Home Business Once rejected, a Chinese company finds the Ambani route to India

Once rejected, a Chinese company finds the Ambani route to India

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Shein’s entry into India seems safe because this time the ownership and control of the platform will remain with Reliance Retail’s subsidiary; the platform will be hosted on infrastructure in India; and all platform data will remain in India, which Shein will not have access to or rights over, SMT reported based on information from sources.

Amid scrutiny in the US and Europe, a Chinese fashion giant eyes India, a potentially massive market for its affordable clothes. Four years ago, India banned Shein from selling products on its app amid heightened tensions with China. 

Now, Shein has secured a route to India through Mukesh Ambani’s Reliance Retail Ventures, set to launch the brand in the coming weeks, SMT reported, citing sources. Ambani’s company will retail Shein’s products both online and through its offline stores.

Image Source: Planify

Shein’s entry into India appears secure as ownership and platform control will rest with Reliance Retail’s subsidiary. The platform will be hosted on Indian infrastructure, with all data remaining in India and inaccessible to Shein, SMT added.

Shein, a global fashion giant founded by Chinese entrepreneur Chris Xu in 2012, dominates the fast-fashion market with nearly a fifth share, posing a significant challenge to Zara and H&M. With operations in over 150 countries and employing 11,000 people, Shein boasts over 250 million social media followers. In 2023, it reported profits exceeding $2 billion and gross merchandise value nearing $45 billion. Known for rapid design turnover, Shein leverages a direct-selling model via social media influencers and discounts, offering products like $10 tops and $5 biker shorts across its 10 brands. Shein’s agile production strategy, utilizing 5,400 third-party manufacturers in China, ensures minimal unsold inventory through on-demand manufacturing.

Critics in the US and Europe have raised concerns about Shein and other Chinese e-commerce firms using import tax exemptions to undercut competitors and bypass customs inspections. Shein ships most items directly from China via air in individually labeled packages, a strategy that aids in avoiding excess inventory and utilizing the “de minimis” provision to evade US import tariffs on low-cost goods, crucial in one of its largest markets.

Increased Congressional Scrutiny on Tariff Exemption

The decades-old tariff exemption allowing packages valued at $800 or less is facing increased congressional scrutiny, criticized for benefiting Chinese firms like Shein by evading higher tariffs on goods from China. Shein’s online-only sales approach reduces overhead costs, but extended delivery times of up to two weeks in the US have disadvantaged it against competitors like Target, Walmart, and Amazon. To address this, Shein is increasing shipments of inexpensive clothing and home goods to US warehouses, aiming to improve delivery speeds, reports trade analysis firm ImportGenius.

Following heightened scrutiny in the US, the European Union (EU) is preparing to levy customs duties on inexpensive products purchased from Chinese online retailers such as Shein, according to recent reports from the Financial Times. The European Commission is set to propose eliminating the existing 150 euros ($161) threshold, which currently exempts items from customs duties when bought online from non-EU countries.

Shein’s IPO Plans

Shein still favors New York for its listing and plans to keep its application active in case US regulators’ stance changes. However, it is now preparing for a London IPO, having confidentially filed papers with Britain’s markets regulator in early June, Reuters reported from sources. Shein may also consider a secondary US listing in New York post-London IPO, when the US political climate is more favorable. Shein was valued at $66 billion in a fundraising round last year.

You might also be interested in – Billionaire Mukesh Ambani eyes Africa with new telecom venture in Ghana.

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