A heated rivalry between Chinese ultra-fast fashion brands Shein and Temu has reached new heights with Temu filing a lawsuit against Shein, accusing the company of attempting to eliminate its competition in the US market. According to Temu’s lawsuit, Shein has forged exclusive contracts with independent manufacturers in China, preventing them from working with Temu. Temu claims that Shein used these agreements as a way to edge out their business in the US. In response, Shein dismissed the lawsuit, stating that it lacks merit and promising to vigorously defend themselves.
Shein, which entered the US market in 2017, has quickly emerged as the most popular ultra-fast fashion brand in the country. Its trendy designs and affordable prices have won over customers, propelling the company to a valuation of $66 billion, surpassing well-established fast-fashion brands like H&M and Zara. Temu, a subsidiary of the Chinese e-commerce giant Pinduoduo, made its debut in the US market in 2022 and became one of the most downloaded apps by marketing to young consumers through low prices and incentivizing app downloads.
The legal battle between Shein and Temu doesn’t end there. Shein has also taken Temu to court, alleging that Temu paid influencers to spread false information about Shein on social media. Temu has denied these accusations and requested that the lawsuit be dropped. In its own lawsuit against Shein, Temu claims that Shein has secured exclusive agreements with 8,338 apparel manufacturers based in China, limiting direct price competition and causing a sharp decline in Temu’s fashion sales.
While the ultra-fast fashion industry has experienced tremendous growth, offering consumers thousands of new products at affordable prices, it has faced criticism, especially Shein. Concerns have been raised about poor working conditions in factories, copyright infringement on independent artists’ designs, toxic chemicals in clothing, and the environmental impact of fast fashion. Shein has denied these accusations. Additionally, Pinduoduo, Temu’s sister company, has faced similar allegations in China regarding its treatment of workers and the sale of counterfeit products on its website.
The scrutiny surrounding Shein and Temu has caught the attention of the US government. The US-China Economic and Security Review Commission, a federal agency focused on national security and economic relations between the US and China, released a brief in April highlighting the success of Chinese e-commerce companies like Shein and Temu. The report stated that their success has inspired other Chinese platforms to replicate their models, posing challenges to US regulations, laws, and market access principles.
In conclusion, the battle between Shein and Temu has escalated with lawsuits being filed by both parties. These Chinese ultra-fast fashion brands have gained significant traction in the US market but also face criticism and regulatory scrutiny. The outcome of these legal battles and government scrutiny will shape the future of these companies’ operations in the US.
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