Shein’s ‘War’ Against Temu Reaches London High Court
Shein and Temu’s battlefield just got bigger.
The Telegraph reported Sunday that Shein has filed a lawsuit in the United Kingdom accusing its e-tail nemesis of copying thousands of images from its website.
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According to papers filed in London’s High Court in August, Shein said it has “identified thousands of instances” where Temu’s sellers allegedly ripped pictures from Shein’s platform to market and sell their own products, creating unfair competition.
The Singapore-headquartered company is seeking an injunction to keep Temu’s sellers from copying its listings, as well as demanding that its Boston-based rival delete all allegedly offending posts. It’s also asking the comparative upstart, which arrived on the scene only a year ago, for at least 100,000 pounds ($125,000) in damages.
Shein declined to comment further due to pending litigation, and Temu did not respond to a request for comment.
The lawsuit echoes a complaint filed in the U.S. District Court of Illinois in December by Roadget Business, the company that owns the Shein trademarks and global website, to charge Whaleco, the legal entity that operates Temu in the United States, of trademark and copyright theft, impersonation of the Shein brand and the use of social media influencers to make “false and deceptive statements.” In June, the ultra-fast-fashion phenom extended its complaint to Twitter, now known as X, which it said failed to comply with a subpoena demanding the release of undeleted data related to the so-called “fraudulent” accounts, including IP addresses and device settings that could identify the perpetrators responsible.
Temu hit back in July with a lawsuit of its own, accusing Shein of anticompetitive conduct through the use of threats, intimidation and false claims of infringement to “coerce” clothing manufacturers in China, on which they both depend, into exclusive agreements that prevent them from working with anyone else—that anyone being Temu, since the “Shop Like a Billionaire” platform said it wasn’t aware of Shein enforcing this with other companies that offered similar products.
“As a result, Shein now views itself as being ‘at war’ with Temu and has engaged in an elaborate and anticompetitive scheme aimed at stymieing Temu’s business,” Whaleco said in the complaint. “The U.S. market is the primary theater of this war.” It added that 10,000 product listings have been pulled from Temu since October 2022 “because of Shein’s scheme” and that some manufacturers have asked Temu to remove all of their products from its site in order to “appease” Shein.
That Shein and Temu should ruffle each other’s feathers isn’t surprising considering the similarity of their business proposition: impossibly cheap products, shipped directly from China, that provide succor to novelty-seeking Western consumers wrung out by stubborn inflation. The two are respectively the No. 2 and No. 1 most downloaded shopping apps in both the United States and the United Kingdom, handily beating former top-spot incumbent Amazon, which has fallen to No. 4 in the United States and No. 6 in the United Kingdom, according to Similarweb, a data analytics firm.
Owned by PDD Holdings, which also operates e-commerce juggernaut Pinduoduo in China, with a market capitalization of more than $100 billion, Temu relies solely on third-party merchants. Shein, which has manufactured clothing under its own label since 2016, recently expanded into the full-category space by adding a similar marketplace model, allowing it to hawk everything from electronics to kitchenware in addition to tank tops and bodycon dresses. The IPO aspirant, which is valued at some $64 billion, is also making a play for brick-and-mortar with a stake in Sparc Group, a joint venture that includes Authentic Brands Group and mall operator Simon Property Group, that could soon see it running shops-within-shops in Forever 21. In May, Shein said it would be opening 30 popup shops across the United Kingdom this year, signaling a more aggressive push into the market.
Both companies are also facing mounting scrutiny from hawkish U.S. lawmakers who see them as chess pieces in the economic competition with China, particularly as U.S.-Sino relations have stretched to their breaking point in the wake of the Uyghur crisis.
In an interim report published in June by the House Select Committee on the Chinese Communist Party, Temu was fingered for doing “next to nothing” to keep its supply chains free of forced labor, while Shein was criticized for relying “heavily” on a trade provision that allows direct-to-consumer shipments valued at under $800 to avoid paying import taxes and fees while sidestepping serious scrutiny from customs officials. Since then, Temu has been staffing up with compliance experts. Meanwhile, Shein has expressed interest in a “responsible reform” of the de minimis system.
They’ve been associated with national security concerns: Shein because of its alleged close ties with TikTok, another political bogeyman, along with its reported failure to “properly handle” a data breach involving the personal information of tens of millions of customers, and Temu after a report by Grizzly Research called it a form of “malicious spyware.”
“The app has hidden functions that allow for extensive data exfiltration unbeknown to users, potentially giving bad actors full access to almost all data on customers’ mobile devices,” Grizzly Research, which runs a team of “private investigators in China that enable us to conduct site visits and interviews with locals, suppliers, customers and other stakeholders,” wrote last week. “It is evident that great efforts were taken to intentionally hide the malicious intent and intrusiveness of the software.”
Following Grizzly Research’s short call, PDD Holdings’ stock fell 7.2 percent.
When asked for a response, Temu did not provide an on-the-record statement, instead forwarding a recent note from Bernstein that cited its “best-in-class active buyer retention…and incremental willingness to spend more.”
“The Chinese are coming,” the note continued. “Cheap household knick-knacks [are] coming to a market near you. Be very afraid. Let me know if you need a referral code.”
