Shein, Luxshare, Huaqin..why are Chinese cos returning to India?
Sep 13, 2024
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Shein's comeback in India, partnering with Reliance, raises eyebrows about changing attitudes towards Chinese companies. The podcast discusses the fast fashion landscape and recalls the ban that overshadowed Shein's initial success. It also examines the evolving Sino-Indian business relations, highlighting a mix of opportunities and risks in new Chinese investments. Hosts dive into competitive dynamics, and the broader implications of these changes for the future of the market.
Shein's comeback in India through a licensing agreement with Reliance signifies a potential shift in regulatory attitudes towards Chinese investments.
The evolving approach to foreign investments indicates that India is selectively reassessing its relationship with Chinese firms, particularly in less sensitive sectors.
Deep dives
Shein's Re-entry into India
Shein, the fast fashion giant, is preparing to re-enter the Indian market after being banned in 2020 due to geopolitical tensions and alleged regulatory issues. The partnership with Reliance Industries marks a significant shift as Reliance will now manage the domestic operations while Shein provides production support. The new agreement also includes training for over 25,000 local suppliers to produce Shein-branded products and mandates that all generated data will be handled within India. This re-entry comes at a time when the fast fashion market in India is rapidly growing, presenting a strong opportunity for Shein to compete against established players like Tata Group.
Previous Challenges and Regulations
Shein's initial operations in India faced challenges, particularly regarding customs regulations that led to the seizure of significant shipments in 2019. The brand's growth relied heavily on the ability to circumvent taxes on small order values, which contributed to its eventual ban. Many believed that the series of regulatory issues stemmed from broader concerns about the influx of Chinese companies following a crackdown on Chinese apps in the country. As such, the entry of Shein and other Chinese firms into India's marketplace raises questions about the evolving regulatory landscape and how the government will address concerns around data security and market dominance.
Changing Perspective on Chinese Investments
There appears to be a gradual shift in India’s stance towards Chinese investments, with indications that not all sectors may face the same level of scrutiny. Recent approvals for various Chinese companies entering sectors like textiles and electronics signal a potential rethinking of previous bans, recognizing that investments differ in risk and impact. Policymakers are identifying sectors where foreign investments, particularly from China, can be beneficial without compromising security, such as in textiles compared to tech companies. This nuanced approach may suggest a future where strategic partnerships with Chinese firms become more common, reflecting changing dynamics in the geopolitical landscape.
Chinese fast-fashion giant Shein, one of the companies banned in India in 2020, is set to make a comeback, this time under a licensing agreement with Reliance Industries. Other Chinese entities like HKC and the Adani Group’s new subsidiary in China hint at a possible shift in India’s business approach towards its neighbour. Do all these point to a change in Indo-Chinese relations, at least as far as business is concerned?
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