Shein is shelling out the big bucks to build out a supply chain headquarters in the Zengcheng district of Guangzhou, China as it reportedly prepares for an IPO.
The online fashion retailer has plans to establish a smart logistics park that will integrate various functions such as warehousing, stocking, picking, fulfillment, distribution, delivery services. The initial phase of the project will cost 3.69 billion yuan ($517 million) and will sprawl across 121 acres.
The Guangzhou City Planning and Natural Resources Bureau, which first announced the project on Aug. 13, revealed that it granted the e-commerce giant 25 construction project planning permits to begin construction. It is unclear how long the construction will take, or what the first phase of the project will focus on.
Shein’s new infrastructure project looks to deepen the company’s roots in Guangzhou, which hosts a vast network of 300 to 400 small suppliers in the city’s Panyu district. That district is a major hub for China’s garment manufacturing industry, and has helped Shein rise into a global fast-fashion titan that is reportedly valued at nearly $65 million as of June, according to Sky News.
Related Stories
Last year, Shein moved part of its Guangzhou operations to a new office building in Panyu, where chief rival Temu is also based.
With Panyu and Zengcheng within 30 miles of each other, a mega warehouse would better support Shein’s global sales, as suppliers and manufacturers would be able to move product over to the complex in less than an hour.
The Zengcheng facility would complement Shein’s primary international distribution center in Foshan, which resides roughly 60 miles west of the expected complex.
The headquarters will be built within the Guangzhou Eastern Road-Rail Intermodal Hub, a massive logistics hub that had 408 international trains as of 2023. These trains carry a combined 40,000 20-foot equivalent units (TEUs) of merchandise annually. The hub, which began construction in 2022, was designed to bolster the logistics and cargo movement capabilities of China’s Guangdong-Hong Kong-Macao Greater Bay Area.
Since the logistics park would be located within the intermodal hub itself, Shein would be able to ship goods out via rail to customers in Europe and Southeast Asia.
According to a report from the South China Morning Post, a Shein representative cited in the announcement said that the fashion firm will start construction on the facility as soon as possible, with the intent to advance the development of the Zengcheng district’s cross-border e-commerce economy.
Sourcing Journal reached out to Shein.
Shein has already built a fabric center in Zengcheng, which will complement the other locations in the district and Panyu by furnishing the necessary materials for new apparel designs.
While the often-controversial company was founded in China and partners with some 6,000 manufacturers in the market, the business seemingly started to distance itself from the country as it gained a larger global profile and sought to go public. In 2022, Shein relocated its headquarters out of China into Singapore and has since opened up production centers in the U.S., Brazil and Turkey.
That shift has coincided with Shein’s increased scrutiny from U.S. lawmakers for a large swath of issues, such as using the de minimis customs provision to purportedly skirt taxes, potential ties to forced labor in Xinjiang and overall poor working conditions in its supplier factories.
Nevertheless, the new headquarters indicates that the Flexport partner is still committed to the market in full, from a production and distribution standpoint. Either way, the headquarters will be built as Shein sees accelerated demand, having driven $2 billion in profits in 2023, according to The Financial Times. Shipments out of China have skyrocketed to the point where air freight analysts have attributed much of the capacity crunch in that transportation mode to cargo from Shein and Temu.
The announcement of the $517 million logistics hub follows multiple recent forays for Shein in the U.K. market, including the reports that it confidentially filed for its initial public offering (IPO) on the London Stock Exchange.
In July, Shein invested $271 million into Europe and the U.K. with the creation of the Circularity Fund. As part of that investment, Shein is financing early-stage startups working on textile-to-textile recycled materials innovation and related areas.
Reports also circulated that the retail giant is scouting U.K.-based warehouse sites to build its first facility in the country, but the company denied the reports.