Fast fashion giant Temu accuses Shein of starting ‘war’ over US markets
A self-described “war” between Chinese ultra-fast fashion brands Shein and Temu has escalated, with a new lawsuit from Temu against its competitor claiming it is trying to squeeze its rival out of the US.
In a lawsuit filed in Massachusetts court, Temu accused Shein of creating exclusive contracts with independent manufacturers in China that bars them from working with Temu. The company claims Shein made the agreements in an attempt to edge out Temu in US markets.
“The US market is the primary theatre of this war,” Temu said in its lawsuit, saying that Shein was “engaged in an elaborate and anti-competitive scheme aimed at stymieing Temu’s business”.
In a statement to CNN, a Shein spokesperson said the company “believe[s] this lawsuit is without merit and we will vigorously defend ourselves”.
Since its debut in the US in 2017, Shein has taken over as the most popular ultra-fast fashion brand in the US, appealing to customers with trendy designs at cheap prices. The company is valued at about $66bn, more than longstanding fast-fashion brands H&M and Zara.
Temu, an offshoot of the Chinese e-commerce giant Pinduoduo, entered the US market in 2022 and became one of the most downloaded apps in the US, marketing to young consumers through low prices and giveaways encouraging people to get others to download the app.
Shein is already trying to take its competitor to court, alleging in court filings to a Chicago court in December that Temu has been paying influencers to spread “false and deceptive statements” about Shein on social media. Temu has denied the accusations and has requested the suit be dropped.
In its own lawsuit against Shein,
Temu said that its competitor had gotten “8,338 independent apparel manufacturers” based in China to sign exclusive agreements. Temu said this means US consumers do not have “access to direct price competition” and its fashion sales have fallen sharply.
Though the ultra-fast fashion industry has boomed over the last few years, enticing consumers with over 10,000 new products a day for cheap prices, the industry – especially Shein – has come under criticism for things such as poor working conditions in factories, copyright infringement on independent artists’ designs and toxic chemicals in clothing, along with criticism of fast fashion’s impact on the environment. Shein has denied the accusations. Meanwhile, Temu’s sister company, Pinduoduo, has faced similar allegations in China over concerns for its workers and selling fake or counterfeit products on its website.
The companies are slowly becoming the target of scrutiny by the US federal government. The US-China Economic and Security Review Commission, a US federal agency focused on national security and economic relations between the US and China, released a brief in April saying that the success of Shein and Temu, along with other Chinese e-commerce companies, “has encouraged both established Chinese e-commerce platforms and startups to copy its model, posing risks and challenges to US regulations, laws and principles of market access”.