Chinese online fast-fashion retailer Shein said on Thursday it will invest US$148.9 million in Brazil in coming years to establish a network with thousands of textile manufacturers in the country.
The company, which also announced a marketplace for products and sellers in Brazil, said it intends to partner with 2,000 manufacturers in the country, which should generate the creation of 100,000 jobs over the next three years.
Some 85 per cent of sales made in Brazil should be sourced from local manufacturers and sellers by the end of 2026, it added.
Shein’s plan is “basically ship raw material to Brazil and localize our manufacturing in the country”, the firm’s Latin America Chair Marcelo Claure told Reuters.
Claure, a former high-ranking executive at Japan’s SoftBank Group Corp, who joined Shein earlier this year, said that the company will continue to practice competitive prices even with the start of local production.
“All the savings in transport and logistics will be offset by what I believe will just be a little higher manufacturing cost, so the end result should be exactly the same or lower,” he explained.
Shein currently ships its orders from Brazil individually.
Earlier on Thursday, Brazilian Finance Minister Fernando Haddad had said that Shein was planning to localize part of its Brazilian sales by implementing local production.
According to the company, the investment will be used to provide technology and training to domestic manufacturers so that they can upgrade their operations to match Shein’s on-demand model.
This strategy should allow local producers to better manage the company’s orders, reduce waste and excess inventory, Shein said.
“We have seen great success in Brazil since our launch in 2020, and with growing consumer demand, we saw the opportunity to further localize our supply chain,” Claure said in an earlier statement.
Later on Thursday, textile producer Coteminas, controlled by Brazilian textile multinational Springs Global, signed a memorandum of understanding with Shein for a “joint effort for 2,000 of its garment manufacturer clients to become Shein suppliers for the domestic market and Latin America.”
The agreement also involves working capital funding for the Brazilian firm and export contracts of household products, Coteminas said in a securities filing.
Shein, founded by Chinese entrepreneur Chris Xu, has grown into one of the world’s largest online fashion marketplaces since its 2008 launch in Nanjing.
In Mexico, it faced concerns last year over its use of indigenous designs in a top, which prompted it to remove the product.
Source : Insideretail