Shein sued by rival Temu for alleged ‘mafia-style intimidation’

A package from Temu. (Photo by Nikos Pekiaridis/NurPhoto via AP)

A package from Temu. (Photo by Nikos Pekiaridis/NurPhoto via AP)Nikos Pekiaridis/NurPhoto/APCNN — 

Fast-fashion retailer Shein has been hit with a lawsuit by rival Temu, alleging the company has used aggressive and unlawful tactics to thwart competition — adding another layer to the hostilities between the two Chinese-owned e-commerce sites as they fight to dominate the bargain shopping market in the US.

The lawsuit, filed Wednesday in the US District Court of the District of Columbia by Temu’s US-based parent company, WhaleCo, alleges that Shein has engaged in “mafia-style intimidation” tactics against Temu and its suppliers. Temu alleges that Shein employees have even gone so far as to falsely imprison merchants who do business with Temu in Shein’s offices for “many hours.”

Shein, which sells clothing and other lifestyle goods, allegedly engaged in the “subversion of the US legal process to disrupt Temu’s operations and damage Temu’s valuable brand,” including by illegally claiming copyright registrations for products sold on Temu’s website, according to the lawsuit.

In a statement to CNN, a Shein representative said, “We believe this lawsuit is without merit and we will vigorously defend ourselves.”

The lawsuit comes just weeks after Shein filed for a US IPO, according to reports from Reuters.

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Both Temu and Shein are Chinese-owned e-commerce companies specializing in low-cost and discount goods — mostly shipped from China. Temu’s WhaleCo is owned by China-based PDD, which also owns the hugely popular Chinese e-commerce giant Pinduoduo. Both are relatively new entrants in the US market: Shein expanded its American presence in 2019, while Temu launched in the US in September 2022.

The lawsuit comes amid an already-contentious legal fight between the two retailers. Temu filed another lawsuit against Shein in Massachusetts federal court in July, accusing its rival of violating antitrust laws. That lawsuit followed a complaint by Shein, which sued Temu in December for allegedly mobilizing social media influencers to disparage Shein online.

In a statement to CNN on the latest lawsuit, a Temu spokesperson said: “Their actions were too exaggerated, we had no choice but to sue them.”

Wednesday’s filing alleges that Shein has ratcheted up its intimidation tactics in the months leading up to Temu’s Super Bowl LVIII advertising campaign set to launch in February 2024 because the campaign is “bound to increase traffic to Temu’s app and website.”

– CNN’s Michelle Toh contributed to reporting.

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