Shein, Reliance renegotiate partnership as China-US trade tensions grow

Chinese authorities have stepped in to retain domestic manufacturing as the Trump administration looks to encourage business to shift the US

This story has been updated.  Fast fashion giant Shein may be reconsidering the scope of its global sourcing partnership with Reliance Retail, The Economic Times reported, citing sources close to the matter. The move comes amid escalating trade tensions between the United States and China, which have seen Beijing tightening its grip on domestic manufacturers and discouraging them from shifting operations abroad. 

Chinese govt cracks down on domestic manufacturers

One of the key goals of the Reliance-Shein collaboration, announced during Shein’s India relaunch earlier this year, was to establish India as a strategic sourcing hub for the brand’s global operations. However, with the Trump administration slapping a steep 145 per cent tariff on Chinese-made goods, Chinese authorities stepped in to retain domestic manufacturing. As a result, Shein’s plans to expand production from India may now be scaled back.

 

 

While the US has temporarily paused reciprocal tariffs—including the 26 per cent duty on Indian goods — for 90 days, this suspension has not been extended to China. Tensions between the two world powers have continued to remain tense with Beijing retaliating with a 125 per cent tariff on US imports. Under these circumstances, Beijing remains wary of losing its global manufacturing dominance.

 

Shein-Reliance partnership and growth plans

This comes just months after Shein re-entered the Indian market through a partnership with Reliance Retail Ventures Ltd, nearly five years after it was banned during a government crackdown on Chinese-origin apps. The partnership allowed Shein to launch a standalone app operated and hosted by Reliance Retail, with all data stored within Indian infrastructure.

 

The collaboration had also outlined broader ambitions, which included building an export-oriented ecosystem involving around 25,000 Indian MSMEs in garment manufacturing. Shein had committed to sharing technology and resources to enable Indian manufacturers to become part of its global supply chain. That vision now faces uncertainty amid shifting diplomatic and trade equations.

 

Despite the global push to diversify manufacturing bases away from China, Chinese tech brands such as Oppo, Vivo, and Realme continue to manufacture for India’s local market without relocating core production. Shein, although now headquartered in Singapore, still relies heavily on Chinese manufacturing. It had hoped India would help reduce that dependence, however this seems unlikely in the current geopolitical climate.

 

Shein growth slump amid competition

Shein, too, has struggled in its global sales, due to increased competition from fast fashion brands. The company’s net profit dropped nearly 40 per cent to $1 billion in 2024, even as its full-year revenue grew 19 per cent to $38 billion. 

The company’s valuation peaked at $100 billion in 2022, but dropped to $66 billion in 2023. Reports now suggest that the company may be under pressure to lower its valuation further in preparation for its London IPO, possibly to around $30 billion.

The company has finally received approval from the London Stock Exchange to list its shares – a major milestone the fast fashion retailer has been working toward for a long time. It had originally planned to list in New York but abandoned the plan after facing political opposition from US lawmakers. 

India remains a critical market for the brand, as the country’s fast fashion industry is projected to quintuple from $10 billion in FY24 to $50 billion by FY31, according to Redseer Strategy Consultants. 

The report by The Economic Times suggests the two companies are exploring workarounds to salvage at least parts of the sourcing agreement as global supply chains shift. 

Commenting on the reports, a Shein spokesperson said, “There are no changes to SHEIN’s relationship with Reliance Retail.”