Five years after ban, Shein is back in India. Or is it?

NEW DELHI – Despite declaring “The OG is back”, Chinese ultra-fast-fashion giant Shein’s Jan 31 comeback in India was a low-key one as it relaunched its website and app after a nearly five-year ban.

The question now is whether the garment powerhouse – popular in the United States, Europe and the Middle East, and arguably an OG or “original gangster” that changed the retail game with low-priced, ultra-fast-fashion e-commerce – can recover lost ground in India.

Shein was banned after three years of operation in June 2020, along with 58 other apps, as India imposed restrictions on Chinese businesses shortly after a border clash between the two countries in which soldiers were killed. Bilateral ties spiralled downwards, and more apps were subsequently banned due to national security concerns.

But with the recent warming of diplomatic relations, several Chinese companies such as Shein, smartphone giant Vivo and major electronics and home appliance maker Hisense are quietly re-entering or boosting their presence in the Indian market.

Shein’s entry into India is through a long-term licensing deal with Reliance Retail Ventures Limited (RRVL), a subsidiary of Reliance Industries owned by Asia’s richest man, Mr Mukesh Ambani. 

While it has no equity in the India business, Shein will get a licensing fee.

Home-grown players

Unlike five years ago, when clothing was also imported from China by Shein, clothes available on the app now will be manufactured in India based on the Chinese firm’s designs.

As a result, fashion experts say there is little to distinguish Shein from competitors that have also jumped on the fast-fashion bandwagon in a country that, unlike the US or some European countries, has a strong textile and garment manufacturing base.

Shein did not have as much competition during its first foray in India, but during its five-year absence, many home-grown players have entered the fast-fashion market. Established retailers such as Myntra, Tata Group’s Zudio, and Reliance’s own Ajio have also expanded operations, providing consumers with a diverse range of the trendiest clothes at varying price points.

“The fast-fashion landscape in India is more dynamic than ever, with a young, highly engaged consumer base that is both trend-driven and price-conscious,” said Mr Sumit Jasoria, co-founder and CEO of fashion start-up Newme.

With 16 stores and an online store, Newme sells a wide range of clothes under 1,000 rupees (S$15) in categories like Korean drama-inspired looks, and even offers 90-minute delivery in some cities like Delhi.

Mr Jasoria said the entry of Shein added to the “competitive intensity” in the affordable fashion scene, and his company is “scaling our India-based supply chain to ensure we stay ahead of trends while offering price-sensitive consumers a seamless shopping experience across digital and offline channels”.

The data divide

A T-shirt by Shein can go for as little as 199 rupees. But Shein 2.0 in India is not simply picking up where it left off five years ago.

In a concession to concerns about consumer data protection and an influx of cheap Chinese goods, Shein cannot run the app, have access to Indian consumer data, or bring in clothing from China.

Rather, RRVL, while using the Shein branding, is in charge of every facet of the domestic business – from managing consumer data to setting up supply chains and manufacturing Shein designs.

Amid the larger reality of the trust deficit between India and China, Commerce and Industry Minister Piyush Goyal on Dec 17 assured Parliament in a written reply that Shein would have no access to consumer data, a key trigger for the 2020 app ban.

Approval to Reliance and Shein was granted only after the Ministry of Textiles, following consultations with the Ministry of Electronics and Information Technology, which in turn consulted the Ministry of Home Affairs, conveyed no objection to the proposal, he said.

He added that control would always be with Reliance and that “the platform will be hosted on infrastructure in India and all platform data will remain in India, with Shein having no access to, or rights over, such data.”

One of Shein’s key strengths has been is its data-driven trend forecasting and personalised recommendations to shoppers based on browsing history, social media analysis, preferences, and purchase behaviour. It remains to be seen if RRVL can replicate this model and match Shein’s success on this front.

