Shein, a Chinese purveyors of desperately cheap goods, has raised lurid claims its rival Temu in a new lawsuit.

The two Chinese companies 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 outfit 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 felt 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 fellow fast fashion e-tailer 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 companies;
• Creating a purposely confusing corporate structure; impersonating Shein on Twitter/X;
• 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 more egregiously, not even trying to hide it.

Shein said it was filing the complaint at a time when Temu seeks “to infiltrate the US.” Temu’s presence in the USA, which it does as the international subsidiary of Nasdaq-listed PDD holdings and sister site of Chinese e-commerce platform Pinduoduo, appears to be a trigger for Shein.

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

Like any good example late-stage capitalism gone horribly awry, the feud between Temu and Shein has simmered for years, with one or the other slinging 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, China's Ministry of Commerce issued a policy calling for massive expansion of the nation's 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 is quiet, however, on regulating the likes of Temu and Shein.

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

But Beijing is not at all concerned about offshore users’ data, another matter of concern for the critics of these fast fashion platforms. ®

https://www.theregister.com//2024/08/21/shein_temu_lawsuit/