Fashion Giant China based Shein to Recenter India with Reliance

Shein, whose app was banned in India in 2020, is seeking to tap the country’s consumer market and diversify its supply chain

Shein is set to re-enter India as soon as this month by partnering with one of the country’s largest retail businesses, according to people familiar with the matter, in a bid to tap India’s growing consumer market and diversify its China-centric supply chain.

The Indian government has approved a partnership between the online fashion retailer and the retail unit of conglomerate Reliance Industries, the people said.

Reliance is a major player in India’s economy and its unit Reliance Retail operates more than 15,000 stores across India that sell a range of products including groceries and clothes.

With this agreement, Shein is likely to source fabrics from small businesses in India, the people said. That could help Shein diversify its supply chain beyond China, they said, as it faces scrutiny in the U.S. over the sourcing of cotton.

Through the partnership, Shein could reach India’s large, fashion-conscious young population, while Reliance could benefit from Shein’s brand recognition, technology and supply chain, the people said. Shein also plans to build a production hub in India to export to the Middle East, the people said.

A Shein spokesperson confirmed the company’s partnership with Reliance Retail, without giving further details. Reliance Retail didn’t respond to a request for comment.

The Indian government’s approval is notable for Shein, a China-founded, Singapore-based company that has been grappling with fallout from geopolitical tensions not just between the U.S. and China, but also between India and China.

In India, Shein and many other apps originating in China have been banned since 2020 as bilateral relations worsened. Back then, India banned more than 170 apps that it said had suspected Chinese links.

The approval means the Indian government now considers Shein to be a non-Chinese entity, the people said.

A spokesman for India’s Ministry of Commerce and Industry didn’t respond to a request for comment.

Founded in 2012 in the eastern Chinese city of Nanjing, Shein relocated its global headquarters to Singapore in 2021. As geopolitical tensions have grown, Shein—which doesn’t sell in China—has been building a presence in markets worldwide and trying to reduce its heavy reliance on China, where it has a network of more than 3,000 suppliers.

It now operates in over 165 countries, and building partly on the strength of its on-demand manufacturing model to track production real-time, rivals major fashion retailers such as Inditex’s Zara and H&M Hennes & Mauritz.

Shein executives hope that sourcing more fabrics from India through this partnership would help it address questions in the U.S. over whether it uses cotton from China’s Xinjiang region, the people said.

Earlier this month, the House China Committee sent letters to companies including Shein, asking whether their products comply with the Uyghur Forced Labor Prevention Act, which bans cotton from Xinjiang in the U.S. market. Human-rights groups and researchers have said Chinese authorities are subjecting Uyghurs and other Turkic Muslim minorities in Xinjiang to forced labor as part of a broader campaign of suppression, allegations Beijing denies.

Separately, a bipartisan letter signed by more than 20 lawmakers to the Securities and Exchange Commission asked the regulator to order a supply-chain audit before Shein is allowed an initial public offering on American stock exchanges.

Shein has said that it has no suppliers in Xinjiang and regularly checks that its suppliers meet requirements. The company also said its suppliers must adhere to a strict code of conduct aligned with the International Labor Organization’s core conventions.

The company also stated on its website that the cotton for Shein-branded products is primarily sourced from the U.S., India, Brazil and Australia. Its manufacturers are permitted to use cotton only from these and other approved regions such as Bangladesh, Tanzania and Pakistan.

Shein has been expanding its global footprint through manufacturing in Turkey, warehouses in Poland and a distribution center in the U.S. It also plans to establish a network of textile manufacturers in Brazil.

Shein raised $2 billion in its latest fundraising round that values the company at $66 billion, and hired London-based consulting firm ERM to conduct an independent review and due diligence of its environmental, social and governance performance to address investor concerns, The Wall Street Journal reported.