Bad news for Mukesh Ambani, Isha Ambani as Shein may scale down partnership with…, its renegotiating…

The recent partnership between Chinese fast-fashion giant Shein and Reliance Retail was much discussed in the news. The original deal to integrate Indian MSMEs (micro, small, and medium enterprises) into Shein’s supply chain, is being renegotiated and may go through significant downsizing, according to an Economic Times report citing sources.

China’s Tariff Policies Impact Shein’s Plans

The partnership, announced with the objective of making India a manufacturing hub in Shein’s global operations. However, after changes in Chinese authorities’ directives, now Shein had to renegotiate its deal . The US increased tariffs on Chinese-made goods up to 145%, so now China is discouraging manufacturers from relocating their operations to other countries like India.

The Reliance Retail-Shein partnership was established to make India as a global manufacturing hub for Shein. Now the media report claims that the recent stand of the Chinese government has led to a reconsideration of the deal and talks are going on to revise the terms of the partnership, and Shein can scale down India in the global sourcing plan.

While some global companies, like Apple, are trying to expand their operations in India, Chinese smartphone brands such as Oppo, Vivo, and Realme ar still not ready to relocate their production from China, even though they manufacture locally for the Indian market.

Shein, majorly relies heavily on China for its manufacturing, has been exploring options to reduce this dependence. Its partnership with Reliance Retail was part of their plan to scale up sourcing from India. However, after directives from Chinese it has become difficult for them to shift their base.

Shein’s India Strategy

Shein had recently made its comeback in India with the help of an app operated by Reliance Retail Ventures after a five-year ban. The partnership was not limited to retail, but it was to integrate 25,000 Indian MSMEs into Shein’s global supply chain. This might have created a parallel supply chain based in India considering local garment and textile manufacturing availability in India.

Shein was also going to share its technology with Reliance to develop an export platform for Indian manufacturers that would have helped Indian manufacturers to reach in the global fast-fashion industry.

Shein’s partnership with Reliance Retail might have helped both companies to meet their ambitious targets. However after trade wars now it may limit its scope to fully utilize its capacity as per their earlier plan.

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