Shein's tariff-busting shift hits home in Chinese factory hub

GUANGZHOU, China, April 16 (Reuters) - The rapid rise of ultra-fast fashion retailer Shein has been so key to the fortunes of a group of urban villages on the outskirts of China's southern metropolis of Guangzhou that they have been colloquially dubbed "Shein villages".

Shein was able to become a behemoth selling over $30 billion worth of goods annually on a foundation of cheap prices and advantageous trade rules, such as the U.S. "de minimis" exemption that allows low-cost imports to enter the country duty-free.

But the supply chain efficiencies emanating from hundreds of humming factory floors in these villages, reacting in real-time to online orders for leopard print palazzo pants or peasant blouses at unbeatable prices, were also key to its success.

On a recent visit to Shein villages in Panyu District, however, the mood was glum. Three factory bosses along with four local downstream suppliers said Shein's local orders were in decline, pointing the finger at moves to diversify production to Vietnam.

As companies reliant on China for production reel from tariff rates of 145% and cancellation of the de minimis threshold for packages from China, questions are being asked about how long the good times can keep rolling - for Guangzhou's factories, and also for Shein.

Factory owner Mr Li has been in business since 2006, manufacturing apparel for both the Chinese and international markets. He has been working with Shein for five years and says orders from the firm this year have dropped by 50% as more orders have moved to Vietnam.

"The impact is quite obvious," he said. "Tariffs are not something that we can see an end to for the time being, and we don't know what will happen next."

Here, thousands of small contract manufact...
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