Shein-Reliance India alliance could offer inspiration for Chinese startups

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Shein is partnering with Reliance to re-enter India, a strategy that, if proven viable, could serve as an example for startups facing backlash from China amid rising geopolitical tensions.

The China-founded, Singapore-based fast fashion giant is partnering with Reliance Retail, the retail subsidiary of Indian conglomerate Reliance, The Wall Street Journal informed. A Shein spokesperson confirmed the association without elaborating.

In 2020, India forbidden TikTok and Shein along with some 50 apps after tensions with China escalated on the countries’ Himalayan borders. TikTok remains unavailable, though its parent company ByteDance still operates the music streaming app called Resso in the country.

The partnership comes at a time when Reliance Retail’s online shopping platform JioMart is going through a mass layoff that could affect more than 10,000 employees.

At the heart of the Shein-Reliance alliance is location. According to the WSJ report, Shein will source fabrics from small Indian companies under the partnership. The company also has plans to build a production facility in India for export to the Middle East.

The partnership has received approval from the Indian government, which views Shein as a non-Chinese entity, the sources told WSJ.

Being in favor of the Indian authority is a milestone for Shein. On the one hand, it indicates that India believes that the return of Shein could 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, can help mitigate vulnerabilities posed by geopolitical complexities. ”.

Getting the green light from India must have been a relief for Shein, who is rallying his forces to shed his Chinese label. Founded in Nanjing and Guangzhou more than a decade ago as an online fashion exporter, Shein moved its parent entity to Singapore. early 2022 while its founder Sky Xu applied for permanent residence in the city-state.

Shein has established operating teams around the world and has also been trying to diversify its supply chain, opening a manufacturing base in Turkey.

Untangling one’s ties to China while displaying an unwavering commitment to a foreign market is a formidable task. And the extent to which these steps should be taken largely depends on how the dynamics of the country’s relationship with China evolve.

In the US, for example, Shein is running into obstacles. In mid-April, a congressional body singled out PDD-owned Shein and Temu in a reportaccusing these “trendy Chinese e-commerce platforms” of exploiting loopholes in trade tariffs, violating intellectual property rights, among other issues.

TikTok, one of the few other Chinese-founded internet platforms that have succeeded abroad, has a harder time cracking its Chinese links. Despite his promise to spend about $1.5 billion building a data firewall between his American business and his Chinese property, a plan dubbed Project Texas, the US government is still pushing for a sale from the short video giant from its parent company.