Shein maps out how to charm the world in India

Fast-moving. Sometimes together is better. Shein is relaunching its fast-fashion label in India, four years after the government banned its app in a crackdown against Chinese business interests. This time the company is in cooperation, with Mukesh Ambani’s $250 billion Reliance Industries. It maps out a path Shein may need to take elsewhere too.

The online retailer's products will go live on Reliance's retail app and some of its 18,836 physical stores within a few weeks, a year since the two entered a strategic partnership, The Economic Times reported on July 4, citing unnamed executives. It's a timely boost; Shein's plan to float in London at a $63 billion valuation is under scrutiny, predominantly because of the company's Chinese roots and its supply chains in the country.

Ambani’s conglomerate is helping its Singapore-based partner develop India as a parallel sourcing hub for its global markets, of which the United States is the most important. In return, Shein will offer Reliance technology and expertise to integrate a network of over 25,000 small and medium-sized businesses, a person familiar with the situation told Breakingviews. The Indian company will run and fully own the operations and it will only pay a share of its profit, if there is any, to Shein.

That's a big boost to Reliance's existing status as the country's largest retailer and puts Shein back into a consumer market with vast potential. Fast fashion in India grew at around 30% during the 12 months ended March, five times faster than the broader fashion segment, according to Redseer, a consultancy.

The more successful Shein is, the more jobs and export revenues it will generate for India. What's more, New Delhi will have the added comfort of having all data related to Shein's Indian activities hosted within the country, smoothing over a key concern underpinning its ban on 59 Chinese-origin apps in 2020.

Overall India recognises knowhow from the People's Republic is essential to achieving its manufacturing ambitions. China's SAIC Motor formed a joint venture with JSW Group in March to build and sell electric cars in India, for example. That's a big change from four years ago, when the South Asian nation subjected investments from China to extra scrutiny following border skirmishes between their armies.

Shein was savvy to seize the opportunity with Reliance. The arrangement will take time to scale up. In the meantime, there may be more partnerships it can strike to make itself more acceptable to a sceptical West.

Context News

Reliance Retail will launch online fast-fashion label Shein in India in the next few weeks, a year after the two businesses inked a strategic partnership, The Economic Times reported on July 4, citing unnamed executives. The Reliance unit, part of Reliance Industries, will sell Shein products on its app and in physical stores owned and operated by the Indian company, the report added. Shein's app was one of 59 online platforms India banned in June 2020, following clashes on the border between Indian and Chinese troops.