The resurgence of SHEIN in India ignites aggressive ambitions of Reliance Retail in the fashion sector

The strategic return of Shein in India serves as a significant move by Reliance Retail to establish a strong presence in the fashion market, which is currently dominated by Myntra. By bringing back Shein, Reliance Retail aims to position itself as a formidable competitor and capture a substantial market share in the fashion industry.

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Good news for all fashion lovers in India; The most popular and adored women’s clothing and accessories brand is making a grand comeback in the Indian market. The world’s largest fashion retailer SHEIN is poised to re-enter India with a partnership with Reliance Retail, the country’s largest retailer.

The partnership between SHEIN and Reliance Retail has reportedly received approval from the Indian government.

What’s even more interesting is that the development comes at a time when US lawmakers are screening the labour practices employed by Shein, which has a significant presence in the US market, ahead of its potential initial public offering (IPO). Shein is trying to mitigate the challenges in the US by leveraging the strong ties between the US and India.

What’s in it for Reliance Retail?

Through its strategic partnership with Shein, Reliance Retail, owned by Mukesh Ambani, is strategically positioning itself to achieve dual objectives. Firstly, it aims to solidify its leadership in India’s fashion industry by offering cost-effective apparel, thereby presenting a formidable challenge to other affordable brands such as Zudio, Max, H&M, and more. As part of this endeavour, the company plans to establish physical stores to retail Shein’s clothing and accessories.

Secondly, leveraging its Ajio platform, Reliance Retail intends to capture a significant market share in the e-commerce space, particularly within the apparel category. Currently, this segment is predominantly dominated by established players like Myntra and Nykaa. By forging this partnership and expanding its digital presence, Reliance Retail seeks to expand its footprint and compete effectively in the online fashion retail sector.

According to the India Brand Equity Foundation (IBEF), India’s apparel industry is anticipated to reach $135 billion by 2025. That’s an impressive compound annual growth rate (CAGR) of 27.54% over a five-year period, from $40 billion in 2020.

What’s in it for SHEIN?

The partnership between SHEIN and Reliance Retail signifies a compelling opportunity for the fashion retailer to penetrate India’s burgeoning consumer apparel market. With a substantial population and increasing purchasing power, India offers substantial growth prospects for fashion retailers seeking expansion.

Furthermore, this collaboration allows Shein to address concerns raised in the United States regarding its labour practices. Notably, Shein’s manufacturing unit has been authorized to source cotton exclusively from countries including the US, India, Brazil, Australia, Bangladesh, Tanzania, and Pakistan. Given the scrutiny Shein faces in the US regarding cotton sourcing, the company is likely to engage with small businesses in India to procure fabrics for its global and local manufacturing operations. Thus, by partnering with Reliance Retail, Shein can diversify its supply chain beyond its prior focus on China.

Essentially, by capitalizing on India’s robust textile industry and diverse fabric options, Shein can mitigate risks associated with overreliance on a single sourcing region. Additionally, reducing dependency on China will convey a positive message to US lawmakers, fostering favourable operations in the US market and enhancing Shein’s overall business operations.

Neither Shein nor Reliance have yet made an official statement on the matter.

When India banned Shein

In June 2020, the Ministry of Electronics and Information Technology (MeitY) in India banned 59 Chinese apps, including Shein, TikTok, UC Browser, ShareIt, Clash of Kings, and others. The ban was imposed due to privacy and data security concerns, exacerbated by increased tensions between India and China at the Galwan border. As a result, these apps were prohibited from being accessed or used within India.

In July 2021, when Amazon India announced its ‘Prime Day’ sale scheduled for July 26-27, which included products from Shein, the Delhi High Court swiftly took action. Immediately, the Court issued a notice to the Indian government and Amazon, requesting a prohibition on the sales of Shein’s products on the Amazon India shopping platform.

However, in response to a petition seeking a ban on the sales of Shein’s products on Amazon India, the government said, “A blanket order for blocking the sales of Shein products in other platforms/websites cannot be passed by the Committee constituted under section 69A of the IT Act, 2000.”

Originally founded in China, Shein made a strategic decision to relocate its headquarters from China to Singapore in late 2021. This strategic move effectively transformed Shein into a non-Chinese entity, aligning with its expansion plans and facilitating favourable engagements with various markets, including India. By shifting its headquarters, Shein was able to obtain necessary approvals from the Indian government, positioning the company for smoother operations and collaborations within the Indian market.

SourceWSJ

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