Fast-fashion retailer Shain faces an uncertain future amid the threat of Trump tariffs and a crackdown on the sale of cheap goods overseas.
There were rumours that Shein planned to list in London with a £50bn float around this Easter, but according to the FT, this boon for London’s market is likely to be shelved until later in the year amid the drama over international goods sales.
The retailer faces pressure from the UK government over its presence in Xinjang, China, as well as potential tariffs due to its presence in China and a global crackdown on ‘de minimis’ sales.
‘’Shein’s planned London listing was already mired in controversy and now it’s hit by fresh tariff turmoil, becoming ensnared in clampdowns on e-commerce giants,” Susannah Streeter, head of money and markets at Hargreaves Lansdown, said.
“If Shein can’t compete so easily on price in major markets like the US and the EU, it’ll be a much harder sell, particularly given it also faces claims of environmental recklessness and poor working conditions in its supply chains,” Streeter added.
The global crackdown on ‘de minimis’
‘De minimis’ is a Latin word roughly meaning “too small to matter”, and refers to small packages that are shipped directly to consumers from abroad, bypassing customs and tariffs along the way. More than 30 per cent of the shipments to America using the ‘de minimus’ rule were from Shein and Chinese ecommerce giant Temu.
Trump has pledged to crack down on this rule to boost customs revenue and reduce its utility for the cross-border transportation of opioids.
For now, Trump has been forced to pause his closure of the loophole “until adequate systems are in place to fully and expediently process and collect tariff revenue” due to a massive build-up of packages at the US border.
The EU has already proposed the removal of the de minimis exemption.
“Shein and Temu have enjoyed very strong sales growth in recent years, supported by their low price points and very effective marketing,” RBC analysts said.
“However, we view the proposed removal of the de minimis exemption on US import duties as a threat to their business models, with potential for other markets to follow suit,” RBC added.
Shein’s bet on Vietnam
According to Bloomberg, Shein may incentivise Chinese suppliers to shift some production to Vietnam.
This may include higher procurement prices of 15-30 per cent, although the plans are still being discussed.
Shifting production to Vietnam would grant Shein better access to the European markets via the EU-Vietnam Free Trade Agreement.
Florimond de Tinguy, VP of sales at commerce platform VTEX, said Shein’s move in Vietnam was “a calculated response to rising tariffs and shifting global trade dynamics”.
“By shifting production to Vietnam and other emerging markets like India, Shein is optimising for resilience by reducing its dependency on China by minimising tariff risks through multi-sourcing strategies,” Tinguy said.
“This move reflects a broader industry trend, with companies reshoring manufacturing and embracing assembly-only models to comply with local rules of origin,” he added.
However, the move to Vietnam may be more of a short-term strategic plan rather than an alternative to a listing: Hargreaves’ Streeter suggested Shein will still target London for a float, albeit at a lower price.
“With the spotlight on Shein’s business model shining more intensely, the company looks set to set its sights on a cheaper listing price, and drum up more appetite among institutional investors,” Street said.
City AM has contacted Shein for comment.