WASHINGTON: Temu, a Chinese-owned online retailer, has filed a lawsuit against its rival Shein in the United States, alleging that Shein has used “mafia-style” intimidation tactics to maintain dominance in the US market.
The lawsuit, filed in a federal court in Washington DC, accuses Shein of threatening merchants against conducting business with Temu, as well as other allegations.
The lawsuit states, “While each component of Shein’s conduct is unlawful in its own right, taken together they form an anticompetitive scheme and abuse of power.”
The legal action from a fellow Chinese-founded company comes as Shein is preparing for a US-based IPO in the coming year.
Shein, which is officially based in Singapore, is known for offering large volumes of clothing stock at very low prices in various countries around the world.
Both companies have gained significant traction in the United States and are considered to be upstart competitors to Amazon.
Earlier this year, Shein was valued at US$66 billion and purportedly generated US$23 billion in revenue and US$800 million in net profit in 2022. The company has informed investors that it has achieved new records in 2023.
The two companies have previously filed lawsuits against each other in the US, but these were settled before going to trial earlier this year.
Founded in 2008 in China, Shein has rapidly captured the global fast fashion market by exclusively selling its products online and targeting young customers through social media.
The company has faced criticism for allegedly exploiting unpaid labor, obscuring production processes, and promoting overconsumption, leading to backlash from environmental and human rights activists.
Temu has held the top spot in US app download rankings on multiple occasions this year and is positioned as a large online retailer, similar to Amazon, offering a range of products from cosmetics to home goods and electronics.
Its soft launch last year marked the entry of Chinese ecommerce giant Pinduoduo into the US market. – AFP
