Shein’s layoffs in Singapore highlight the challenges facing the fast fashion giant

The layoffs of employees at online fast fashion retailer Shein at its Singapore headquarters reflect how the China-founded company is grappling with a number of challenges in its cross-border e-commerce business.

Shein The company announced on Thursday that it had laid off 17 employees as a result of the restructuring of its global information technology research and development center. An earlier statement said more than 20 employees were affected.

While the number of employees affected represents only a small percentage of the company’s total headcount, this is the first time Shein has confirmed job losses since it moved its headquarters from China to Singapore in 2021. According to its data, Shein employs over 16,000 employees worldwide 2023 Sustainability and Social Impact Report.

People pass a Sheina advertisement in London, March 8, 2024. Photo: Reuters

The layoffs take place in connection with the 15-year-old company, founded in 2008 by shy entrepreneur Xu Yangtianfaces challenges on multiple fronts, including a pending initial public offering (IPO) in London, as well as threats from increased U.S. customs controls that could threaten its business model.

Ivy Yang, founder of Wavelet Strategy, said the job cuts “could be the beginning of more layoffs” at Shein but would likely not have a major impact on its business “at its current scale.”

The White House said this month it would reduce the scope of low-value imports eligible for tariff and tax exemptions, a move targeting Chinese cross-border goods e-commerce platforms such as Shein and Temu PDD Holdings.

The announcement came as the United States moved to close the so-called import tax loophole used by Chinese companies, which exempts shipments worth less than $800 from import duties, taxes and stringent inspections under the de minimis rule. According to last year’s estimates by a U.S. House Select Committee, Temu and Shein were likely responsible for “more than 30 percent of all packages sent to the U.S. every day under the de minimis rule.”