Shein: Brazilian piece may be cheaper than Chinese – 01/06/2023 – Market

The garment manufactured in Brazil by Shein can cost the same or even be cheaper than the garment imported from China today. Who guarantees it is Shein’s partner, the Bolivian Marcelo Claure, president of the online fashion retailer in Brazil and Latin America, who has the ambition to make the country one of Shein’s global production and distribution hubs.

“Brazil has everything, it has the raw material, cotton, polyester and jeans,” said Claure to Sheet, at the recently inaugurated Shein headquarters in the country, on Avenida Faria Lima, west of São Paulo, addresses of banks and multinationals. “My dream is that we have Brazilian designers, Brazilian fabrics, Brazilian manufacturing and the sale of products all over the world. We are close to achieving this.”

According to Claure, the cost of producing clothes in China may be lower than in Brazil, but there is a high cost involved in bringing clothes from Asia to the Brazilian consumer.

“The savings obtained with logistics allow us to pay the higher manufacturing costs in Brazil, which include taxes”, he says. “The first factories we set up show us that the costs are similar. We no longer need to import Brazilian cotton, manufacture in China and export to Brazil.”

Today, Shein already has 151 factories working exclusively for the online retailer. “I am proud to say that, one month after we announced local production in Brazil, we already have Brazilian parts sold locally,” said Claure, referring to Shein’s commitment to the Brazilian government, announced on April 20, to invest R $750 million within three years by contracting 2,000 factories across the country. “By the end of this month, there will be 200 factories.”

According to Claure, Brazil already represents one of Shein’s five largest markets in the world, behind only the United States, Saudi Arabia, France and England.

“Shein does business with 165 countries and Brazil is one of the three where the company grows the most”, he says. The company does not reveal revenues, but it is estimated that annual sales are around US$ 23 billion (R$ 117 billion), which puts it at a similar level to the textile retail giants, owners of chain stores such as the Spanish Zara and the Swedish H&M.

In April, the company announced an agreement with Coteminas, which belongs to the current president of Fiesp (Federation of Industries of the State of São Paulo), Josué Gomes da Silva. The memorandum of understanding provides that Coteminas’ 2,000 clothing manufacturing customers will become suppliers to the Asian company to serve the domestic and Latin American markets. The expectation is to generate 100,000 indirect jobs.

The announcement followed the controversy surrounding tax evasion on purchases in Asian marketplaces that sell products at affordable prices to Brazil. The Brazilian government decided to tax the sales of these sites, ending the tax exemption on imports worth up to US$ 50 (R$ 255) between individuals. There was suspicion of simulating purchases between individuals to escape the tax.

Faced with the negative repercussions of the proposal, however, the government withdrew from the decision. Subsequently, Shein announced the investments.

According to Claure, at the end of the next three years, 85% of Shein’s sales in the country will be products manufactured here or from local online sellers (“sellers”).

“Brazil is being an innovation platform for Shein as a whole”, he says. “It is the first country where we are producing locally outside China and one of the first three to have a local marketplace – the others are Turkey and the United States”, he says. Currently, 20 categories of national products are sold on the marketplace in the country.

‘Brazilian businessmen criticize instead of understanding that they need to review their models’

As for the accusations of unfair competition and even piracy, made by Brazilian businessmen against Asian websites, Claure says that Shein’s trump card is not the non-payment of taxes, but the disruptive model of production on demand, digitalized and integrated with suppliers, which uses artificial intelligence to guarantee almost 0% of stock. “We are a very agile company,” he says. “Instead of businessmen understanding that they need to review their production models, they criticize.”

Fast fashion uses a digital manufacturing system, whereby the supplier base shares its capacity in real time. Shein selects the fabrics and its stylists design the models from the available options. The company has thousands of stylists around the world, including Brazil, to whom it pays a percentage of sales.

The son of Bolivian diplomats, Claure is a former senior executive in the market (he worked for the last seven years at Softbank) and invested US$ 100 million in Shein out of his own pocket. He says he visited, earlier this year, Shein factories in China to check the working conditions, in view of the accusations of slave labor that weigh on the company. “I saw people working happily,” he says.

The businessman, who graduated in Boston (USA), was the founder of Brightstar, a supplier of telecommunications equipment sold to SoftBank, from which he left in January last year.

“I want to go back to being an entrepreneur, now in Latin America, especially in Brazil, where there are great ideas, but lack of capital”, says he, whose family office (a private company that manages a family’s investments), the Claure Group, manages US$ 3.3 billion (R$ 17 billion) in resources. Shein was the first significant investment to date.

“I’m studying new businesses, preferably disruptive ones”, he says, praising the Uber model, which has revolutionized transport in cities, by proving to be an economical alternative to taxis and individual transport.

At the age of 52, Claure officially lives in New York, with his fifth wife and their youngest daughter, 4 years old (he has three other children, the oldest of whom is 28 years old). He is passionate about football and the owner of Club Bolívar. “Who beat Palmeiras 3-1 last month”, he jokes.