Newcomer Temu drags Shein to court for "mafia methods"
The market for items at bargain prices is highly competitive. Both the low-cost online retailer Temu and its fast-fashion competitor Shein have only recently started operating in the USA. Temu is now taking Shein to court. The accusations are serious. There is talk of "mafia-like intimidation tactics".
In the USA, the two Chinese low-cost online retailers Temu and Shein are fighting fiercely for supremacy on the bargain market - allegedly also using unfair means. Their competition has now ended up before a US court. The retail app Temu is accusing its fast-fashion competitor Shein of using "mafia-style intimidation tactics" to gain a competitive advantage, according to the financial portal Bloomberg.Temu accuses Shein in a 100-page paper of having devised a "desperate plan" to slow down Temu's growth.
"Shein pressures fashion suppliers with exclusivity requirements and mafia-style intimidation and stalling tactics against suppliers who dare to sell to Temu," the indictment states. The company is also alleged to have filed tens of thousands of copyright takedown notices against Temu and threatened Temu merchants. Temu alleges that Shein employees even went so far as to wrongfully imprison merchants doing business with Temu for "many hours" in Shein offices.
"Temu has found that Shein's anti-competitive behavior not only continues, but has 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 spokesperson said. Shein said in a statement that it believes the lawsuit is without merit and that the company will vigorously defend itself against it.
In addition to copyright infringement and bullying of suppliers, Temu's lawsuit also accuses Shein of trying to "cleanse its tarnished reputation" by moving its headquarters to Singapore, even though most of its business activities and employees remain in China.
Shein wants to go public
Both Temu and Shein are Chinese-owned e-commerce companies specializing in low-cost and discount goods. Both are relatively new entrants to the US market: Shein expanded its American presence in 2019, while Temu launched in the US in September 2022.
It was recently announced that Shein has filed for an IPO in the USA, probably confidentially. It could be one of the largest IPOs in recent years. According to several people familiar with the matter, Goldman Sachs, JPMorgan Chase and Morgan Stanley have been engaged as lead managers for the project, which could take place in 2024. Shein was valued at around USD 66 billion in a funding round in May and is likely to seek an even higher valuation in an IPO. A year before the last financing round, Shein was valued at 100 billion dollars.
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In the intensifying competition between the two Chinese low-cost online retailers Shein and Temu in the USA, Temu has accused Shein of employing "mafia-style intimidation tactics" against suppliers who sell to Temu, allegedly stalling their business and even imprisoning some for extended periods in Shein offices. Amidst this legal battle, it was also announced that Shein has confidentially filed for an IPO in the USA, aiming to potentially raise billions of dollars.
Source: www.ntv.de
