Shein, the Chinese ultra fast-fashion retailer, has been investing in Brazilian garment manufacturers in order to expand its production capabilities and shorten its supply chain. On Thursday the company said it would invest a further 750 million reais (approximately 148.9 million dollars) to establish a network with thousands of textile manufacturers in the country.
Brazil is one of the largest textile and garment producers in the world and has a highly developed manufacturing industry, making it an attractive destination for foreign investment.
Shein will partner with 2,000 local manufacturers, which should result in the creation of 100,000 new jobs over the following three years, said Reuters. By the end of 2026, local producers and vendors should account for almost 85 percent of all transactions made in Brazil. Shein’s plan is to “basically ship raw material to Brazil and localize our manufacturing in the country”, the company’s Latin America Chair Marcelo Claure told Reuters.
A move away from China
One of the main reasons for Shein's investment in Brazil is to reduce its reliance on China as its sole production base. With rising labour and raw material costs in China, and increasing pressure to diversify its supply chain due to geopolitical tensions, Shein is looking to Brazil as an alternative and affordable source of production.
Brazil has preferential trade agreements with key markets such as the European Union and the United States, which will be beneficial to Shein. This allows the company to reduce its production costs and improve its profit margins by avoiding high tariffs and duties on imported goods.
In 2022 Shein piloted a B2B program in Brazil allowing brands to offer their products for sale on the firm’s platform. The trial program began last March and handled 50,000 orders a day, Tech in Asia reported at the time.
With a large and growing middle class, and a strong appetite for fast fashion, the Latin American region could be a significant growth opportunity for fashion businesses.