Shein is scaling back its Vietnam operations after a large logistics hub lease was only partially used, sources say.

The company began leasing 15 hectares of warehouse space near Ho Chi Minh City in 2025 as part of a plan to position Vietnam as an export base, but U.S. trade policy changes altered the outlook.

The end of the de minimis duty exemption and higher tariffs on Chinese goods reduced the cost advantage of Vietnamese production, while supply chain inefficiencies and labor constraints limited the hub’s effectiveness, according to supplier representatives and a factory manager.

Shein has increased investment in its Guangdong supply chain, pledging more than $1.5 billion for a smart system, and is pursuing a Hong Kong IPO, while some domestic suppliers are seeking sales on other platforms such as Temu or Amazon.