Shein, the Chinese ultra-fast fashion giant, has made a strategic move to start producing apparel in Mexico. With this decision, Shein aims to diversify and localize its manufacturing capabilities and strengthen its position in key markets such as Latin America and the United States.
The Singapore-headquartered company recently announced plans to invest US$70 million over the next five years to strengthen its network of third-party suppliers.
Besides Mexico, Shein has also targeted Brazil as a manufacturing and export hub for the Latin American region. This localization strategy has proven to be one of the most successful of Shein’s approaches to date, allowing the company to tailor its factories and manufacturing facilities to the specific needs of local markets.
In addition, Shein’s move is a conscious attempt to reduce its political dependence on China and avoid potential problems with the United States, a key market for the company.
Concerns were raised only recently when a US federal commission reported that Shein sourced cotton from China’s Xinjiang region, which is banned in the US because of its association with Uyghur forced labor. To meet these challenges and maintain its growth trajectory, Shein plans to fund its expansion into Mexico and Brazil with the $2 billion in capital it recently raised from investors.
Despite a valuation that was lowered to $66 billion in the latest funding round, Shein continues to post an impressive 40 percent annual revenue growth, according to Reuters.
localization of production
Shein’s ambitious plans for Brazil call for 85 percent of sales to come from local manufacturers and distributors by the end of 2026. While the company has yet to comment on its specific strategy for Mexico, Marcelo Claure, Shein’s Latin America Chairman, underscored the importance of leveraging global reach and operational excellence to support local economies and networks.
In an April statement, Claure pointed to the opportunity to further localize the supply chain to benefit consumers, small businesses and the economy at large.
Shein’s move to Mexico and Brazil is a carefully calculated one to solidify its digital presence and expand its marketplaces in the fast-paced world of fast fashion.
This translated article originally appeared on FashionUnited.uk.