Temu Hits Shein with New Lawsuit, Reviving Legal Battle

Online fast-fashion retailer Temu has hit rival Shein with a new lawsuit in the US alleging the Chinese-owned Singapore-based company of using what it described as ‘intensified’ anti-competitive practices.

A filing to the US District Court for the District of Columbia stated that Whaleco Inc., operating as Temu in the country, claimed Shein has infringed on its intellectual property rights to prevent merchants and suppliers from conducting business with Temu and limit its growth.

The PDD Holdings Inc.-backed online discount store said the complaint was necessary as it allegedly saw its rival’s anti-competitive behavior not only continue but grow more severe.

In the suit, Temu accused Shein of intimidating its suppliers ‘mafia-style’ by illegally detaining merchant representatives for hours, taking away their electronic devices, and threatening penalties for working with the Boston-based shopping app.

In addition, Shein purportedly stole Temu’s key marketing and advertising staff, offering no details about their location.

Shein has yet to comment on the matter.

The latest lawsuit restarts a legal battle between Temu and Shein after withdrawing their previous complaints against each other in October over copyright and antitrust issues.

Temu’s Growth Possibly Led to Shein’s Alleged Malpractice

The new suit came as Temu gained a more significant lead against Shein in US transactions since beating it in May.

Data from a California-based transaction data analytics provider showed that that gap has expanded each month since, increasing threefold compared to Shein’s sales in November.

The two fast-fashion apps are engaged in intense competition in the online discount shopping space.

The China-founded shopping platforms have observed significant growth in the US market in recent years as inflation and cost-of-living challenges prompted consumers to turn to affordable e-commerce products, such as a $5 shirt from Shein and $3 earphones from Temu.

Temu specializes in selling China-made products, from fashion to household items, at low costs and aims for consumers overseas. Shein likewise hires the help of contracted producers, largely in China, to design, create, and deliver its budget products.

The two retailers’ suppliers are mainly based in the country, with a spokesperson for Temu saying the alleged violation involved Chinese vendors.

While Temu has a different business model from Shein’s fashion-oriented resale strategy, Shein has considered Temu as its main competitor, according to the filing.

Such a view purportedly made Temu a target of unlawful practice aimed at hindering its success.