By Giselle Alzate  | 2025-06-12

BOGOTÁ -- The rise of Chinese e-commerce giants Shein and Temu has thrown Latin America's textile industry into crisis.

Their business model, built on rock-bottom prices, on-demand production and direct-to-consumer shipping, is pushing traditional manufacturers and brands in countries like Brazil, Colombia and Argentina toward bankruptcy. Governments and industry groups are beginning to respond with tariffs and accusations of unfair competition.

These platforms exploit legal loopholes in the region to flood markets with ultra-cheap clothing. By cutting out intermediaries, predicting trends through data analysis and producing in small batches, they adjust quickly to local demand.

Latin America has become one of their key targets in their global expansion.

"We must adapt to local demand through small-batch production," acknowledged Patrick Lassauze, a spokesperson for Shein in Mexico, in comments to Bloomberg Línea in early May.

He admitted that Shein still faces obstacles in the region, including limited logistics infrastructure, trade regulations and supply constraints. But the trend is unmistakable.

Brazil sounds the alarm

In Brazil, the region's largest market, the textile industry claims Shein and Temu benefit from a lopsided tax system.

While domestic companies face tax rates of up to 90%, foreign platforms pay as little as 20% on imports and 17% in ICMS (a value-added tax on sales and services), which is set to rise to 20% in some states, Fernando Valente, director of Brazil's Textile and Apparel Industry Association (Abit), told Bloomberg Línea.

"Countries with large domestic markets like Brazil suffer more. The textile sector is especially vulnerable to China's unfair competition," said Valente.

Textile imports rose by 20% in 2023, and 60% of those came from Asia. Local industry growth, in contrast, stagnated at just 4% that year, Valente noted.

Colombia urged to combat smuggling

Colombia has taken a tougher stance. Since 2022, the country has imposed tariffs of up to 40% on imported garments, a move that has helped boost local production.

But Chinese platforms continue to operate through "ant smuggling": an estimated 400,000kg of merchandise enter Colombia daily without paying taxes or generating local employment, Guillermo Criado, president of the national Apparel Chamber, warned.

"Ant smuggling" refers to small online purchases, typically under $100, from Chinese platforms that enter countries tariff-free under personal-use exemptions.

Criado urged the Colombian government to act swiftly against unchecked digital imports. "We can't just hand over our market to Asian producers who don't pay taxes," he told Bloomberg Línea.

Argentina opens the door

In Argentina, the government has dismantled many protectionist policies, allowing Shein and Temu to exploit exemptions for low-value shipments.

"The current measures are an industrial extermination," said Marco Meloni, vice president of the Argentine SME Industrial Union.

Even if Shein caused a sensation in Mexico, where thousands flocked to its pop-up stores in Guadalajara and Monterrey, it has sparked controversy. The country's Culture Ministry accused the brand of appropriating Mayan textile designs.

Labor and ethics concerns

Greenpeace has criticized the company's environmental impact, revealing that 15% of sampled Shein products contained hazardous chemicals.

Garment workers "frequently work 10 to 16 hour days, six days a week, for nearly three times less than their country's living wage," while "80% of apparel is made by young women between the ages of 18 and 24," Greenpeace said in 2024.

These conditions starkly contrast with Shein's public code of conduct, which pledges a safe and fair work environment.

Yet the platforms' popularity shows no signs of waning. Among young Latin Americans, Shein has become a go-to option.

The situation raises urgent questions about the future of the regional textile industry. Can Latin American firms compete with this ultra-fast model? What role should governments play to balance trade without sacrificing sustainability and labor rights?

So far, answers remain elusive. Chinese platforms continue to gain ground, while local workshops across Latin America shut their doors in silence, one by one.