Chinese fast-fashion competitors Temu and Shein are headed to U.S. courts over Temu alleging Shein had engaged in “unlawful exclusionary tactics”.
The antitrust suit was filed by Temu in Boston federal court charging the clothes-making giant of compelling its Chinese factories to stop Temu’s manufacturing to allow its reign to continue in the U.S.
“Shein’s escalating attacks leave us no choice but to take legal measures to defend our rights,” Temu said, in a statement this week.
Within the allegations, Temu said Shein has “engaged in an elaborate and anti-competitive scheme aimed at stymieing Temu’s business” and that the “U.S. market is the primary theatre of this war.”
Additionally, Temu’s lawyers have accused Shein of attempting to maintain its vast hold of 75% of the U.S. “ultra-fast fashion” market by forcing its “8,338 independent apparel manufacturers located in China” into exclusive relationships.
According to Temu, Shein’s underhanded strategy has prevented U.S. shoppers to have “access to direct price competition” and blocked Temu’s ultra-fast fashion sales by 300% to 400%.
Because of their bargain basement prices, both Chinese clothing companies have risen to the top of app download charts, but Temu, which was launched by Chinese e-commerce company Pinduoduo last year, is new on the clothing scene.
In the Australian market, however, Temu has been attempting to take on Amazon and Kogan and around the globe, is fighting a battle in both the U.S. and China.
Founded over ten years ago in the eastern Chinese city of Nanjing, the success of Shein has also spawned an array of competitors like Temu.
Through its wildly popular app, Shein forged the path of selling price-slashed, fast-fashion designs to millennials in the U.S. and Europe and cornered the market raking in an estimated $30 billion in sales in 2022, according to the complaint.
The sales figures are bigger sales numbers that not even H&M and Gap could boast but this year, however, Shein went from a $100 billion valuation to about $64 billion earlier due to the tech downturn.
The incredible revenue generated from $15 sweaters is undeniable but how are these clothing manufacturers able to slash prices to this level?
Back in June 2022, a video went viral on social media claiming that Shein employees were hiding messages like “need your help” written within the care instructions in the clothes they produced.
A claim Shein denied within the company’s own TikTok video stating it has a “strict code of conduct for supplies, which forbids them to use forced labour.”
The claim has led U.S. Congress increase the pressure put on Shien to task the U.S. Securities and Exchange Commission requiring Shein to certify its products are made in China but do not utilize Uyghur forced labor.
As for the current federal U.S. case Temu launched, the company made it clear how intertwined their business and Shein’s ties to China despite Temu’s claims being ” founded in Boston, Massachusetts in 2022″ and Shein’s reincorporation in Singapore last year.
For the clashing companies, this case represents their second case with another Chicago federal court case that they are duking out over Shein’s claims that Temu had influencers criticise Shein on social media and also imitated its brand in an attempt to “trick consumers” into downloading its app.
Whatever the decision is in the courts, it appears that Shein and Temu will remain rivals for the foreseeable future.
