Temu says Shein used mafia-style intimidation tactics to get suppliers to work exclusively for Shein
Shein and Temu are in a battle to conquer the US fast-fashion world, and the war has—once again—reached the courts. Over the last year, the Asian e-commerce giants sued and countersued each other, until they decided to drop the lawsuits in October. But on Dec. 13, Temu filed a new lawsuit, saying Shein has “intensified” anticompetitive practices.
Temu has accused Shein of “mafia-style intimidation of suppliers,” alleging it detained merchant representatives in Shein’s offices for hours, seized their devices, compelled them to give up passwords and transaction records with Temu, threatened penalties for doing business with Temu, and coerced them into pledging allegiance to Shein alone.
As Nikkei reported, Shein “believe[s] this lawsuit is without merit, and we will vigorously defend ourselves.”
Temu’s revival of the litigation tug-of-war and accusations of strong-arming suppliers come at a crucial juncture, with Temu—at least at the moment—appearing to have the upper hand, while Shein is preparing for an IPO.
The two Chinese-origin brands have already left behind other competitors like H&M, Fashion Nova, Forever 21, and Zara in amassing revenue and market share. Brands big and small from Jane.com to Etsy to Gap $GPS have blamed both Shein and Temu for upsetting the retail world order in the US.
$30 billion: How much Shein’s valuation—over $100 billion in early 2022—fell following the US entry of Temu. It’s last valuation was $66 billion.“[So] Shein hatched a desperate plan to eliminate the competitive threat posed by Temu,” the new lawsuit alleges.
61 million: Customers Temu had in the US in September 2023, a year after its launch. It’s swiftly playing catch-up with Shein.
3 times: Temu’s US sales in November versus Shein’s
18 minutes: Time users are spending daily on the Temu app, versus 10 minutes for Amazon $AMZN and 11 for Alibaba-owned Ali Express
100: Pages in Temu’s newest complaint—nearly triple the length of its original lawsuit
63%: Share of takedown notices that Temu says it received that were from Shein between January and October 2023. The remaining came from 2,200 different copyright holders combined.
“Shein and Temu are not just retailers. They are pioneering tech-enabled platforms that are changing the very nature of business. In the old days, a brand like General Motors $GM leveraged its marketing and distribution power by buying up manufacturers. A brand like McDonald’s used franchising to achieve the same goal. Shein and Temu rely on IT to do the job.”
—John Deighton, Harold M. Brierley professor of business administration emeritus at Harvard Business School.
2017: Shein enters the US, advertising on daytime television, partnering with influencers in retail hauls, and building a robust brand on TikTok.
September 2022: Temu launches in the US.
December 2022: Shein drags Temu to US federal court, accusing it of contracting social-media influencers to make disparaging remarks about Shein in their promotions, and impersonating the Shein brand online. This is the first legal battle between the two.
April 14, 2023: The US-China Economic and Security Review Commission explicitly calls out Shein and Temu in a brief warning against Chinese fast fashion platforms, citing “exploitation of trade loopholes; concerns about production processes, sourcing relationships, product safety, and use of forced labor; and violations of intellectual property rights.”
July 14, 2023: Temu sues Shein over “unlawful exclusionary tactics,” accusing it of binding manufacturers in exclusive contracts, and even levying fines for working with its rival.
Nov. 28, 2023: Shein confidentially files paperwork to kickstart its initial public offering (IPO) process in the US.
Nov. 30, 2023: Temu parent company PDD—also the owner of Chinese e-tailing giant Pinduoduo—sees its e-commerce market valuation surpass long-time leader Alibaba’s
$3.65 billion: That’s the operating loss Temu might see this year despite clocking global sales upwards of $13 billion, according to analysts at Sanford C. Bernstein. Its dirt-cheap prices and free shipping without spending minimums are enticing for customers but not helpful to the bottom line.
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