Shein, known for its affordable clothing items like $10 tops and $5 biker shorts, has a portfolio of 10 different brands including Romwe, MOTF, and Cuccoo. It appears that Shein's entry into the Indian market will be a safer venture this time, based on information from sources. The key differences are:
1. The ownership and control of the platform will remain with Reliance Retail's subsidiary, rather than being fully owned by Shein.
2. The platform will be hosted on infrastructure located within India, rather than overseas.
3. All data related to the platform will stay within India, and Shein will not have direct access or rights over this data.
These factors suggest Shein's India expansion strategy has been modified to address potential concerns around data sovereignty and platform control, compared to its previous approach.
In a strategic move, the Chinese fast-fashion powerhouse Shein is poised to enter the Indian market, potentially tapping into a vast and lucrative consumer base. This comes as the company faces challenges in the United States and Europe, where it has come under scrutiny over its business practices.
Shein's foray into India will be facilitated through a partnership with Mukesh Ambani's Reliance Retail Ventures, which plans to launch the Chinese label in the coming weeks. Reliance Retail will sell Shein's products on its app as well as in its offline stores, ensuring a safe and controlled entry for the Chinese brand.
"This time the ownership and control of the platform will remain with Reliance Retail's subsidiary," a source told ET. "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."
The move is seen as a strategic response to the potential hurdles Shein might face in the US and Europe. "Since Shein might face curbs in the US and Europe, its India entry will support its global leadership in the fast-fashion market," the source added.
Founded by Chinese entrepreneur Chris Xu in 2012, Shein has rapidly grown into a global fashion powerhouse, serving customers in over 150 countries and employing more than 11,000 people. The company has a strong social media presence, with over 250 million followers across various platforms.
Shein's business model, which emphasizes a direct-selling approach and heavy use of influencers and discount codes, has allowed it to achieve remarkable success. In 2023, the company clocked more than $2 billion in profits and close to $45 billion in gross merchandise value.
While Shein's growth has been meteoric, the company has faced increasing scrutiny in the US and Europe. Critics have alleged that Shein uses import tax exemptions to undercut rivals and avoid customs inspections of its products.
In the US, Shein's strategy of shipping products directly from China to shoppers has allowed it to take advantage of the "de minimis" provision, which exempts cheap products from tariffs. This practice has drawn the attention of US lawmakers, who are now considering revising the decades-old tariff exemption.
Similarly, the European Union is exploring plans to impose customs duties on cheap goods bought from Chinese online retailers, including Shein. This move aims to level the playing field and ensure a more equitable market environment.
Despite the challenges in Western markets, Shein's entry into India is seen as a strategic move to maintain its global leadership in the fast-fashion industry. The partnership with Reliance Retail, a trusted Indian conglomerate, provides a secure platform for Shein to navigate the Indian market.
"It seems a safe India entry for Shein because this time the ownership and control of the platform will remain with Reliance Retail's subsidiary," the source said. "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."
As Shein continues to navigate the evolving global landscape, its foray into the Indian market represents a significant opportunity for the company to capitalize on the country's vast consumer base and potentially offset any setbacks it may face in other regions.
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