The Chinese government is asking Shein not to move production abroad

Following the hefty tariffs by Trump on Chinese imports, the fast fashion giant Shein has begun a strategy of relocating its production centers outside of China, the company's country of origin. However, the Chinese government strongly opposed the proposal, fearing that the shift could greatly affect the unemployment rate and, consequently, the Republic's economy. According to Bloomberg, the Chinese Ministry of Commerce contacted Shein and other companies strongly advising against collaborating with sourcing and production sites in other countries. Still according to the outlet, the request came just a few days before Trump announced the new tariffs, and for now, in response to the government's request, Shein has halted the inspections it was conducting with its Chinese suppliers of factories in Vietnam and other Southeast Asian countries. Shein represents one of the largest economic powers in the country, so the relocation of production centers could weigh heavily on China's economy at an extremely sensitive time for the country.

The tariffs imposed by Trump on all international trade are particularly severe for China, the United States' main economic competitor and a huge export hub: the country will have to face import duties of 54%, a practically unsustainable figure. The positioning of Shein and Temu on American soil could also be severely affected: one of the two brands' main strengths in the United States was the ability to ship their products using customs exemption, but the "shortcut" will expire on May 2, in less than a month, so the companies may be forced to raise their prices even further. Since they are fast fashion companies (meaning clothing produced quickly and at low cost), the price increase could permanently drive Shein and Temu away from American consumers – the U.S. market, along with the European one, is one of their largest commercial outlets.

After Trump’s threats to revoke customs exemptions on small packages, the company began offering incentives to key suppliers to rely on production sites in Vietnam starting in February. And now the Chinese government is doing everything it can to stop the hemorrhage before it’s too late. At the moment, the Chinese economy is under pressure from all sides: new American tariffs threaten the country’s international power, while domestically the government and manufacturers are clashing, with the former afraid of losing local manufacturing and the latter trying to cling to external factories just to save on production costs. Many Chinese companies had already begun moving their processing centers abroad during Trump’s first term, especially to Cambodia, so further changes could deliver a final blow to Chinese manufacturing. The issue of tariffs is a serious problem for Shein, which for just over a year has been preparing to go public on the London Stock Exchange. Between Trump’s tariffs and the concerns of the Chinese government, the company could lose important investments. Perhaps that’s precisely why it’s trying to clean up its image in Europe, with events and initiatives across the region, including with small Italian businesses.