Chinese e-retailer Temu has filed a lawsuit against its rival, Shein, alleging violations of antitrust laws and consumer rights, as reported by Reuters on July 17. The lawsuit alleges that Shein has abused its market power by pressuring suppliers not to do business with Temu. Shein is accused of forcing manufacturers to sign loyalty agreements and imposing fines and penalties on those who refuse to comply. According to Temu, Shein’s actions have resulted in higher prices and fewer choices for consumers, hampering the growth of the ultra-fast fashion market in the US. In response, Shein has denied the allegations, stating that the lawsuit was “without merit” and that it will “vigorously defend” itself.
The lawsuit highlights the intense competition between two of the fastest-growing online retailers in the US, both originating in China and featuring low-cost products, mainly fast-fashion clothes sourced from Chinese suppliers. Shein, based in Nanjing, entered the US market in 2017 and rapidly gained significant market share, accounting for nearly half of the country’s fast-fashion sales as of November 2022. However, Temu has emerges as a strong competitor, positioning itself as an even cheaper option to Shein. Earlier this year, Shein had accused Temu of trademark and copyright infringement, along with other alleged unfair business practices, further escalating the rivalry between the two companies.