e-Commerce player Temu files lawsuit against Shein

Temu, the low-cost international e-commerce platform operated by PDD Holdings, has initiated a new legal battle against its rival, Shein, by filing a lawsuit in a US District of Columbia court. 

The complaint alleges that Shein engaged in "Mafia-style intimidation" tactics to pressure suppliers shared with Temu. Specifically, Temu, operating as Boston-based WhaleCo Inc in the US, claims that Shein abused intellectual property laws to hinder merchants and suppliers collaborating with Temu.

According to the filing, Shein is accused of "falsely imprisoning" vendors associated with Temu. This allegedly involved detaining merchant representatives within Shein's offices for extended periods, seizing their electronic devices, and making threats of penalties for conducting business with Temu. Shein has not yet responded to the lawsuit as of Thursday.

Both Temu and Shein, originating from China, have experienced significant growth in the US market amid rising inflation and cost-of-living pressures. 

Temu offers low-cost products such as $3 earphones, while Shein is known for its $5 T-shirts. The majority of suppliers for both platforms are based in China.

A spokesperson for Temu confirmed that the alleged misconduct primarily involved Chinese vendors. 

The spokesperson said, "We sued Shein because recently their actions have escalated," citing illegal detainment of merchants, theft of merchant accounts and passwords, and coercion of merchants to leave Temu's platform.

The lawsuit also asserts that Shein poached key marketing and advertising personnel from Temu, without specifying their location. This legal clash follows previous disputes between the two companies, with both sides withdrawing lawsuits filed in October without explanation.

Notably, Shein had previously sued Temu in the US, alleging that Temu instructed social media influencers to make negative comments about Shein and deceived customers into downloading the Temu app through "imposter" social media accounts. 

In July, Temu filed its own lawsuit in Boston federal court, accusing Shein of violating US antitrust laws in its dealings with clothing manufacturers.

Shein has confidentially filed for a public listing in New York, potentially valuing the company at $90 billion. This move has reignited scrutiny of Shein's business practices and supply chain.

(With Reuters Inputs)