Since the beginning of this year, India seems to have become the eyes of many companies "sweet and pastry," companies have opened the door to the Indian market in a flock。

On June 21, according to media reports, China's online fast fashion brand Shein may be re-approved to enter the Indian market, but only if it is in contact with Indian retail company Reliance Industries Ltd (Reliance Industries Ltd..) reach a strict license agreement。

The agreement mentions that Reliance Industries' retail arm will have full ownership of India's domestic retail operations, while Shein will play a "technology-producing" role, with the company providing production support and training to more than 25,000 local small and medium-sized suppliers so they can produce Shein-branded products worldwide, according to people familiar with the matter.。

The agreement will result in a significant increase in "Made in India" products sold on Shein's platform.。If Indian manufacturers can meet a quarter of Shein's global demand, India's exports could increase by about 500 billion rupees ($6.1 billion).。Shein was also able to capitalize on the growing consumer demand in India, a huge market, and get a share of sales.。

In addition, according to the strict requirements of the Indian government on data security issues, all data generated by Shein's application and its operations in India will be stored locally in India, but Shein cannot access this data.。

These specific requirements show that, on the one hand, India seeks Shein to use its capabilities to enhance India's own manufacturing capabilities, and on the other hand, it prevents Shein from becoming bigger and stronger in the Indian market and squeezing the development of local brands.。

If finally approved, Shein will return to the Indian market after three years。As early as 2020, India banned a number of Chinese apps, and Shein was one of them.。

Why India has set restrictions and Shein has decided to return to the Indian market？

Shein is one of the few unicorns in online fashion。In 2021, the company is valued at $100 billion.。But by May of this year, it was revealed that Shein had raised $2 billion in its latest round of funding, leaving the company at a current valuation of just $66 billion, about a third less than at its peak a year ago.。

Behind the decline in Shein's valuation are signs that its growth has been "underpowered."。

Shein revenue of $22.7 billion in 2022, up 52.8%; GMV total value of about $30 billion, up 174% year-on-year; profit of $700 million, down 36% year-on-year, which is the company's fourth consecutive year of profitability.。

Shein's report card is very bright at first glance, but it's still a bit weaker than previous growth。Previously, Shein had maintained the momentum of rapid growth。It is reported that before 2020, Shein's revenue growth rate exceeded 100% for 8 consecutive years.。2022 revenue growth decline, profit decline is the first time。Shein executives attributed the drop in profits to high air freight costs and rising production costs。

For Shein's slowdown in the pace of growth, some industry analysts believe that this is because in the environment of slowing economic growth and increased competition in the industry, Shein's selling price and cost are basically fixed, the supply chain model is not much breakthrough, while the expansion of new markets is not very smooth.。In addition, Shein's net margin is not high compared to its peers。It is reported that Shein's net interest rate is about 6%, while other fashion brands such as ZARA and Uniqlo, their net interest rates are around 12%.。

In terms of industry competition, Shein's dilemma is not small。In Southeast Asia, there are Shopee, Lazada and other "old fritters," in North America, there are Temu and other "novice" admission。In addition, consumer online shopping is no longer limited to shopping platforms, and the rapid rise of e-commerce tracks such as live streaming has also taken a lot of market share.。

In order to break the game, Shein had to look to other markets around the world, such as South America.。

At present, Shein is moving into South America, and Brazil is the first stop, but Shein's South American market expansion road is not smooth。In April, the Brazilian government said it would impose a "digital tax" on shipments from e-commerce giants.。Shein is seen as one of the targets targeted by the measure。It is reported that the proposed tax is not to create a new tax, but to adopt an improved tax system, which will be taxed electronically before the shipment of goods.。

To minimize the impact of the tax, Shein plans to localize 85% of its Brazilian sales through local production.。Shein says to invest in Brazil in coming years 7.500 million reais (about 1.500 million U.S. dollars), plans to cooperate with 2,000 manufacturers in Brazil, which will create 100,000 local jobs in the next three years。However, industry insiders believe that Brazil's logistics efficiency is not ideal, the drop rate is very high, which is Shein this online shopping platform is not a small challenge.。

Not only in Brazil, Shein also plans to build a factory in Mexico。At the end of May, according to media reports, Shein was considering setting up a factory in Mexico as one of its production centers outside China.。Shein hopes to reduce shipping time and reduce distribution costs for customers in Latin America。From these plans to build factories, Shein's willingness to transform can be glimpsed, and the company hopes to shift from relying on China's domestic clothing supply chain in the past to setting up supply points in many parts of the world.。

Shein's global expansion is still going on, whether it can be successfully transformed and whether it can continue to be "the Swordsman" in an increasingly competitive environment remains to be verified.。