China tells Shein to halt supply chain diversification efforts: Bloomberg
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The news: Beijing has urged fast-fashion giant Shein to halt plans to shift its production out of China, as the country attempts to stem the flow of manufacturing departures in the face of Trump’s tariffs.
The numbers: Shares in companies related to Shein fell on the news, with a quality inspection service provider for Shein, Guangzhou Jiacheng International Logistics Co, falling as much as 7.7%, paring losses to close down 4.5% on Tuesday.
The context: According to sources cited by Bloomberg, the Chinese Ministry of Commerce has discouraged Shein and other companies from diversifying their supply chains by sourcing from other countries. The order was given in the lead up to Trump’s reciprocal tariff announcements last week, which prompted companies around the globe to find ways to circumvent the soaring levies.
Responding to Trump’s additional 50% tariff threat on Chinese goods on Monday, which would take accumulative US import taxes on goods from China to 104%, Beijing said it would "fight to the end," and that “The US threat to escalate tariffs on China is a mistake on top of a mistake.”
In response to the order, Shein has stopped reconnaissance tours of factories in Vietnam and other nearby nations for its major Chinese suppliers.
The company has been under pressure to slash its valuation to USD30 billion ($49.7 billion), as it pursues an initial public offering in the UK after previous attempts to for a US float faltered.
Markets were in chaos on Monday, as the fallout from Trump’s tariffs triggered selloffs and saw stocks plummet across the globe. Companies with supply chains that depend on countries hit with the steepest tariffs were hit hard, with Apple seeing a particularly sharp selloff. Shares in the tech giant have dropped 19% in the last three sessions, erasing over USD637 billion in market value from the company whose supply chain relies on China, Vietnam and India.
The source: Bloomberg
