Shein accused of 'mafia-style' tactics by rival Temu


Temu, a popular low-cost online marketplace with ties to China, accused rival Shein of using “mafia-style” methods to curb competition in a demand unveiled Wednesday, the latest salvo in a heated turf war between two of the fastest-growing fashion retailers in the United States.

In the filing, Whaleco, which operates in the United States as Temu, accused Shein of orchestrating a “multifaceted plan” to slow its growth. He added that Shein had been trying to impede its growth by intimidating merchants and instigating baseless copyright infringement lawsuits.

“Shein suffocates fast fashion suppliers with exclusivity requirements and mafia-style intimidation and detention tactics against suppliers who dare to sell to Temu, including false imprisonment” by detaining supplier representatives in their office for hours and the “seizure of mobile phones”. During meetings, Shein uses false pretenses,” the lawsuit says. He goes on to claim that Shein then “forces” suppliers to sign exclusive agreements with them.

The lawsuit also claims that Shein has instigated baseless copyright infringement claims against Temu, and describes Shein as having “monopoly power in the United States ultra-fast fashion market.”

“We believe this lawsuit is baseless and we will vigorously defend ourselves,” a Shein spokeswoman said in an emailed statement.

The lawsuit is the latest challenge for Shein, which confidentially filed a lawsuit in November initial public offering in the U.S.

In recent years, Shein has gained a following among teens and young adults drawn to its affordable, high-end merchandise, such as $10 dresses and $3 packs of false eyelashes. It uses sophisticated technology and production models that allow you to quickly introduce new items to shoppers, keeping them coming back to your website and app.

Last year, it gained a formidable competitor with Temu, which is a subsidiary of PDD Holdings in China that sells electric milk frothers for $2.87 and women's tank tops for $3.99. Temu made waves among consumers after running multiple ads during this year's Super Bowl, one of the most expensive slots for advertisers. On TikTok, shoppers regularly post videos of their purchases with the hashtag #temuhauls.

In the lawsuit, Temu noted that Shein's reported valuation had fallen and said Shein was trying to crush the competition in response.

“Shein's conduct directed at Temu is part of a broader pattern of behavior by Shein to subvert and abuse the American legal system,” the lawsuit says.

Shein has been facing intense scrutiny from lawmakers in Washington regarding its business practices. She has faced questions from lawmakers about her supply chain since reports linked the company's cotton to Xinjiang, a region of China where U.S. officials say the government has exploited the labor of ethnic Uyghurs.

It has also been accused of stealing intellectual property from independent designers, and a growing number of lawmakers, lobbyists and other retailers say Shein unfairly benefits from de minimisa US trade provision that allows companies to avoid paying customs fees when shipping low-cost products to consumers in the United States.

As Temu becomes more prominent, he begins to face some of the same criticism. In June, legislators accused the platform of providing an uncontrolled channel that allows products made with forced labor to flow into the United States. Critics also say its use of de minimis is unfair to American retailers.

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