2023-04-20 16:51:03
Shein said today that it will start manufacturing its products locally in Brazil — in the first move of its kind made by the ecommerce Chinese since it was founded 15 years ago.
Marcelo Claure, the chairman of Shein in Latin America, told the Brazil Journal that today 70% of the products sold in Brazil come from China, and the remaining 30% come from partners in the Brazilian marketplace.
By 2026, the plan is to reverse this relationship, with 80% of products coming from local manufacturing and marketplace and only 20% being imported from China. “We are only going to continue importing products that Brazil cannot manufacture here,” he said.
Shein is committing to close partnerships with 2,000 Brazilian manufacturers, generating 100,000 jobs over the next three years.
The company said it will invest US$ 150 million during this period to adapt Brazilian factories to Shein’s production model, with investments in technology, equipment and employee training.
Today, all Shein private label products are manufactured in China at tens of thousands of affiliated factories and exported to the 150 countries where the company operates.
The announcement comes at a time when Shein and other Chinese e-commerce companies have come under fire from Brazilian retailers for what they see as unfair competition.
In recent weeks, the Government studied taxing international remittances of up to US$ 50, but ended up going back following criticism on social networks.
Claure spoke regarding the investment commitment following a two-hour meeting with the Minister of Finance, Fernando Haddad. The executive gave Haddad a letter of commitment with the promises made for Brazil.
According to him, Shein’s expectation is that the prices of products manufactured in Brazil will be equal to or lower than those imported, since the company will have great savings with logistics.
“We have already started testing manufacturing with small manufacturers here and we have seen that the Brazilians have the same efficiency as the Chinese, and we have a lot of savings in the supply chain,” he said. “When we reach that scale of 2,000 factories, and we have implemented our manufacturing model, the cost will be very similar.”.
The big difference from Shein’s manufacturing model is that she makes her clothes on demand. In other words, it only manufactures what it sells, saving manufacturers the cost of carrying inventory.
“When you have hundreds of millions of customers you can predict very well what the consumer wants and produce only what will sell. Our partner manufacturers do several small orders a day, but the factories are fully digitized and efficient,” he said.
Even in China, the company does not own any factories, always operating in partnership with thousands of small local manufacturers.
According to Claure, the decision to start manufacturing locally has to do with the importance of the Brazilian market for Shein. Brazil is among the company’s five largest markets in terms of revenue — the market estimate is that the company had revenues of R$ 8 billion last year — and the Brazilian “has a very large fit with our products.”
“O product-market fit that we have with the Brazilian consumer doesn’t exist anywhere else in the world,” said Claure. “The designer of our products that sells the most, for example, is a Brazilian who lives in the USA.”
The idea is that products manufactured in Brazil are also exported to other countries in Latin America. In the future, Shein is considering adopting the near shoring in other markets in which it operates.
Peter Arbex
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