Shein looks to Mexico for manufacturing
Shein, the Chinese ultra-fast fashion giant, has made a strategic move to commence garment production in Mexico. This decision comes as Shein aims to diversify and localise its manufacturing capabilities and strengthen its foothold in key markets such as Latin America and the United States.
The company, headquartered in Singapore, recently announced plans to allocate 70 million dollars over the next five years to empower its ecosystem of third-party manufacturing suppliers.
In addition to Mexico, Shein has also set its sights on Brazil as a manufacturing and export hub for the Latin American region. This localisation strategy has proven to be one of Shein's most successful approaches to date, allowing the company to tailor its factories and production facilities based on the specific needs of local markets. Moreover, this move serves as a deliberate effort by Shein to reduce its political dependence on China and avoid any potential issues with the United States, a key market for the company.
Recent concerns were raised when a U.S. federal commission reported that Shein sourced cotton from China's Xinjiang region, which has been banned in the U.S. due to its association with Uyghur forced labour. To address such challenges and maintain its growth trajectory, Shein plans to fund its expansion into Mexico and Brazil using the two billion dollars in capital it raised from investors.
Despite a valuation cut to 66 billion dollars in its latest funding round, Shein continues to achieve impressive annual revenue growth of 40 percent, as reported by Reuters.
Shein's ambitious plans for Brazil involve an expectation that 85 percent of its sales will be driven by local manufacturers and vendors by the end of 2026. While the company has not yet commented on its specific strategy for Mexico, Marcelo Claure, Chairman of Shein in Latin America, emphasised the significance of leveraging global scale and operational excellence to support local economies and ecosystems.
In a statement made in April, Claure highlighted the opportunity to further localise the supply chain to benefit consumers, small businesses, and the broader economy.
Shein's move into Mexico and Brazil represents a calculated step towards solidifying its digital presence and expanding its marketplaces in the fast-paced world of fast fashion.