Shein-Reliance Rethinks Partnership Amid US-China Trade Friction

As per the Economic Times report, rising trade tensions between China and the United States are rippling through global supply chains, and one of the latest partnerships to feel the heat is that between Shein and Reliance Retail. The fast fashion giant is renegotiating its sourcing partnership with Reliance Retail Ventures Ltd (RRVL), a development that reflects the changing geopolitical dynamics shaping business decisions.

Reliance Retail is a part of Reliance Industries Limited (RIL). It is the retail business wing of Reliance Industries. 

The Trump-era tariff hike of 145% on Chinese goods, still in effect, has pushed Chinese authorities to reinforce domestic manufacturing and restrict outward production migration. This policy shift directly challenges Shein’s original plans to position India as a major manufacturing base.

Shein’s India Vision Faces Headwinds

Shein re-entered the Indian market in 2024 after being banned in 2020 amidst India’s crackdown on Chinese-origin apps. This return came through a strategic partnership with Reliance Retail, allowing Shein to launch a standalone app hosted on Indian servers, with a strong focus on local data storage and compliance.

Beyond retail presence, the agreement envisioned transforming India into a global export hub for Shein’s products. A core part of this ambition was the mobilisation of over 25,000 Indian MSMEs in the apparel manufacturing space, with Shein pledging access to technology and resources. However, the recent turn of events suggests that these plans may be scaled down significantly.

Read More: Shein Returns to India: Now Available on Reliance’s New App. 

Beijing’s Manufacturing Retention Strategy

In response to US tariffs, China has implemented countermeasures, including a 125% tariff on US imports, while also tightening its control over domestic industries. These developments reflect Beijing’s broader aim to protect its status as the world’s manufacturing powerhouse.

While the US has extended a 90-day suspension on some tariffs, such as the 26% duty on Indian goods, the relief has not been applied to Chinese products. In this tense environment, Beijing remains cautious about losing production influence to other countries, particularly India, which was emerging as a strong contender in Shein’s diversification strategy.

Shein’s Profitability Challenges and IPO Pressure

Shein’s supply chain issues come at a time when the company is navigating a turbulent business landscape. Its net profit dropped by nearly 40 per cent to $1 billion in 2024, despite revenue growing 19 per cent to $38 billion. The valuation, once a staggering $100 billion in 2022, fell to $66 billion in 2023. Now, reports suggest Shein might settle for a valuation as low as $30 billion ahead of its much-anticipated IPO.

After shelving its New York listing due to political opposition, Shein has secured approval from the London Stock Exchange. This move marks a crucial step forward, though it also raises questions about how the company will position itself in a more geopolitically cautious investment climate.

India’s Fast Fashion Potential Remains Strong

Despite current uncertainties, India continues to present a significant opportunity for fast fashion brands. According to Redseer Strategy Consultants, the Indian fast fashion market is projected to expand fivefold—from $10 billion in FY24 to $50 billion by FY31. For Shein, which now operates from Singapore but still leans heavily on Chinese production, India was expected to be a key strategic node in its global footprint.

Other Chinese brands like Oppo, Vivo, and Realme, although firmly embedded in the Indian market, have retained their primary production bases in China. Shein’s initial intent to break that mould by shifting production to India now appears less feasible in light of mounting diplomatic pressures and trade complexities.

Conclusion

The Shein-Reliance partnership, once seen as a template for global collaboration in a post-China manufacturing world, is now being re-evaluated. As diplomatic frictions between superpowers reshape the trade landscape, companies like Shein are being forced to recalibrate their expansion blueprints, underscoring the tightrope multinationals must walk in a highly politicised economic environment.

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