I don’t think tariffs alone will be enough to kill Temu, and I’ve written about how the company has adapted. But there’s another Chinese giant selling large volumes to the U.S.: Shein.
Looking only at revenues, you’d think Shein is in great shape, with a 19% increase in sales, reaching $38 billion. However, the company saw a significant profit decline in 2024, with net income dropping by nearly 40% to $1 billion—which may have delayed its IPO.
So what’s happening?
Increasing manufacturing and supply chain costs have made it harder for Shein to maintain their ultra-low prices. It now also has to compete with Temu—and, to a lesser extent, Amazon.
Shein is also facing increased attention from regulators over labor practices, environmental impact, intellectual property issues, and product safety concerns. This has likely resulted in higher compliance costs and may have affected brand perception.
And, of course, higher tariffs won’t help. Shein has plans to expand its distribution network outside China, but it appears to be behind Temu. While this is a step in the right direction, it may lead to higher prices.
According to BusinessLive, the average price of a dress on Shein in the U.S. has jumped 28% in the past year. So far, this hasn’t scared customers away, but the price gap between Shein and brick-and-mortar fast fashion brands like H&M and Zara is narrowing. These retailers don’t release millions of designs per day, they may be more trusted by customers,and offer perks like in-store try-ons, and easier returns.
It’ll be interesting to see how Shein adapts. My guess? A strategy similar to Temu’s: expanding local shipping and trying to attract recognizable brands to appear more premium and trustworthy.
