The Shein-Reliance India alliance could offer inspiration for Chinese startups

Shein is partnering with Reliance to re-enter India, a strategy which, if proven viable, could set an example for startups grappling with the China backlash amid rising geopolitical tensions.

The China-founded, Singapore-headquartered fast fashion giant is teaming up with Reliance Retail, the retail subsidiary of Indian conglomerate Reliance, The Wall Street Journal reported. A spokesperson for Shein confirmed the partnership without giving further details.

In 2020, India banned TikTok and Shein along with some 50 apps after tensions with China escalated on the countries’ Himalayan borders. TikTok remains unavailable, though its parent firm 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 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 be sourcing fabrics from small Indian businesses under the partnership. The company also has plans to build a production hub in India for export to the Middle East.

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

Being in the good graces of the Indian authority is a milestone for Shein. For one thing, it signals that India believes Shein’s reentrance 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 it’s through job creation or tax revenue generation, can help mitigate the vulnerabilities posed by geopolitical complexities.”

Getting the greenlight from India must have been a relief for Shein, which is mustering its forces to shed its Chinese label. Founded in Nanjing and Guangzhou over a decade ago as an online fashion exporter, Shein moved its holding entity to Singapore in early 2022 while its founder Sky Xu was applying for permanent residence in the city-state.

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

Disentangling one’s ties with China while showcasing an unwavering commitment to a foreign market is a formidable task. And the extent to which these measures should be undertaken hinges largely on the evolving dynamics of the country’s relationship with China.

In the U.S., for instance, Shein is stumbling on roadblocks. In mid-April, a Congress body singled out Shein and PDD-owned Temu in a report, accusing these” Chinese fashion e-commerce platforms” of exploiting trade tariff loopholes, violating intellectual property rights, alongside other issues.

TikTok, one of the very other few China-founded internet platforms that have made it big abroad, has a harder time unraveling its Chinese links. Despite its pledge to spend about $1.5 billion on erecting a data firewall between its U.S. business and its Chinese ownership, a plan dubbed Project Texas, the U.S. government is still pushing for a sale of the short video giant from its parent.