Guangzhou: From his sewing machine station behind his small clothing factory, Wu Bin drags him from the cigarette clenched between his lips as his hands feed the women’s black blouse seams through whipping metal.
It’s a repressively sweating day in the Panyu district of Guangzhou, southern China, with Wu and dozens of his workers forgetting to have lunch or smoke breaks, stirring up piles of dresses and tops. Fans stuck on the machine work overtime to keep them cool.
Clothing workers in Guangzhou’s “Shayne Village” district will unleash their doomed first fashion for sale on Chinese e-commerce site Pindoudou throughout their lunch break.credit: Sanghee Liu
Speed and quantity are the currency here, driving the world’s ultra-fast fashion epicenter in a neighborhood called “Shayne Village,” where workers flock to sewing machines for 12-14 hours a day, often paying less than a dollar for completed clothing.
The masthead was preparing for an uncertain future when Wu visited the district on Sunday in early May, a week before the US and China brokered a 90-day trade ceasefire. His factory is one of the thousands of people in the area making clothes for Shane. This is the online retail giant where Americans flock to buy super cheap fashions. The US is the biggest market in the scene.
“Unless the tariffs are removed, I don’t think I can continue to work on Shane’s orders,” Wu (37) said he continues to discuss and sew about the impact that the trade war will have on his business.
“After tariffs increased prices, product sales have dropped significantly. Many of these unsold clothing are currently stocked in US warehouses. As a result, there are currently few new production orders.”
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Wu produced 20,000 pieces of clothing a month for Shane before President Donald Trump launched a trade war with Beijing.
In April, Wu’s Shein Orders plummeted to less than 5,000 units, and by early May his factory was not working on ordering the platform, so he sought orders from domestic clients and other export markets.
With the complex tariff structure in place, it is not yet clear how the 90-day trade ceasefire will affect Guangzhou’s first fashion hub. However, locals in the district have already counted the costs of previous trade feuds, saying that their business models must be adapted as the US orders have dried up, re-routing production to third countries such as Vietnam, particularly saying that Hard Hits have completely shut down their factories.
Under a temporary transaction in Geneva last weekend, the US agreed to reduce import taxes on Chinese products from 145% to 30%, while China agreed to reduce American goods duties to 10%, down from 125%. The changes are now effective Wednesday.
Clothing workers at a large factory in Guangzhou.credit: Sanghee Liu
The US has also restructured a change to a tax-free loophole called the De-Minimis rule. This previously allowed consumer postal shipments from China for less than $800 ($1,250) to enter US tax exemption until it was axed on May 2nd.
The loophole was heavily reliant on Shein and its e-commerce rival Temu to send millions of cheap items directly to US buyers each year. The latest revision will reduce the new tax on these shipments from 120% to 54% or incur a flat rate of USD 100 per postal package.
Trade analysts say Sheen and other e-commerce retailers need to weigh whether to send parcels to consumers on airline tickets, have a 54% obligation, or import large quantities of goods into the US by boat at 30% tariff, but shipments will be longer.
“Sellers are probably taking a stand-alone approach, but I think it’s fair to say in general the booming era of small package delivery from China to the US. The golden age is already gone.
Shein packaged bags are displayed in a factory in Guangzhou’s first fashion district.credit: Sanghee Liu
“If people are buying clothes in the scene and they say the product will arrive in a month, who will buy it?”
Shane did not respond to requests for comment. Last month, Shein and Temu were released near the same statement advising US customers on April 25th, “price adjustments” to make “recent changes to global trade rules and tariffs.”
For exporters and importers on both sides of the Pacific, we are not certain what the three-month trade environment will look like. This is the deadline for agreed negotiations for US and Chinese officials to tackle a broader trade agreement.
“Escalation is obviously good news for the global economy, but there is still uncertainty in tariff policy over the 90-day increments. Frankly, it’s awful for companies trying to make decisions about investment and employment.”
Scramble to adapt in Scene Village
In chaos that has been caught up in the past month, small factories like Wu have had to scramble to find new suppliers as Shein’s orders fell. Sitting at a sewing station near Wu, a young mother yells through her black and white dress, her baby sleeping in a stroller by the factory floor. The clothing she and other workers are making are directed at domestic buyers of Pinduduo, a bargain Chinese e-commerce site.
But some of the bigger “Tia One” suppliers – companies that directly contract with Shane to create patterns and source fabrics that are fed to factories like WU to produce, are facing economic ruin.
Several streets on the third floor of a large warehouse are cut, sewn, ironed and packed by dozens of clothing workers from IEF, a Guangdong first fashion clothing company with thousands of shops around the world.
Over 10 days, 20 workers will focus solely on making blue women’s dresses, finishing 20,000 pieces by the time the order is completed. The price tag attached to the finished dress shows each retailer worth 159 yuan ($34).
Headhunters play with their mobile phones while migrant workers wait for them to apply for a job at the clothing factory in Guang Elephant First Fashion Hub.credit: Sanghee Liu
The factory manager refused to give him his name to speak freely about the industry, saying that his company began challenging domestic orders several years ago and did not receive orders from the scene because the profit margins were too low.
“Many factories that worked for the scene are closed. One reason is that after Shane outsources that order to the first supplier, they provide a very low margin for the actual manufacturer.
Some companies have moved production to Southeast Asia to limit exposure to US-China relations, he said.
“Some manufacturers, including one of my friends, have set up companies in Hong Kong, shipped their products to Vietnam and tagged them with Vietnam before exporting them to the US.”
Factory owners were not the only ones who were hit in the trade war. Clothing workers say they saw wages slip. Many of them are migrant workers from poor rural areas.
Located at the corner of the main strip of Shane Village, an area shaded by the Banyan tree, serves as a meeting point for workers who play cards and kill time by asking for a substantial payment gig. Over a dozen metal A-frame placards promise workers ads, promising air conditioning factories, dormitory housing and high pay salaries.
Recruiters wander the area in dresses, blouses and trousers with dresses, blouses and trousers on their shoulders. This is a sample of clothing workers need to make in the factory.
“Many of the information posted here is not true. There is a lot of false information,” said Din Wenfang, 54.
He has worked in the clothing district for decades and said many factories have lost money. The trade war further dampened wages, which had already been depressed due to China’s domestic demand and economic slump. Today, he can make 5,000 yuan ($1,078) a month from 8,000 yuan before the pandemic.
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“The margins are low and the design of clothing is becoming more complicated. Many factories have been closed in the last two months because there is no profit and no one is willing to work,” Ding said.
Another woman, Kewanbao, in her 50s, left her last job on April 30th after being given only one day of the month, rather than the two promised days. Her hands are calm and her skin is peeling off from the old wounds on her palm.
“It’s a very tired job,” she said, but the job was now difficult.
“What the custom factories are getting is not stable. We work from time to time,” she said.
For now, instability is a new normal for many in the coal-season of the supply chain rattles by the economic conflict between Washington and Beijing.
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