By Daily Touch Insights Editorial Team
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BUSINESS & GLOBAL COMMERCE — Shein's experience expanding its operations in Vietnam is highlighting a difficult reality for global fashion companies: moving part of a supply chain away from China can be much harder than it appears.

The fast-fashion giant has spent years building an exceptionally flexible manufacturing and logistics network around China. Its experience in Vietnam has shown that having lower-cost production locations available does not necessarily mean they can immediately replicate the speed, scale and coordination of China's manufacturing ecosystem.

Key Insight: Moving production is not simply about finding cheaper factories. Companies also need suppliers, skilled workers, logistics networks, raw materials and the ability to respond quickly when customer demand changes.

Why Shein Looked Beyond China

China has long been central to Shein's business model, but geopolitical tensions, trade policies and growing scrutiny of Chinese supply chains have encouraged global companies to explore alternative manufacturing locations.

Vietnam has become one of the countries attracting manufacturers looking to diversify their operations.

The country already has a significant textile and apparel industry and has benefited from companies seeking alternatives to manufacturing entirely in China.

For Shein, expanding outside China could also provide greater flexibility as international markets become more complicated.

The Problem Is Bigger Than Factory Costs

At first glance, moving manufacturing can appear straightforward.

A company can identify a factory, negotiate costs and begin producing products.

But Shein's model depends on much more than factory capacity.

The company has built a system capable of connecting thousands of suppliers with real-time consumer demand. Products can be tested in relatively small quantities, and successful designs can then be produced at a much larger scale.

Replicating that system requires an entire ecosystem rather than one factory.

China's Manufacturing Ecosystem Is Difficult to Reproduce

China's advantage comes partly from the enormous concentration of businesses involved in manufacturing.

Factories, textile suppliers, packaging companies, logistics providers, machinery manufacturers and other specialized businesses can operate within closely connected industrial regions.

That proximity can reduce the time required to move materials and make changes to production.

For a company operating in fast fashion, speed is extremely important.

A delay of even a few days can matter when consumer preferences change quickly.

Shein's Business Depends on Speed

Shein became one of the world's most recognizable online fashion retailers by operating differently from traditional fashion companies.

Instead of producing enormous quantities of every design months before a season begins, its model relies heavily on data and rapid testing.

Products can be introduced, monitored and adjusted according to customer demand.

That requires manufacturers to respond quickly.

The closer suppliers are to one another and the more integrated they are with the retailer, the easier it becomes to maintain that speed.

Why Vietnam Still Matters

Vietnam's role should not be dismissed simply because it has struggled to replicate every part of China's manufacturing ecosystem.

The country remains an important manufacturing hub for global companies.

Its growing industrial base, trade relationships and established apparel sector make it attractive to businesses seeking supply-chain diversification.

The bigger lesson is that Vietnam may complement Chinese production rather than immediately replace it.

China's Advantage Is Not Just Cheap Labour

One common explanation for China's manufacturing strength is low labour costs.

That explanation is incomplete.

China's competitive advantage increasingly involves infrastructure, supplier density, manufacturing expertise, logistics and the ability to produce at enormous scale.

Automation and highly developed industrial processes also allow manufacturers to compete on speed and efficiency.

Those advantages cannot easily be transferred to another country simply by opening a new facility.

The Supply-Chain Diversification Challenge

Global companies have increasingly adopted a strategy sometimes described as "China plus one."

The idea is not necessarily to abandon China completely.

Instead, companies establish additional manufacturing capacity in countries such as Vietnam, India, Indonesia or Mexico to reduce their dependence on a single location.

This approach can provide greater resilience if trade restrictions, geopolitical tensions or supply disruptions affect one market.

But diversification can also increase complexity and costs.

Fast Fashion Makes the Challenge Harder

Fast fashion operates under unusually demanding conditions.

Trends can change rapidly, meaning companies need to produce new designs quickly and avoid being left with large amounts of unsold inventory.

A manufacturing network that takes too long to respond can undermine the entire business model.

This is one reason Shein's Chinese supplier network remains strategically important.

What Shein's Experience Means for Other Companies

Shein's experience offers a warning to businesses planning major supply-chain relocations.

Moving production should not be treated as a simple search for cheaper wages.

Companies need to evaluate the entire ecosystem.

  • Availability of raw materials.
  • Supplier networks.
  • Skilled manufacturing workers.
  • Transport infrastructure.
  • Ports and logistics.
  • Production speed.
  • Quality control.
  • Access to supporting industries.
  • Government policy.
  • Ability to scale production quickly.

A country may perform well in one category while remaining less competitive in others.

China's Position Is Not Guaranteed Forever

China's manufacturing dominance should not be interpreted as permanent.

Other countries are investing heavily in factories, infrastructure and workforce development.

As wages, trade policies and geopolitical conditions change, some forms of manufacturing will continue moving to new locations.

But building a manufacturing ecosystem takes years.

That is the critical advantage China currently possesses.

The Bigger Global Trend

The Shein story reflects a much larger transformation in global commerce.

For decades, companies increasingly concentrated production in regions where manufacturing could be performed efficiently at massive scale.

Now businesses are trying to balance efficiency with resilience.

They want supply chains that are inexpensive but also flexible enough to survive political disputes, trade restrictions, transportation disruptions and unexpected crises.

That creates a difficult balancing act.

Our Perspective

Shein's experience demonstrates why China's manufacturing strength cannot be measured simply by factory prices.

The real advantage is the network surrounding those factories.

A company can move a factory to another country, but recreating decades of supplier relationships, industrial expertise and logistics infrastructure is considerably harder.

Vietnam can still become an important part of Shein's global supply chain. But the experience suggests that diversification does not necessarily mean replacing China.

Conclusion

Shein's Vietnam experience highlights one of the biggest challenges facing global manufacturers today: reducing dependence on China without losing the speed and efficiency that made Chinese manufacturing so competitive.

Vietnam offers important advantages and remains an increasingly significant manufacturing destination. But China's enormous industrial ecosystem gives it a level of scale and coordination that is difficult to reproduce quickly.

For Shein and other global companies, the future may therefore be less about choosing China or another country and more about building a supply chain capable of using several manufacturing hubs while preserving the efficiency that made the business successful.

The lesson is simple: manufacturing power is not built by opening factories alone. It is built by creating an ecosystem around them.