Online fashion giant Shein is exploring plans to build a factory in Mexico, as part of its push to localize production and cut distribution costs for customers in Latin America. The factory, which will produce Shein items, follows its announcement that it will build a manufacturing network in Brazil.
Shein was founded in China and manufactures most of its products there, but is now seeking to diversify. The company has taken market share from other affordable fashion retailers and is now headquartered in Singapore.
A final location for the Mexico site has not been decided yet, but Shein will use funds from its recent capital raise of $2 billion to fund the expansion. The retailer still posts annual revenue growth of 40%, one of the sources added.
Shein recently offered an online marketplace platform in Brazil, allowing third-party merchants to sell their own goods on the Shein app and website. The upcoming Mexico factory will not house items from third-party vendors.
Shein has come under fire in markets including India, Brazil and the U.S. for its supply-chain links to China. The company has previously said it has “zero tolerance” for forced labor and requires suppliers to follow the International Labour Organization’s core conventions.
Shein is continuing to explore nearshoring options as it expands to new markets, and is considering bringing its “marketplace model to other markets across Latin America.”