Stringent Licensing Agreement With Reliance Welcome Shein On India Re-entry

SUMMARY

Under the agreement, Shein will require Reliance Retail to fully own the domestic business

Shein will offer production support and training to more than 25,000 small and mid-sized local suppliers

More importantly, amid rising data security concerns, all data generated by Shein’s app and from its operations in India will be stored in India

For reentering the Indian market, Chinese fast fashion brand Shein reportedly needed to adhere to a strict licensing deal with Reliance Industries Ltd.

Under the agreement, Shein will require Reliance Retail to fully own the domestic business, Bloomberg reported citing sources.

Moreover, Shein will offer production support and training to more than 25,000 small and mid-sized local suppliers so they can produce Shein-branded products globally.

Shein would be able to tap into rising consumer demand in India and take a cut from sales, as well as increase the share of made-in-India goods sold on its platform.

If Shein manufacturers can deliver at least one fourth of Shein’s global demand, it could potentially add around $6.1 Bn of exports from India.

More importantly, amid rising data security concerns, all data generated by Shein’s app and from its operations in India will be stored in India. The data will be inaccessible to the online retailer in compliance with strict requirements from the Indian government.

Last month it was reported that Shein is making its second entry in the country in partnership with Reliance Retail three years after its ban in India.

The company secured an approval from the Indian government for its partnership with Reliance Industries.

Under this partnership, Reliance Retail would sell Shein products in offline stores operated by the retailer as well as through its ecommerce app Ajio.

The Indian government banned 59 Chinese apps including Shein in India in 2020 due to geopolitical issues.

Interestingly, Shein relaunched in India on Amazon during its annual Prime Day sale in 2021. A petition was later filed before the Delhi High Court saying the Chinese brand would have “access to personal and sensitive data of several millions of Indian citizens”.

Centre told the Delhi High Court that Shein was banned in the interest of India’s sovereignty and security of the State but a blanket order against the sale of its products on third-party platforms could not be passed under the IT Act. It added that the sale of Shein’s products on a third-party platform is not covered under the Section 69A.

Earlier this year, Shein raised $2 Bn at a valuation of $66 Bn. It competes against the global fast fashion brands Zara, H&M.