Shein and Temu are working with suppliers to move production out of China, following the Trump administration's recent actions surrounding tariffs and de minimis exemptions, according to the Wall Street Journal.
Shein is encouraging suppliers to set up production in Vietnam, meeting with them to offer incentives like interest-free loans and increased order placements. The company has also offered help with raw materials and logistics, such as shipping fabrics from China to Vietnam and helping with local hires, and has encouraged suppliers to register as independent local entities or through a Hong Kong entity to avoid potential compliance risks in the future, according to WSJ sources. However Shein denies the rumors.
Meanwhile, Temu raised prices on its website and is pushing suppliers to store inventory in its US warehouses, which currently fulfill around one-third of US orders, according to insiders. Temu also started offering some sellers higher wholesale prices to buy up their inventories, which they would likely ship to their US facilities.
Additionally, Temu is boosting its efforts to sell in countries other than the US, which is currently its biggest market. Inside Retail reports that Temu is stepping up its preparations to directly enter the South Korean market and is in the process of hiring Korean employees for HR, admin, PR, marketing, and logistics functions.
Earlier this month, I reported that President Trump delayed his plans to close the de minimis exemption on Chinese goods to allow the Commerce Department time to set up a system to process inspections and levies on the shipments. However manufactures and sellers aren't waiting around to see what the US decides to do and are instead proactively making plans to move production and/or diversify their businesses.
As one factory owner told the WSJ, “U.S. policies are too volatile, it’s too big of a risk to put inventory there”