Shein, Temu escalate epic e-commerce squabble

Shein, a well-known purveyor of desperately cheap goods, has raised lurid claims against its rival Temu in a lawsuit.

The two Chinese outfits both focus on fashion items, which they sell at astoundingly low prices – think $5 for a top that might survive two washes – and promote with near-constant blitzes of online advertising. Neither is renowned for product quality, but both are infamous for offering goods that use suspiciously similar designs to those offered by big brands. It’s widely believed many of the products sold by both platforms are made by workers who face dire conditions – or are even subjected to forced labor.

In a lawsuit [PDF] filed on Monday, Nanjing-founded but now Singapore-headquartered Shein expressed its desire to hold Temu “accountable for an unlawful enterprise built on counterfeiting, theft of trade secrets, infringement of intellectual property rights, and fraud.”

The complaint accuses Temu of “masquerading” as an e-commerce marketplace, encouraging IP theft, bullying vendors who use the platform, and turning a blind eye to human rights abuses.

In the filing, Shein cast itself as an “immensely valuable” brand and retail business that offers “highly sought-after clothing, accessories and homewares” internationally, and whose success was “achieved by designing products that consumers love and can afford.”

In its 80-page filing, Shein also alleged Temu:

• Misused Shein’s trademark and even tricked internet users searching for Shein into clicking on Temu;
• Paying influencers to spout false claims about the quality and price of products from both e-tailers;
• Creating a deliberately confusing corporate structure;
• Impersonating Shein on Twitter/X;
• Unlawfully using Shein’s proprietary data sets and obscuring its seller payments processes;
• Lifting photos from the Shein website – and not even trying to hide it.

Shein claimed it was filing the complaint at a time when Temu seeks “to infiltrate the US.” Temu’s presence in the States – which it operates as the international subsidiary of Nasdaq-listed PDD holdings and sister site of Chinese e-commerce platform Pinduoduo – appears to be a raw nerve for Shein.

“Through these unfair competition practices, Temu has, within two years of its launch, secured an unearned and illicit foothold in the US market,” claimed Shein in its Monday filing. The complaint alleges that Temu is subsidizing its own US presence – losing 30 to 50 percent of the value on every order placed.

Shein also has its critics. The outfit aspired to list on the New York Stock Exchange, but faced resistance as investors and authorities pondered risks such as uncomfortably close ties to Beijing, the aforementioned forced labor allegations, systematic AI-powered IP theft [PDF] and interesting tax affairs.

In a statement sent to The Register, a spokesperson at Temu, said: “The audacity is unbelievable. SHEIN, buried under its own mountain of IP lawsuits, has the nerve to fabricate accusations against others for the very misconduct they’re repeatedly sued for.”

Like any good example of late-stage capitalism gone horribly awry, the feud between Temu and Shein has simmered for years. One or the other periodically slings accusations that allege manipulation of influencers, intimidation campaigns, copyright infringement, unfair exclusivity agreements for sellers, and interference with suppliers.

Shein has even reportedly held some of its merchants captive and forced them to provide phone passwords and transaction records.

As one e-commerce lawyer put it, the newest lawsuit resembles a “Spider-Man meme complaint if there ever was one.”

The financial successes of its e-commerce giants has caught Beijing’s eye. In June, the nation’s Ministry of Commerce issued a policy calling for massive expansion of its cross-border e-commerce industry while state-sponsored media has celebrated the “seamless sales overseas” of Shein and Temu.

Temu’s founder was recently named the richest man in China.

Beijing has been reticent, however, on the matter of regulating the likes of Temu and Shein.

At the start of the year, The Cyberspace Administration of China did review Shein’s cyber security and data practices. According to media reports, the government was particularly interested in the type of Chinese data that would need to be disclosed for that now-abandoned US IPO.