Polyester Giant Reliance Sets Stage for Shein's Backdoor Return to India

India’s retail and ecommerce sectors are abuzz with what’s going to be the impact of the Reliance-Shein combine on the overall landscape, and how it is eventually going to play out. A texfash.com analysis.

Long Story, Cut Short
  • By bringing back Shein to India, after the global fast fashion behemoth’s three-year exile, Reliance Retail is about to set the mass market segment ablaze.
  • On the Shein front, it is no longer perceived as a Chinese company, as it is now headquartered in Singapore.
  • Shein would be using Reliance Retail's sourcing, warehousing & logistics infra along with the latter's huge portfolio of online & offline stores. Shein, for its part, is expected to bring its brand appeal & technology to the table.
Random images from Shein India's Instagram account. The online fast fashion retailer was immensely popular among Indian women, especially youngsters, for its stylish wears.
Sheinfluencers Random images from Shein India's Instagram account. The online fast fashion retailer was immensely popular among Indian women, especially youngsters, for its stylish wears. Shein India

In September last when the story doing the round was that India’s retail giant Reliance Retail was planning fast fashion outlets to take on H&M and Zara, no one would have seen this coming. Late last week, the Indian fashion and retail sectors were set aflutter with the news that retail wing of India's largest polyester manufacturer was tying up with behemoth Shein.

Six months ago, it might have seemed that Reliance Retail Ventures Limited (RRVL) would go the whole hog—right from manufacturing to retailing. It would have seemed logical thus since fast fashion essentially is polyester-driven, and the parent company of RRVL is one of the biggest polyester manufacturers in the world: Reliance Industries Limited (RIL).

But a second look will not make it appear so much of a surprise. Reliance is not so much into apparel-making. At one end of the spectrum it produces polyester, and at the other—at least in the fashion sector—is known to market global brands in the country. Reliance Brands Limited is the luxury arm of Reliance Retail, and caters to the luxury, bridge-to-luxury, high-premium and high-street lifestyle segments in India. Its portfolio ranges from Armani and Burberry to Versace and Zegna.

And by bringing back Shein to India, after the global fast fashion behemoth’s three-year exile, Reliance Retail is about to set the mass market segment ablaze. In a way, it’s a return to the masses—it was RIL which had been instrumental in changing the contours of the apparel market in India with polyester which was affordable for ordinary people. RIL’s Vimal brand is now folklore

Taking on a Shein

Shein had left India almost three years ago in a huff. In June 2020, the Indian government had banned 59 Chinese apps in a retaliatory move over the border skirmish between Indian and Chinese troops in the Ladakh region. At that time, Shein was immensely popular among both working women and college-going young women for the chic designs and the attractive price points.

As it returns to India, a lot has changed. On the Shein front, it is no longer perceived as a Chinese company, now headquartered in Singapore as it happens. The growth of Reliance Retail in the meantime has been phenomenal, and the company is one of the focus areas of RIL. At RIL’s annual general meeting in the last week of August last year, Chairman and Managing Director Mukesh Ambani had put daughter Isha Ambani at the helm of affairs at RRVL. In the preceding year, Reliance Retail had added over 2,500 stores and generated employment for more than 150,000.

The numbers, as they stand, are staggering. The company's revenues for FY2021 were $26.3 billion. Today, it owns 15,196 retail stores spread over an area of 41.6 million sq ft. Reliance Retail is present in over 7,000 cities and towns, and serves over 5 million customers every week. It runs over 500 distribution centres, and owns about 12 million sq ft of warehousing space.

It is on this tailor-made turf that Shein will be operating on. As part of the agreement, Shein would be using Reliance Retail's sourcing capabilities, and warehousing and logistics infrastructure along with the latter's huge portfolio of online and offline stores. Shein, for its part, is expected to bring its brand appeal and technology to the table. It’s what they love to call a win-win partnership.

An incomplete story

When the COVID-19 pandemic hit India, Shein was on a roll at over 20,000 order shipments a day, and the sky seemed to be the limit. Then—Ladakh happened.

India took its ire out on Chinese apps, calling them a "threat to sovereignty and integrity.”  The government contended that these apps posed potential risks in terms of data collection, storage, and potential misuse. PUBG, Tiktok, Shen and others were shown the exit. Since then, India has banned over 270 Chinese apps for being "prejudicial" to India's sovereignty, integrity and national security.

For a brief period, Shein apparel could be accessed over amazon.in, but even that stopped soon. What reports indicated was that only Shein’s app had been banned, and the company was free to sell its products otherwise in the country. But a Shein on an Amazon made no sense. Shein disappeared from the Indian landscape, leaving a huge fanbase yearning for more. Or at least, some. 

But, the 2020 crackdown was not the first occasion when Shein had found itself at the receiving end of the Indian government’s stick. Exactly a year earlier, Shein had gone temporarily offline after Customs officials seized about 500 parcels from the premises of Sino India Etail, Shein’s Indian seller, and sealed a company warehouse. The allegation was that the Indian wing was undervaluing and wrongly declaring goods. Another Chinese brand Club Factory was also targetted.

And now, the comeback

Given this backdrop, India’s retail and ecomm sectors are abuzz with what’s going to be the impact of the Reliance-Shein combine on the overall landscape, and also how it is eventually going to play out.

The Mint newspaper, quoting government officials, reported that Shein would not require foreign direct investment (FDI) approval since it will not hold equity in the new operations, which would be controlled by a wholly-owned subsidiary of Reliance Retail.

“Ownership and control of the platform will remain with the RRVL subsidiary, a 100% Indian firm. The agreement says that an Indian app which will be built by RRVL will have a wall between the domestic and global app. If in the future, investment comes from Shein India, Press Note 3 would be applicable," the official told the newspaper. “RRVL has only bought the licence and the platform. The agreement between the companies says that the profits will be shared when this subsidiary makes profit," he added. [Press Note 3 is an amendment to the FDI policy brought about in 2020 to prevent hostile takeovers of domestic firm by Chinese entities.]

Many conjectures are floating around. One is that Shein—which sources over 90% of its wares from China—could ramp up its India intake to as much as 25%. Were that to happen, both small-time apparel manufacturers as well as independent designers in India could see an attractive channel opening up for them. This assumes significance in the face of dwindling apparel exports.

It is not clear where this initiative would be hosted, but speculation is rife that it could well be on the Ajio platform, the digital commerce subsidiary of Reliance Retail. Ajio already markets a bunch of international labels, and is a cousin of Reliance Jio—India’s biggest telecom player by a yard. Last August, Meta introduced WhatsApp grocery shopping to India through Reliance Retail and Jio.

In short, the stage is set. All that Shein now needs to do is re-launch.

Subir Ghosh

SUBIR GHOSH is a Kolkata-based independent journalist-writer-researcher who writes about environment, corruption, crony capitalism, conflict, wildlife, and cinema. He is the author of two books, and has co-authored two more with others. He writes, edits, reports and designs. He is also a professionally trained and qualified photographer.

 
 
 
  • Dated posted: 23 May 2023
  • Last modified: 23 May 2023
 
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