to pledge spending of over 10 billion yuan ($1.5 billion) on a smart supply-chain system in the region.

But while Shein has recommitted to China, some domestic suppliers are not necessarily recommitting back as demand slows. Shein's draft prospectus showed a 14% slide in US revenue during the first quarter due to the end of the de minimis exemption.

Wen and three other suppliers said orders from Shein were either stagnant or showing only a little growth. Demand is expected to further slow after the European Union last month imposed a €3 duty on low-value e-commerce imports.

Ping He, who has worked in operations management for Shein and TikTok Shop, said thousands of Shein's smaller suppliers have begun supplementing their income by opening stores on PDD Holdings-owned Temu or Amazon.

"Shein is not the prettiest boy in town anymore. There are many more options now," she said.
Other suppliers are returning to larger orders with longer lead times.

"Shein's profit margins are just too thin ... their order volumes are quite small, often just dozens of pieces at a time, which makes production a hassle. So we decided to drop them," said Yang, a manager at Jiang Gong Clothes, a factory in Panyu that worked with Shein until a few months ago.



Lululemon Forecast Cut Hits Shares, Underscores Challenge for Next CEO

FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo
FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo
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Lululemon Forecast Cut Hits Shares, Underscores Challenge for Next CEO

FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo
FILE PHOTO: A logo is displayed inside a Lululemon outlet retail store at Bicester Village in Oxfordshire, Britain, August 21, 2024. REUTERS/Hollie Adams/File Photo

Shares of Lululemon Athletica fell about 18% in premarket trading on Friday after the sportswear maker cut its full-year forecast for a second time, underscoring the hurdles awaiting incoming CEO Heidi O'Neill.

Lululemon, known for its high-priced stretchy pants and athletic tops, has been grappling with declining sales for several quarters as it seeks to recover from merchandising missteps, an overreliance on promotions and intensifying competition, Reuters reported.

The firm's shares fell ⁠to $100.1 premarket, and ⁠if losses hold, it would wipe out more than $2.5 billion from Lululemon's market value and deepen the stock's year-to-date decline to about 41.5%.

O'Neill, a former Nike executive who takes the helm on September 8, will ⁠be tasked with reviving demand in North America, Lululemon's largest market, and restoring growth.

Revenue in the Americas, the company's largest market, fell 8% in the second quarter, compared with a 1% increase a year earlier, as the firm struggles to reignite demand amid inflationary pressure on consumer spending.

Morgan Stanley said that sales could deteriorate further in the second half, ⁠with ⁠limited visibility on when demand might recover, raising the risk of continued pressure on margins.

Following the results, at least 12 brokerages lowered their price targets on the shares, with Piper Sandler setting the Street-low target of $80, according to data compiled by LSEG.

The company trades at about 11.50 times forward earnings, compared with ​20.76 for Nike ​and 13.41 for Adidas, according to LSEG data.


One Year After Its Founder’s Death, Armani Faces Challenge of ‘Inevitable Evolution’

People walk past a Giorgio Armani store in Galleria Vittorio Emanuele II, in Milan, Italy, September 5, 2025. (Reuters)
People walk past a Giorgio Armani store in Galleria Vittorio Emanuele II, in Milan, Italy, September 5, 2025. (Reuters)
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One Year After Its Founder’s Death, Armani Faces Challenge of ‘Inevitable Evolution’

People walk past a Giorgio Armani store in Galleria Vittorio Emanuele II, in Milan, Italy, September 5, 2025. (Reuters)
People walk past a Giorgio Armani store in Galleria Vittorio Emanuele II, in Milan, Italy, September 5, 2025. (Reuters)

One year after the death of founder Giorgio Armani, the Italian fashion house is entering a pivotal period as the clock starts ticking on plans for an initial stake sale, after the group spent the last year focused on governance.

Armani, who died aged 91 on September 4, 2025, stipulated in his will that a first sale of around 15% of the company should take place between 12 and 18 months after his death, followed by the disposal of a larger stake or a bourse listing.

