War of the cheap online retailers
Newcomer Temu drags Shein to court for “mafia methods.”
December 15, 2023, 12:10 p.m
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The market for items at bargain prices is competitive. Both the low-cost online retailer Temu and the fast fashion competitor Shein have only recently been operating in the USA. Now Temu is taking Shein to court. The allegations are serious. There is talk of “mafia intimidation tactics”.
In the USA, the two Chinese cheap online retailers Temu and Shein are fighting bitterly for dominance in the bargain market – allegedly also using unfair means. Their competition is now ending up in a US court. Trading app Temu accuses its fast-fashion competitor Shein of using “mafia-like intimidation tactics” to gain a competitive advantage, financial portal Bloomberg reports. In a 100-page paper, Temu accuses Shein of hatching a “desperate plan” to slow Temu’s growth.
“Shein puts pressure on fashion suppliers with exclusivity requirements and mafia-like intimidation and stalling tactics against suppliers who dare to sell to Temu,” the indictment says. The company is also said to have filed tens of thousands of copyright warnings against Temu and threatened Temu dealers. Temu claims that Shein employees have even gone so far as to unfairly lock up traders who do business with Temu in Shein offices for “many hours.”
“Temu has determined that Shein’s anti-competitive behavior not only continues, but has actually intensified,” Bloomberg further quotes from the indictment. A Temu representative said the latest move was a result of Shein’s escalating anti-competitive behavior. “We had no choice but to sue them,” a spokesman said. Shein said in a statement that the company believes the lawsuit is without merit and that the company will vigorously defend itself against it.
In addition to violating copyrights and bullying suppliers, Temu accuses in his Shein also accuses Shein of trying to clear its “tarnished reputation” by moving its headquarters to Singapore, even though most of its operations and employees remain in China.
Shein wants to go public
Both Temu and Shein are Chinese-owned e-commerce companies that specialize in low-cost and discount goods. Both are relatively new entrants to the US: Shein expanded its American presence in 2019, while Temu launched in the US in September 2022.
It was recently announced that Shein had confidentially filed an application for an IPO in the USA. It could be one of the largest IPOs in recent years. Goldman Sachs, JPMorgan Chase and Morgan Stanley have been hired as underwriters for the venture, which could take place in 2024, several people familiar with the matter said. Shein was valued at around $66 billion in a funding round in May and will likely seek an even higher valuation in an IPO. A year before the last financing round, Shein was valued at $100 billion.