Chinese fast fashion giant Shein is reportedly re-evaluating its global sourcing partnership with Reliance Retail in India, amid renewed geopolitical tensions between China and the United States. The partnership, which was announced in 2023, aimed to establish India as a key manufacturing base in Shein’s global supply chain. However, the collaboration is now under review, as Beijing urges Chinese firms to limit overseas manufacturing amid the escalating trade war with the US.
According to a report by the Economic Times, the Trump administration’s decision to impose a 145% tariff on Chinese goods has prompted the Chinese government to discourage companies from shifting production abroad. This move is seen as an attempt to prevent an exodus of Chinese manufacturers to low-tariff countries such as India.
Strategic Sourcing Plans in Limbo
Sources familiar with the matter told ET that both Shein and Reliance are reassessing the structure and scale of their collaboration. “The partnership was conceived with the goal of building a global supply base out of India. That now hangs in the balance,” said one executive. Another source revealed that both sides are exploring alternative solutions to navigate the new advisories issued by Chinese regulators.
Shein had recently re-entered India through a standalone app operated by Reliance Retail Ventures, following its 2020 ban amid broader geopolitical tensions. The move was seen as a strategic pivot—not just to re-enter the Indian market, but also to integrate India’s MSMEs into Shein’s global fashion supply chain. The plan aimed to onboard over 25,000 Indian small businesses and provide them access to Shein’s technology and manufacturing systems.
India’s Retail Market, Shein’s Profit Dip
Despite relocating its headquarters to Singapore, Shein still relies heavily on Chinese manufacturing. Meanwhile, India’s fast fashion industry is booming. A Redseer Strategy Consultants report projects the current $10 billion market could grow fivefold to $50 billion by 2030–31. Fast fashion in India grew 30–40% in FY24, compared to 6% growth in the broader fashion category.
However, Shein’s profitability has taken a hit. The company reportedly earned $1 billion in net profit in 2024, down nearly 40% from the previous year, although its revenue rose 19% to $38 billion.
The Shein-Reliance agreement included stringent data separation protocols to alleviate national security concerns. Commerce Minister Piyush Goyal previously clarified that the app’s infrastructure is fully Indian-owned, with no access granted to Shein over consumer data.
The Road Ahead
As geopolitical dynamics continue to evolve, the fate of the Shein-Reliance partnership hangs in the balance. While China attempts to retain manufacturing within its borders, India’s growing appeal as a manufacturing and export hub could still hold strategic value for Shein. However, whether this partnership will survive the shifting sands of global trade policy remains to be seen.
