Temu vs Shein| Chinese e-retailers butt heads in U.S. court

Fast-fashion retailer Temu, owned by Chinese e-commerce giant PDD Holdings Inc, has sued its rival Shein in the U.S., alleging the latter violated antitrust laws by bullying clothing suppliers.

The low-cost e-commerce startup Temu alleged that Shein engages in at least four strategies to stifle competition, including levying fines and penalties on suppliers that work with Temu and forcing suppliers to sign “loyalty oaths.”

Upon hearing Temu's complaint, Shein’s spokesperson responded on Monday that it was "without merit and we will vigorously defend ourselves."

The case came after Shein alleged Temu last year in Chicago federal court, where Temu was accused of working with influencers to disparage Shein on social media. Temu's bid to dismiss that case is still underway.

As two of the leading forces in online retail, Shein and Temu are posing growing threats to the likes of H&M and Zara. The lawsuit puts a spotlight on the fierce feud between the emerging retailers, and also a rare glimpse of the business models of the two.

Shein, founded in China, markets apparel for low prices, including shoes sold for less than $20 and dresses priced at $10. The company produces clothing in China that is sold online in the U.S., Europe, and Asia. The e-retailer, grabbing more than three-quarters of the U.S. fast-fashion market, has been repeatedly reported to file an IPO in U.S. these years and the company denied it every time.

The startup Temu, which was hardly known to Americans a year ago, now has overtaken Shein with 20% more spending on the bargain shopping app, according to Bloomberg Second Measure. Temu was also the most popular iOS app in America on the majority of days in 2023. Additionally, according to Apptopia data, it garnered more global iOS downloads than any other shopping app in the six months following its debut.$PDD(PDD)