Industry executives and analysts warn, however, that one year on, the late designer's heirs and advisers must now focus on evolving, to keep the brand fresh and relevant.

"Continuity is the right choice to get through the first year. It becomes, or could become, a risk if it turns into inertia," said Francesco Fiorese, a partner at consultancy Simon Kucher.

The real test for the company, Fiorese ‌said, will be ‌to switch from "a succession model based on Giorgio Armani's legacy to a more autonomous system, capable of ‌making ⁠its own decisions while ⁠still preserving the brand's identity."

Armani group declined to comment.

NEW BUSINESS PLAN

Over the last year, Armani's sales declined 2.8% at constant currencies to €2.2 billion ($2.56 billion), and investors remain cautious about the luxury sector's health as the war with Iran drags on and Chinese consumer spending is faltering.

As he prepares a new business plan, CEO Giuseppe Marsocci, a group veteran now at the helm, told an event in July that Armani would not seek short-term fixes, while keeping faithful to the founder's long-term vision of an essential and elegant style with attention to detail and wearability.

He said Armani was still in a transition phase and looking for a new balance as the founding family worked closely with new board directors, ⁠including former Gucci CEO Marco Bizzarri.

Marsocci pointed to a joint venture to develop new Armani Hotels & ‌Resorts as an indication of future strategic moves.

"The great challenge will be maintaining ‌the balance between the identity that defines us and the inevitable evolution we will have to pursue," he said.

STAKE SALE

In his will, Armani listed ‌France's LVMH and licensees EssilorLuxottica and L'Oréal as potential buyers - or another luxury group of comparable standing.

The fashion house, which sources said is ‌working with Rothschild as financial adviser for the sale, had €500 million in net cash at the end of 2025.

Two people close to the matter said there was no pressure to clinch a sale and the deadlines set out in Armani's will are not strictly binding.

The process is expected to accelerate in the coming weeks, but a deal could be postponed if market conditions fail to support an adequate valuation, the sources said.

Bankers and advisers consulted ‌by Reuters put the group's valuation at around €5 billion to €7 billion.

LICENSING ACCORDS

For L'Oreal and EssilorLuxottica, a stake in Armani would help to protect licensing deals which last year netted almost €2 billion ⁠in revenue for the groups - and ⁠royalties for Armani.

"Licensing deals with L'Oreal and EssilorLuxottica have been profitable. With the market demanding more accessible entry points, like accessories and beauty, as consumer spending tightens, these areas show strong potential for continued growth," said Gonzalo Brujó, CEO of consultancy Interbrand Global.

EssilorLuxottica would be interested only in a small holding and could consider partnering with other bidders, two people close to the matter said.

L'Oréal has little interest in entering the fashion business but is keen to safeguard a beauty license that runs until 2050, according to another person close to the matter.

LVMH, large enough to incorporate fashion, eyewear and beauty, has closely studied the possibility of a stand-alone investment, according to a source with direct knowledge of the matter. But LVMH tends to control brands in its portfolio and an IPO could complicate its bid for Armani if the heirs decided to list the company, the source said.

EssilorLuxottica declined to comment, while LVMH was not immediately available for comment.

L'Oreal told Reuters in an emailed reply to queries that its position on a possible Armani stake had not changed and it was honored that Armani had mentioned the French cosmetic group. "L'Oréal will study this opportunity, which builds on our long-shared history, whenever the Armani S.p.A representatives choose to open the discussion," it added.


