Chinese ultra-fast fashion retailer Shein has invested in several Brazilian apparel manufacturers to expand its production capacity and streamline its supply chain.
On Thursday, the company announced that it will invest an additional 750 million reais (about 140 million euros) in building a network with thousands of textile manufacturers in Brazil.
Brazil is one of the largest textile and clothing manufacturers in the world and has a highly advanced manufacturing industry, making the country an attractive destination for foreign investment.
Shein will work with 2,000 local manufacturers, which is expected to create 100,000 new jobs over the next three years, according to Reuters. By the end of 2026, almost 85 percent of all business done in Brazil will be from local producers and retailers. Shein’s plan is “basically to ship raw materials to Brazil and localize our production in the country,” the company’s Latin America chairman Marcelo Claure told Reuters.
A departure from China
One of the main reasons for Shein’s investment in Brazil is its reduced dependence on China as its sole manufacturing location. With China’s rising labor and raw material costs and increasing pressure to diversify its supply chain due to geopolitical tensions, Shein sees Brazil as a cost-effective alternative manufacturing option
Brazil has preferential trade deals with key markets like the European Union and the United States, which will benefit Shein. In this way, the company can reduce its production costs and improve its profit margins by avoiding high tariffs and duties on imported goods.
In 2022, Shein launched a B2B program in Brazil, allowing brands to list their products for sale on the company’s platform. The pilot program started last March and processed 50,000 orders per day, as reported by the Asian industry service Tech in Asia at the time.
With a growing middle class and a strong appetite for fast fashion, Latin America could represent a significant growth opportunity for fashion companies.
This translated post previously appeared on FashionUnited.com.