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The backstory: In the landscape of Chinese e-commerce, online retail giants Shein and Temu have been turning heads. Shein, making its debut in the US market in 2017, swiftly drew attention for its budget-friendly and trendy fashion. Recent reports also say that Shein has confidentially filed for an initial public offering (IPO) with US regulators. If the IPO happens, it could mark Shein's first appearance in the public stock market next year.
On the other hand, Temu, making waves in the US since last year, quickly climbed the ranks on Apple's US App Store. Temu's US parent company, WhaleCo, is owned by China-based PDD, the same entity behind the popular Chinese e-commerce giant Pinduoduo. Like Shein, Temu caters to budget-conscious shoppers looking for on-trend fashion. In January, Temu's website visits surpassed Shein's, with gross sales leaping from US$3 million in September to US$192 million in January, according to data firm YipitData.
More recently: Last December, Shein filed a lawsuit against Temu, saying it copied trademarks and violated copyright laws, also accusing Temu of using social media influencers to harm Shein’s online reputation. Then, Temu fired back in July, alleging Shein violated antitrust laws. But then in October, both companies decided to drop the lawsuits they had against each other.
The development: Last Wednesday, Temu’s parent WhaleCo filed a new lawsuit against Shein in the US, saying that it used aggressive tactics to stifle competition. The allegations included "mafia-style intimidation" against Temu and its suppliers, with Shein employees even accused of falsely imprisoning Temu's collaborating merchants in Shein offices for “many hours.” The filing also suggests that Shein stepped up its intimidation tactics, especially leading up to Temu's Super Bowl LVIII advertising campaign coming in February 2024, which is expected to bring a surge in traffic to Temu's app and website. Temu, through a spokesperson, said legal action became necessary due to Shein's “exaggerated” actions. In response, Shein told CNN that the company believed the lawsuit lacked merit and it would vigorously defend itself.
“We believe this lawsuit is without merit and we will vigorously defend ourselves,” said a Shein representative to CNN.
“Their actions were too exaggerated; we had no choice but to sue them,” said a Temu representative to CNN.
“Given the current challenging macroeconomic environment and the backing of parent PDD Holdings, Temu is well-positioned to continue its aggressive growth strategy among US consumers,” said Abe Yousef, a senior analyst at app-tracker Sensor Tower.
"As it is a significant and highly disruptive player in the retail space, Shein will attract a lot of investor interest," said GlobalData managing director Neil Saunders.