SHEIN's Hong Kong Listing: Its Strongest Supply Chain Moat Became Its Weakness
SHEIN spent years building a supply chain data system to compress order-to-delivery time to the minimum; but after the EU imposed tariffs on small parcels, speed stopped making commercial sense, and more than half its European orders now ship from local warehouses.
The video won't play here. Listen to the audio instead:
The argument · tap a timestamp to hear it
The prospectus is three times bigger than the founder's own claim
Xu Yangtian made his first public appearance this year at the Guangdong High-Quality Development Conference, where he said the platform's total shipments in 2025 would be "over 100 billion." Once the prospectus was disclosed, it turned out he had been far too modest: total export value in 2025 was close to 300 billion, equivalent to about 42 billion USD in revenue. To list, the company first moved to Singapore, struck out in both London and New York, and finally came back to Hong Kong, moving its headquarters back to Guangzhou as well. Exports are the strongest of China's three growth drivers; investment and consumption are relatively weak.
A five-euro garment gets taxed up to ten euros
The US was first to end the small-parcel exemption, and the EU followed this year: starting July 2026, most products shipped to the EU as small parcels will face a flat 3-euro tariff plus a 2-euro customs handling fee; categories like phone cases, data cables and earphones will add another two to three euros. The prospectus shows that in 2025, 35% of SHEIN's revenue came from Europe and 24% from the US, making Europe its largest single market. A garment that originally cost 5 euros jumps straight to 10 once taxes and fees are added, and the value proposition vanishes instantly.
Localisation turns the fast model into an inventory business
The only response is localisation: ship goods by sea into EU warehouses first, clear customs properly, and ship locally once the consumer orders. Third-party data shows more than half of SHEIN's European orders already ship from within the EU, and Temu plans for local European orders to exceed 80% by the end of 2026. This step amounts to swapping a pull model of "produce only after the order" for a push model of "stock up first, then sell"; the JIT holy grail that logistics management programmes chased for decades lost its usefulness the moment it was achieved.
Stocking ahead only works if demand is predictable
Pushing goods into European warehouses carries an implicit premise: demand must be stable and predictable, and whatever doesn't sell is dead inventory. E-commerce and retail companies usually die not because profits are bad but because cash flow runs out — money turns into goods, and the goods can't turn back into money, which doesn't even show on the income statement until forced inventory write-downs blow up two or three years later. The host mentions an A-share cross-border e-commerce company that took a write-down of tens of billions in one go. And SHEIN sells fast fashion, where demand predictability is roughly within 10 on a scale of 0 to 100 — the industry least suited to stocking ahead.
The strongest moat was built for a problem that no longer exists
SHEIN developed its own supply chain SaaS that pushes consumer order data — size, colour, material — straight to factory backends; the factories had no digital capability of their own, so SHEIN built it for them. The system took years and a lot of cost, and became its highest moat: a standalone supply chain SaaS project can't get traction; you need a core company holding the orders to set the standard. But the problem is that this system was born to solve rapid reordering, and rapid reordering no longer holds up in the face of tariffs.
Temu's transaction volume has already overtaken SHEIN
Temu launched in the second half of 2022; in its first full year, 2023, GMV was under 20 billion USD; by 2025, its third full year, it was close to 70 billion USD; and in 2026, barring surprises, it will approach 100 billion USD, already surpassing SHEIN. Outside China it is number two globally, while Amazon's annual transaction volume is in the range of seven to eight hundred billion USD. But Pinduoduo's financials deliberately don't break out Temu revenue, and since Temu is a pure platform model recognising only commission and advertising revenue, outsiders can only estimate from third-party monitoring.
Self-operated on the surface, but the factory still carries the risk
Pinduoduo says it is investing 15 billion into Xinpinmu's self-operated business, but on a cross-border basis that's just over 2 billion USD, and it still has to support the turnover of a business with annual GMV in the hundreds of billions of USD. According to research, Pinduoduo doesn't necessarily buy the goods outright first: factories front the money to make the goods, list them on the platform, and get paid after they sell; the platform grades factories strictly, and only those graded high enough get paid in cash upfront with ownership of the goods transferred. So how far Xinpinmu can actually go depends on how much risk Pinduoduo itself takes on, which in turn determines how willingly the best factories cooperate.
