Reliance's deal with the Chinese company that made Zara and H&M change strategy in Europe caught in US-China tariff war

Chinese fast fashion giant Shein is renegotiating its global sourcing partnership with Reliance Retail , as Beijing discourages local manufacturers from shifting production overseas due to escalating trade tensions with the United States. As reported by Economic Times, the move threatens to scale down Shein’s ambitious plan to establish India as a key manufacturing hub for its global operations.

Impact of US tariffs on Shein’s strategyThe Trump administration recently imposed a 145% tariff on Chinese-made goods, prompting concerns that manufacturers may relocate production to countries with lower tariffs, such as India. However, Beijing has stepped in to retain domestic manufacturing, complicating Shein’s plans to expand its sourcing from India.

An executive familiar with the negotiations told ET, "The original arrangement is being revised amid the diplomatic tangle, and Shein’s global sourcing plans from Reliance may be pared down." The uncertainty surrounding the deal has raised concerns about the future of Shein’s India expansion strategy.

Reliance-Shein partnership at a CrossroadsShein re-entered the Indian market in February 2025, nearly five years after being banned due to border tensions between India and China. The partnership with Reliance Retail Ventures was designed to go beyond retail, aiming to create an export platform for Indian MSMEs (micro, small, and medium enterprises) engaged in garment and textile manufacturing.

The agreement also included plans to integrate 25,000 MSMEs into Shein’s global supply chain, with Shein committing to sharing technology and expertise with Reliance. However, these plans now face uncertainty.

The renegotiation of the Shein-Reliance deal comes at a time when India’s fast fashion industry is experiencing rapid growth. According to Redseer Strategy Consultants, the sector is projected to grow from $10 billion in FY24 to $50 billion by FY31, driven by digital-first brands and evolving consumer behaviour.

Despite the challenges posed by the tariff war, Shein remains a dominant player in the global fashion market, with a presence in over 150 countries and 250 million social media followers.

How Shein made Amazon, Zara, H&M, and other big players 'change' their strategyThe re-entry coincides with Shein's growing global dominance, as the company recently became the world's most visited fashion and apparel website, capturing 2.68% of global web traffic in Q3 2024 and outperforming established brands like Nike, H&M, and Zara. Meanwhile, Amazon has launched a new low-cost storefront to tackle Chinese e-commerce platforms, and now is planning to targeting the low-cost fashion segment in the US, one of Shein's biggest market.

The move comes as Shein prepares for a potential London stock market listing in the first half of the year, having abandoned previous U.S. listing plans. The company's rapid expansion has drawn regulatory attention, particularly in Europe, where it now faces stricter oversight under the EU's Digital Services Act due to its large user base of 108 million monthly active users.