Shein Exits Vietnam to Invest $1.5 Billion in China

Shein is drastically scaling back its operations in Vietnam after an attempt to establish the country as a major export base failed. The company reduced its bonded logistics hub near Ho Chi Minh City from 15 hectares to 6 hectares and began mass layoffs in April 2026.

This strategic retreat follows the abolition of U.S. de minimis duty-free exemptions and the imposition of 12.5% U.S. tariffs on both China and Vietnam, triggered by allegations that both nations failed to prevent forced labor imports. Additionally, the company struggled to find Vietnamese labor willing to match the low wages and high speed of its Chinese supply chain.

In response, the retailer is deepening its commitment to southern China. CEO Sky Xu pledged over 10 billion yuan ($1.5 billion) to develop a smart supply-chain system in Guangdong province. These investments come as the company faces declining U.S. revenue and pressure from Chinese suppliers, who are increasingly turning to competitors such as Temu and Amazon due to thin profit margins.