Amazon is pouring all its money into AI
Amazon's first-half financials show that it and the other Magnificent Seven giants had a considerable portion of cash flow turn negative, with the money all going into AI infrastructure. For people watching Temu, this is actually a relief: Amazon is busy with AI and may not have the bandwidth to tangle with Temu, leaving Temu room to breathe. The host is bullish on Chinese cross-border e-commerce, represented by Temu and SHEIN, over the long term, but stresses this is not a naive belief that Western crackdowns will disappear — rather it's "two steps forward, one step back": the business advances two steps, policy pressure pushes it back one.
In their own words · checked verbatim
Then recently, after we saw this prospectus, we found that Mr. Xu was being modest — in fact his total export value had already reached close to 300 billion in 2025, since that's equivalent to about 42 billion USD in revenue in 2025.
那最近我们看到他的这个招股书之后呢 发现了那个许总是谦虚了 实际上他的总的出口额 在2025年已经接近3000亿了 因为是折合420亿美金左右的一个营收 在2025年
This data point is very important — it proves that the picture of small-batch rapid reordering we just described may become history in the future.
这个数据非常重要 这个数据就证明了 刚刚我们描述的那个小单快反的那个景象啊 有可能未来会要成为历史啊
It's impossible for them to kill Chinese e-commerce, right? If they did, that wouldn't be good for locals either — at the very least, consumers wouldn't be able to buy a lot of things.
他不可能把中国的电商打死了 对吧 如果打死了 其实对于本地也不是什么好事 至少消费者有很多东西买不到了
A lot of e-commerce companies and retail companies die not because their profits are bad, but because their cash flow is gone. Why does cash flow disappear? Because money turns into goods, and the goods can't turn back into money.
很多的电商公司 零售公司他死 不是死在他利润不行了 是死在他现金流没有了 为什么现金流会没有 就是因为钱变成了货 但货变不回钱
I have a very deep feeling: the point where you're most successful may be the point where you're weakest.
我觉得有一个很深的感受 就是你最成功的那一个点 有可能就是你最薄弱的那个点
A lot of the time Pinduoduo still operates in this way — self-operated on the surface, but actually still letting the factories carry the risk. And at that point many of the best factories aren't willing to.
很多时候拼多多还是会用这种表面自营 实际上还是让工厂来承担风险的这种方式来去经营 那这个时候很多最好的工厂就不愿意
Why is this a good thing for Temu? Because Amazon is busy with AI and may not have time to tangle with Temu, which now leaves Temu this room to breathe.
这一点为什么对TIMO是好事 因为亚马逊顾着搞AI 可能没空跟你TIMO搞 现在给TIMO留下了这个喘息的空间
Actually, what I mean by bullish is more a kind of feeling — the feeling of two steps forward, one step back.
其实我所谓的看好呢 更多是一个什么感觉 前进两步退一步的那种感觉
Figures
| SHEIN 2025 revenue by region | Europe 35%, US 24%, other 40% | 16:09 |
| EU small-parcel tariff and fees | From July 2026, a 3-euro tariff + 2-euro customs handling fee, plus another two to three euros for certain categories | 15:09 |
| Share of SHEIN European orders shipped locally | More than half | 24:11 |
| Amazon annual transaction volume | On the order of seven to eight hundred billion USD | 39:21 |
| SHEIN operating margin | 4.3% in 2023, 2.5% in 2024, 4.1% in 2025 | 42:22 |
| DJI 2025 profit | Over 3 billion USD | 43:22 |
| Xinpinmu self-operated investment | 15 billion RMB, roughly just over 2 billion USD | 1:00:34 |
Glossary
- Just-in-time
- Producing and delivering only once orders arrive rather than stocking ahead, long regarded as the holy grail of logistics management
- Membersmark
- Sam's Club's own-brand product line, a globally uniform name used as a quality endorsement
How to listen
Operators in cross-border e-commerce and global consumer brands, export factories supplying Temu, and investors watching the consumer going-global sector.
The Hong Kong savings insurance ad read at the end can be skipped.