Same Shein, but different

Workers producing garments at a textile factory that supplies clothes to fast-fashion e-commerce company Shein in Guangzhou on June 11, 2024.PHOTO: AFP

In India, Shein clothing is produced by Nextgen Fast Fashion, a fully owned subsidiary of RRVL, through a network of local manufacturers.

However, in order to quickly and affordably churn out clothes in line with new fashions trends, Shein and RRVL would first need to establish a flexible supply chain for the domestic market. The two companies are also planning to export clothes from India as well.

A report from Indian brokerage Elara Capital noted that it could take one or two years to establish a reliable pan-India supply chain and delivery model.

“In apparel logistics and supply chain, Reliance themselves haven’t been able to do too well,” said Mr Karan Taurani, senior vice-president at Elara Capital.

He further noted that the fast-fashion space is not what it was five years ago.

“The dynamics are quite different. The market is getting extremely competitive. Shein clearly has an opportunity to do well again, but the online space is quite cluttered. It’s not going to be easy to scale up very quickly.”

In India, the fast-fashion industry is valued at US$10 billion (S$13.3 billion), having grown at a pace of 30 to 40 per cent between 2023 and 2024.

A previous Shein customer, Mumbai-based home baker Dolly Patil, is now holding back.

“I used to like Shein a lot. But I got mixed reviews on Instagram that the collection is not like earlier, and it is similar to Reliance or Zudio. So after reading a lot of comments, I have not placed an order yet,” she said.

Her view echoes what experts say is a key challenge for Shein – differentiating itself from competitors.

Mr Arvind Singhal, the founder and chairman of management consulting firm Technopak Advisors, noted that nothing sets Shein apart currently, since it is using the same manufacturing ecosystem as the other Indian firms. “It’s just one more player in the market.”

Globally, Shein’s net profit shrank by almost 40 per cent to US$1 billion in 2024, according to a Financial Times report in February.

Will India warm to more Chinese investment?

Shein’s re-entry into India has also raised questions about whether India will now move towards accepting greater investments from Chinese firms, and whether the way forward for Chinese firms is to partner with Indian ones.

Though a section of corporate India is all for greater economic engagement with China in the face of greater US protectionism, the government has so far signalled no change in policy to ease foreign direct investment rules for China.

India’s policy on Chinese investments has not changed since 2020, with government approval required for foreign direct investment coming in from countries sharing land borders. The move was seen as a way to regulate Chinese investments.

Amid nationalistic sentiment running high in India, Chinese firms such as those in the electronic sector have also kept a low profile, seeking to avoid any public backlash.

While sources say RRVL chose a low-key “beta launch”, or soft launch, to work out the logistics and iron out any kinks before a full-fledged commercial launch and publicity campaign, experts view this as an attempt to test the waters.

“Most Chinese companies want to play it safe by keeping a low profile and staying clear of data privacy related controversies,” said Associate Professor Hemant Adlakha of the Centre for Chinese & South East Asian Studies at Jawaharlal Nehru University in New Delhi.

“The factor being talked about in the industry circles is that Shein is following the new strategy aimed at long-term goal of sustainability in the Indian market which, going by its first inning experience, is to minimise risks if it carries the Chinese identity.”

The case for warmer India-China economic ties has been advanced by uncertainties created by US President Donald Trump, who threatened reciprocal tariffs on countries including India and China on April 2.

Mr Nitin Pai, co-founder and director of the Takshashila Institution, an independent centre for research and education in public policy, believes that as far as improving ties with India is concerned, the ball is in the Chinese court.

He maintained that “China’s leaders have begun stifling India’s technological advancement” by restricting some exports, such as semiconductor instrumentation.

“Such a stance is not conducive to rebuilding neighbourly ties. So the ball is in Beijing’s court – progress depends on whether China wants to improve ties with India,” he said.

“Progress depends on Beijing: China’s leaders must evaluate whether they can afford to confront the Trump administration without mending fences with India,” Mr Pai added.

• Nirmala Ganapathy is India bureau chief at The Straits Times. She is based in New Delhi and writes about India’s foreign policy and politics.

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