Shein is partnering with Reliance to re-enter India, a strategy that, if proven viable, could set a precedent for startups fighting a Chinese backlash amid heightened geopolitical tensions .
The China-founded, Singapore-headquartered fast fashion giant has partnered with Reliance Retail, the retail subsidiary of Indian conglomerate Reliance, The Wall Street Journal reported. Shein’s spokesperson confirmed the partnership without giving further details.
In 2020, India banned TikTok and Shein along with about 50 apps following tensions with China on the Himalayan borders. TikTok remains unavailable, although its parent firm ByteDance still operates a music streaming app called Resso in the country.
The partnership comes at a time when Reliance Retail’s online shopping platform JioMart is undergoing a massive layoff that could affect over 10,000 employees.
At the heart of the Shein-Reliance alliance is localization. According to the WSJ report, Shein will source fabrics from small businesses in India under the partnership. The company also has plans to build a production hub in India for export to the Middle East.
The partnership received approval from the Indian government, which considers Shein a non-Chinese entity, sources told the WSJ.
Being in the good graces of the Indian authorities is a milestone for Shein. For one thing, it signals that India believes Shein’s entry will benefit the local market. As one Chinese cross-border investor told me, “A company’s ability to demonstrate its contribution to the local economy, whether through job creation or tax revenue generation, helps mitigate those vulnerability caused by geopolitical complexities.”
Getting the greenlight from India should be a relief for Shein, which has been gathering its forces to get rid of the Chinese label. Founded in Nanjing and Guangzhou more than a decade ago as an online fashion exporter, Shein is moving its holding entity to Singapore in early 2022 as its founder Sky Xu applies for permanent residency in city-state.
Shein has established operational teams around the world and is also trying to diversify its supply chain, opening a manufacturing base in Turkey.
Disengaging a relationship with China while demonstrating an unwavering commitment to a foreign market is a daunting task. And the extent to which these steps should be taken depends on the changing dynamics of the country’s relationship with China.
In the US, for example, Shein has hit roadblocks. In mid-April, a Congressional body singled out PDD-owned Shein and Temu in a report, accusing them of being “Chinese fashion e-commerce platforms” for exploiting tariff loopholes. of trade, infringement of intellectual property rights, among other issues.
TikTok, one of the few Chinese-founded internet platforms to make it big overseas, has had a tougher time getting rid of links to China. Despite his pledge to spend about $1.5 billion to build a data firewall between the US business and its Chinese ownership, a plan called Project Texas, the US government is still pushing for short-term sales. giant video from its parent.