Shein’s Latin American Ambitions Extend Far Beyond Brazil
Shein’s growing presence in Brazil could open the door for the ultra-fast-fashion giant to bring more local products to other markets in Latin America.
At a media day event Wednesday, Fabiana Magalhaes, director of local production at Shein Brazil, told reporters that the Gen Z-loved fashion firm will start shipping the products it manufactures in Brazil to other local markets by 2026.
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Shein has massive plans for apparel production in South America’s biggest economy. In April, Shein announced investments of 750 million reais ($150 million) over three years to establish a manufacturing network in the nation of nearly 215 million.
To date, the Temu rival has partnered with 336 suppliers across 12 Brazilian states, with 213 factories now operating under Shein’s quick-turn, small-batch business model, Magalhaes said. But TikTok’s most-talked about brand wants to scale this number to 2,000 manufacturing partners over three years to make Brazil an export hub to the rest of Latin America.
“Labor costs in the region…are very attractive in countries like Brazil and Mexico compared to Asian standards,” said Diego Rodriguez, logistics and industry director at market research firm Americas Market Intelligence. “Also, the sector is highly decentralized and comprises hundreds of thousands of satellite family-operated facilities that provide the flexibility to rapidly ramp up or scale down production for larger and established producers in the local industry.”
The investment aims to create 100,000 direct and indirect manufacturing jobs in Brazil, according to Magalhaes. The manufacturing initiative accelerates Shein’s goal of getting 85 percent of its Brazilian sales from locally produced by the end of 2026.
With this strategy, Shein is positioning Brazil one of its three major global production centers, alongside China and Turkey, where it began manufacturing apparel last year.
“With local production, we do not have the logistical costs of importing and we have good quality national raw materials, which strengthens our competitiveness and mission of delivering quality fashion at affordable prices,” Magalhaes said during the event.
The move into Brazil also comes amid heavy criticism from national competitors for skirting tax loopholes related to the import of goods, similar to U.S. lawmakers who criticize Shein’s use of the de minimis provision. Under the Section 321 de minimis trade law, a package of goods valued at $800 or less can enter the U.S. duty-free and usually without inspection by Customs and Border Protection.
“Shein’s strategy to manufacture products locally in Brazil is primarily driven to circumvent the strict de minimis value threshold ($50 in Brazil) to import non-commercial products without paying VAT and duties,” Rodriguez said. “As the company’s sales continue to grow in Brazil, customs and the cumbersome clearing processes of a tsunami of packages hinder the firm’s expansion in the largest e-commerce market in Latin America.”
As of Aug. 1, the Brazilian government added a 17 percent tax on imported goods valued at up to $50 to level the playing field between smaller local businesses and cross-border merchants like Shein and rival Temu.
Regardless of where Shein starts shipping goods, Rodriguez told Sourcing Journal the e-commerce company will remain focused on Brazil, one of its top five global markets.
“I expect Shein’s exports from Brazil to neighboring Argentina, Uruguay, Paraguay, Chile and Colombia will play a minor role in its strategy,” Rodriguez said. “The main goal is to grow and better fulfill orders in Brazil first. The higher air freight rates for intra-regional trade and subpar connectivity [between countries] are two key obstacles to overcome.”
The scaling of Shein’s supply chain in Brazil comes as the company reportedly plans to build a factory in Mexico to further localize apparel production. The moves come as U.S. Congress is assessing potential changes in the de minimis law for companies with roots in China and Russia.
“This situation is definitely on Shein’s radar, for which producing in Mexico becomes a natural second step in Latin America to safeguard its dominant position in the U.S. market,” said Rodriguez.
In a post on LinkedIn, Magalhaes said she also discussed the processes involved in manufacturing locally for Shein at the event, and talked about new collections coming out for the holiday season, including products across plus-size, fitness and underwear. Shein will focus on manufacturing products that allow it to maintain competitive prices in the country, such as denim and knitwear, she said.
“That’s only the beginning, but we’re [on] the right track,” Magalhaes said on LinkedIn. “We believe in change, we believe in revolutionizing the industry, we believe in a new way to do business and most importantly we believe in Brazil to make the beauty of fashion accessible to all.”
Last month, Shein extended its EvoluShein by Design platform to six independent creatives in its Design Incubator Program. Critics attacked the “greener” design ethos when the e-tailer first announced it last year, with one expert at the time saying Shein’s sustainability “claim would only be credible if at the same time the company stops fostering throw-away fashion.” Clothing that qualifies for EvoluShein by Design contains a minimum of 30 percent “preferred” materials, which for Shein could be recycled polyester, eco-friendly viscose or deadstock from a supplier like partner Queen of Raw. Manufacturers must comply with stringent environmental and social standards based on third-party audits.
Industry watchers say that inviting designers Alexandria Carroll, Anke Wonder, Farah Naz, Jacqueline City, Lauren Flagg, and Lillian Butterworth onto the platform does little to move the needle.
“Designers should think twice if they really want to have their name tagged to Shein,” said David Hachfeld, textiles expert at Swiss watchdog group Public Eye. “A few collections painted in green do not outweigh an opaque business model overly relying on cheap labour and ultra short-lived fashion.”
For Becca Coughlan, senior manager of advocacy for Remake, the nonprofit promoting labor rights in fashion, there “really [wasn’t] much to say” about incorporating outside designers into EvoluShein by Design.
“This initiative, like others that have come before it, is truly meaningless unless the company is simultaneously (very significantly) reducing its overall annual production and paying its garment workers a living wage,” she said. “There is too much clothing being produced, particularly by Shein, and no amount of ‘preferred materials’ is going to nullify the company’s overall impact. Its business model cannot and will never be ‘sustainable’.”
Additional reporting by Jessica Binns.
