The legal battles between Temu and Shein have escalated as both companies vie for e-commerce dominance in lucrative US market.
Temu, which is owned by PDD Holdings, has launched a lawsuit in the US against fast-fashion rival Shein accusing it of illegal and anticompetitive practices as part of a “desperate plan” to sabotage its business, in a revamped legal battle between the warring e-commerce giants.
In a Wednesday filing, Boston-based WhaleCo – which operates as Temu in the US – said Shein’s unlawful actions included “mafia-style intimidation” and “false imprisonment” of vendors, as well as “abuse of the copyright system” through sham copyright claims.
In addition to allegedly threatening merchants with penalties for doing business with Temu, the lawsuit accuses Shein of detaining merchant representatives in Shein’s offices, confiscating their electronic devices, and obtaining access to proprietary Temu information through the merchants’ seller accounts.
Temu previously sued Singapore-based Shein in July with similar allegations of antitrust violations, such as the coercion of vendors and manufacturers into exclusive-dealing agreements. Temu filed to drop those charges in October.
“Temu has discovered that Shein’s anticompetitive behaviour has not only persisted but intensified,” the latest lawsuit states, adding that “Shein’s persistent and increasingly aggressive use of anticompetitive conduct, coercion, and threatening behaviour necessitates this lawsuit.”
A spokesperson added in an email to the Post on Thursday that Shein’s actions were “too exaggerated”, leaving “no choice but to sue them”.
Shein also called off a lawsuit against Temu in October, which alleged Temu had infringed on its trademarks and copyright, and impersonated its brand on social media and worked with influencers to disparage its business.
The legal battles between Temu and Shein have escalated as both companies vie for e-commerce dominance in lucrative markets like the US.
Shein, which experienced a rapid rise to prominence in the US during the Covid-19 pandemic, saw its fast fashion market share surpass that of big-name competitors such as H&M Group, Zara, ASOS and Forever 21 by November 2021. This November, the company reportedly filed confidentially for an initial public offering in the US, targeting a valuation of as much as US$90 billion.
However, Temu – introduced to the US market in September 2022 by PDD – has presented a challenge to Shein’s business by offering a broader product range at competitive prices. While Shein sells fashionable clothes at minimal prices, Temu also sells cheap appliances, spare parts, kitchenware, headphones, etc.
The Temu app has become the most downloaded free iPhone appin the US in 2023. Consumers spent an average of 18 minutes per day in Temu’s app, compared to 10 minutes in Amazon. Younger users spent even higher amounts of time, at 19 minutes per day, on average. While Temu attracts users with in-app games, its real draw may be its bargain prices — which have more of an appeal during an economic downturn.
In its latest court action against Shein, Temu states its entry into the US market in late 2022 had contributed to a decline of more than US$30 billion in the valuation of Shein, triggering a “desperate plan” by its rival to eliminate the competition.
Another element of Temu’s suit are allegations that Shein unlawfully obtained IP rights from its vendors and weaponised the information against competitors. According to Temu, Shein has allegedly sent tens of thousands of “sham” copyright notices to Temu to disrupt its business.
Temu has also accused Shein of copying some of its mobile games within its app as well as other promotional strategies, after poaching several of its key marketing executives.
Accusations of copyright infringement in the fast fashion market are not rare. Shein was sued for copyright infringement in 2021 by H&M in Hong Kong, and by three independent designers in California, who allege that the company’s infringement of their work amounts to racketeering – a charge typically associated with organised crime.
This year, Shein has opened its platform to more third-party sellers as an online marketplace, expanding into lifestyle product categories, a move that will increase its competition with the likes of Temu and ByteDance’s TikTok Shop.
Source: SCMP
