The rapid rise of ultra-fast fashion retailer Shein has been so key to the fortunes of a group of urban villages on the outskirts of China's southern metropolis of Guangzhou that they have been colloquially dubbed "Shein villages." But as it and rival Temu warn over the impact of a global trade war, China's factory owners fear the good times are coming to an end. - REUTERS
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00:01The days of cheap Chinese goods by post are coming to an end for U.S. shoppers.
00:06Xi'an and Timu have warned they're going to raise prices from April 25th.
00:11In near-identical letters to customers this week, they urged people to buy now at today's rates.
00:17The online giants had grown big in large part thanks to the so-called de minimis rule,
00:22which allowed them to ship low-cost goods to the U.S. free of all duties.
00:27That loophole will now close from early May under an executive order signed by Donald Trump.
00:33While that spells higher costs for U.S. shoppers,
00:36it also means pain for the army of Chinese firms that supplies Xi'an and Timu.
00:41Reuters reporter Casey Hall visited some of those companies on a trip to Guangzhou in southern China.
00:48We visited a number of these so-called Xi'an villages,
00:51which are home to thousands of suppliers for the ultra-fast fashion retailer.
00:56The mood there was pretty glum because a lot of the suppliers there have seen their orders cut.
01:01Some told us that their orders have been cut by up to half this year.
01:05Besides cancelling the de minimis rule, Trump has also ramped up tariffs on Chinese goods to 145%.
01:12Xi'an could potentially dodge these duties by shifting more of its output to Vietnam,
01:17which faces lower U.S. duties for now.
01:20In Guangzhou, some factory bosses said Xi'an is doing exactly that,
01:25though it's a move the company denied in a statement to Reuters.
01:29And even if production does move, it may be no quick fix,
01:33as Xi'an's business model isn't just about rock-bottom production costs.
01:37It's also about ultra-fast reaction to consumer tastes.
01:41A little-known fact about Xi'an's success is that it's built on this amazing Chinese supply chain.
01:46So they have, they told us, 7,000 suppliers in China.
01:50Many of them are small, nimble, agile factories that can produce thousands of styles every week
01:56in small quantities and quickly scale them up if they become popular.
01:59The problem for Xi'an is if they move their supply chain to Vietnam,
02:03it is not as well established, it's not as efficient as the supply chain in China.
02:07That means that it will take them longer and possibly be more expensive for them to produce there,
02:12which for them in an industry which is so reliant on being fast and on being cheap is a big problem.
02:19Dresses are currently priced at between $6 and $91 on the Xi'an website.
02:24They start at an even lower price on Timu.
02:27Now the question is, just how much of an increase US shoppers will be willing to tolerate?