Amazon's biggest Chinese rival in the US may be facing 'home country' problem

The Chinese government has reportedly intervened to prevent fast-fashion giant Shein – Amazon ’s biggest rival – from moving some of its production out of China. The Chinese Ministry of Commerce has allegedly communicated with Shein and other companies, urging them not to diversify their supply chains by sourcing from countries like Vietnam, a report by Bloomberg said, citing sources familiar with the matter.

These requests reportedly came shortly before the after Trump’ announcement of “reciprocal tariffs,” which have prompted businesses to explore ways to circumvent the increased duties. This can be seen as a move by Beijing to prevent a manufacturing exodus as US President Donald Trump’s tariffs loom. Notably, the US has slapped a total of 54% reciprocal tariffs on China earlier this month, prompting a 34% counter-tariff.

How Shein has responded to China’s requests
One way Shein has responded is by halting reconnaissance tours it had organised for its major Chinese suppliers to visit potential factory locations in Vietnam and other Southeast Asian nations, another source indicated to the publication.

The potential for job losses associated with manufacturers relocating overseas is said to be a significant concern for Chinese officials.

Beijing's reported intervention in Shein's supply chain adjustments comes at a critical juncture. With tariff exemptions for small parcels set to expire within the next month, the cost of goods sold by Shein and its competitor Temu is expected to rise sharply, likely leading to higher prices for American consumers who have favoured these platforms over Amazon.

This situation also highlights a growing conflict between China and its exporters. While the state aims to protect its domestic manufacturing sector, companies are increasingly seeking strategies to avoid the mounting costs associated with the tariffs.

During the President's first term, many Chinese firms circumvented tariffs by shifting production to other countries. For instance, more than half of Cambodia's factories are now reportedly Chinese-owned. However, the commerce ministry's recent actions suggest that Beijing will likely resist similar relocation strategies this time around.