Fast-Fashion Giant Shein Plunges 10% on Hong Kong Debut

Carlson Tong (C), Chairman of Hong Kong Exchanges and Clearing Limited, attends SHEIN’s listing ceremony at the Hong Kong Exchanges and Clearing Limited (HKEX) in Hong Kong, China, 01 September 2026. (EPA)
Carlson Tong (C), Chairman of Hong Kong Exchanges and Clearing Limited, attends SHEIN’s listing ceremony at the Hong Kong Exchanges and Clearing Limited (HKEX) in Hong Kong, China, 01 September 2026. (EPA)
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Fast-Fashion Giant Shein Plunges 10% on Hong Kong Debut

Carlson Tong (C), Chairman of Hong Kong Exchanges and Clearing Limited, attends SHEIN’s listing ceremony at the Hong Kong Exchanges and Clearing Limited (HKEX) in Hong Kong, China, 01 September 2026. (EPA)
Carlson Tong (C), Chairman of Hong Kong Exchanges and Clearing Limited, attends SHEIN’s listing ceremony at the Hong Kong Exchanges and Clearing Limited (HKEX) in Hong Kong, China, 01 September 2026. (EPA)

Fast-fashion retailer Shein fell 10 percent on its long-awaited Hong Kong trading debut Tuesday, having raised US$1.7 billion in a high-profile initial public offering.

The flotation comes after the company's plans to list in New York and London were derailed by regulatory scrutiny, but it won approval from Chinese officials in July for the sale in the southern financial hub.

However, its shares fell to as low as HK$43.72 soon after the open, compared with its listing price of HK$48.56.

The IPO put the company's valuation at around US$26.3 billion -- well short of the nearly US$100 billion during private fundraising rounds in 2022.

Shein, known for its ultra-low prices and rapidly produced clothes, said proceeds from the sale would be used to finance its technological capabilities and boost its international presence.

The online retailer moved its headquarters to Singapore between 2021 and 2022, which analysts say was intended to avoid increasing global scrutiny of Chinese firms.

Its European customer base rose to 156 million average monthly users by the end of 2025, making it one of the continent's biggest e-commerce platforms alongside China's AliExpress and US titan Amazon, which have 193 million and around 180 million users respectively.

The company has faced scrutiny over its environmental footprint and allegations of human rights violations, and faces growing competition from low-cost e-commerce companies such as Temu and AliExpress.

Executive chairman Donald Tang told AFP last year that the company has "zero tolerance" for forced labor.

Morningstar analyst Lorraine Tan said in an August note that revenue growth "has converged to the pace seen by the fast fashion industry at below 10 percent in 2025".

She added the fall in valuation "does reflect that drop off in investor appetite for Shein's shares".

The company pioneered a formidable model that is hard to replicate, said Ken Pucker, a sustainable fashion expert at Tufts University.

- Chinese roots -

But its unprecedented growth also invited challenges of "newly imposed taxes and duties, compromised sustainability, privacy and copyright practices and competition", he added.

"Timing is not ideal given the company's slowing growth. That said, it has been trying to go public for around five years, and I am guessing that many of its investors were eager to get paid out."

In 2025, Shein reported a full-year net profit of US$2.06 billion but swung to a US$99 million loss in the first three months of this year after the United States scrapped an import duty exemption on small packages.

In a similar move, the European Union last month imposed a duty of three euros (US$3.50) per item for packages valued at less than 150 euros.

And France will impose a fee on ultra-fast fashion items from Tuesday that could eventually reach almost 20 euros per garment, as the government targets major Asian e-commerce platforms.

"Shein's near future is going to be marked by negative growth," e-commerce analyst Juozas Kaziukenas told AFP.

The retailer needs a "mid-air engine swap" to rebuild its supply chain on diversified inventory sources beyond shipping directly from China, he added.

Shein's CEO Sky Xu made a rare public appearance this year in the southern Chinese province of Guangdong, pledging to allocate greater resources in the country, which was seen by analysts as an attempt to realign the company with its roots.

The Hong Kong listing represents a "new Asian story for the company", as it redefines itself institutionally with "roots in China", said Lawrence Loh, a professor specializing in ESG markets at the National University of Singapore.

"The listing opens a new chapter for Shein to access new capital to resolve the sustainability issues, but this comes with a price of even higher levels of public scrutiny."