In the bustling US bargain market, Temu, a low-cost online retailer, is locked in a fierce rivalry with Shein, another Chinese competitor, raising allegations of "mafia-like" tactics. This high-stakes competition has landed them in court. According to Bloomberg, Temu alleges that Shein employs intimidation and manipulation strategies to stifle Temu's growth.
Temu's accusations against Shein include forcing exclusive deals upon fashion suppliers and using intimidation techniques against those willing to sell to Temu. The lawsuit further claims that Shein has filed countless copyright takedown notices against Temu and threatened Temu merchants, even imprisoning some for extended periods in Shein offices.
Emphasizing the severity of the situation, Temu states that Shein's tactics have not only continued but intensified, leading to the lawsuit. Temu spokesperson cites escalating anti-competitive behavior as the reason for taking legal action. Shein, on the other hand, denies these accusations, expressing confidence that the lawsuit lacks merit and vowing to defend themselves vigorously.
Amidst these allegations, Shein is eyeing the US market, filing for an IPO guessing confidentially. With heavyweights like Goldman Sachs, JPMorgan Chase, and Morgan Stanley as lead managers, Shein aims for a record-breaking IPO in 2024. With a valuation of USD 66 billion in their last funding round, Shein seeks a higher valuation in the IPO.
Both Temu and Shein are newcomers to the US market, with Shein expanding in 2019 and Temu launching in September 2022. The intense rivalry and legal battles may shape the future of the US's bargain market and the reputation of these e-commerce giants.
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Temu's lawsuit against Shein is not just limited to the US. It also involves legal disputes in the UK's High Court. Temu alleges that Shein breached British competition law by compelling fast-fashion suppliers to exclusive deals. This practice, Temu claims, is part of a broader campaign of “mafia-style intimidation.”
The UK legal dispute involves a counterclaim by Temu for 4.2 million pounds ($5.5 million), accusing Shein of engaging in illegal activities. This claim highlights the complex and evolving nature of the legal battle between Temu and Shein.
The evidence unveils Shein's practice of restricting apparel manufacturers from collaborating with Temu through exclusive agreements. This violation of market competition laws, if proven, could tarnish Shein's reputation and undermine their IPO prospects.
Shein, however, continues to deny these allegations and seeks to clear its name in the ongoing trials. The ongoing litigation points to the intensifying rivalry between Temu and Shein, with both sides not giving an inch in their legal battles.
The complex legal landscape and the breach of competition laws will not only shape the future of both companies but also set a precedent for other online retailers in the bargain market.
