Temu Accuses Rival Shein of Using “Mafia-Style” Tactics in Lawsuit
The fashion industry is no stranger to fierce competition, and the battle between two ultrafast-fashion retailers, Temu and Shein, is heating up. Both companies, with roots in China, offer low-cost items to U.S. consumers. However, Temu has recently filed a lawsuit accusing Shein of using “mafia-style” methods to stifle its growth.
Allegations of Intimidation and Copyright Infringement
In the lawsuit filed by Temu, the company claims that Shein has orchestrated a “multifaceted scheme” to impede its growth. It alleges that Shein intimidates merchants and initiates unfounded copyright infringement lawsuits. The lawsuit goes on to describe instances of “mafia-style intimidation and detention scare tactics,” including false imprisonment and seizure of cellphones during meetings. Temu asserts that Shein then coerces suppliers to sign exclusive deals with them.
The suit also highlights Shein’s alleged monopoly power in the U.S. ultrafast fashion market and accuses the company of instigating unfounded copyright infringement lawsuits against Temu.
Shein’s Response and IPO Plans
A Shein spokeswoman responded to the lawsuit, stating that they believe it is without merit and that they will vigorously defend themselves. This legal challenge comes at a crucial time for Shein, as the company recently filed confidentially for an initial public offering in the United States.
Shein and Temu: Competing in the Ultrafast-Fashion Market
Shein has gained popularity among teenagers and young adults in recent years due to its wide range of inexpensive merchandise. The company’s use of sophisticated technology and production models allows it to quickly introduce new items to shoppers, keeping them engaged with its website and app.
Temu, a subsidiary of PDD Holdings in China, emerged as a formidable competitor to Shein last year. Known for its low-cost products like electric milk frothers and women’s tank tops, Temu made a splash among consumers after running multiple ads during the Super Bowl. Shoppers regularly share their Temu purchases on TikTok using the hashtag #temuhauls.
Temu’s Lawsuit as a Response to Shein’s Falling Valuation
In the lawsuit, Temu suggests that Shein’s reported valuation has fallen, and the company is attempting to suppress competition as a result. It claims that Shein’s conduct towards Temu is part of a larger pattern of behavior aimed at subverting and abusing the U.S. legal system.
Scrutiny and Controversy Surrounding Shein
Shein has faced intense scrutiny from legislators in Washington regarding its business practices. Lawmakers have raised concerns about the company’s supply chain, particularly its connection to cotton from Xinjiang, a region in China where forced labor of ethnic Uyghurs has been reported.
The company has also been accused of stealing independent designers’ intellectual property. Additionally, lawmakers, lobbyists, and other retailers argue that Shein unfairly benefits from a U.S. trade provision called de minimis, which allows companies to avoid paying customs fees when shipping low-cost products to U.S. consumers.
As Temu gains prominence, it is starting to face similar criticisms. Lawmakers have accused the platform of facilitating the flow of goods made with forced labor into the United States. Critics also argue that Temu’s use of de minimis puts American retailers at a disadvantage.
Despite the legal challenges and controversies, the competition between Shein and Temu continues to shape the ultrafast-fashion market in the United States.
