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Temu lawsuit alleges Shein employed “Mafia-style intimidation” to win suppliers

PDD Holdings’ international facing discount e-commerce platform, Temu, filed a lawsuit in a US District of Columbia court on Wednesday alleging rival Shein employed “Mafia-style intimidation” to coerce suppliers that also worked with Temu.

According to the filing, Boston-based company WhaleCo, which operates in the US as Temu, alleges China-founded, Singapore-based rival Shein misused intellectual property legislation to stop merchants and suppliers working with Temu.

It also claimed Shein “falsely imprisoned” vendors who dealt with Temu by detaining merchant representatives in Shein’s offices for many hours, confiscating their electronic devices and threatening them with penalties for doing business with Temu.

Shein did not immediately reply to a request for comment on the lawsuit on Thursday.

Both firms, which have roots in China, have seen their businesses boom in the US market in recent years as inflation and cost-of-living pressures have helped attract consumers to low-cost e-commerce offerings, such as Shein’s $5 T-shirts and Temu’s $3 earphones.

The bulk of suppliers for both companies are in China and a spokesperson for Temu confirmed the alleged infractions involved Chinese vendors.

“We sued Shein because recently their actions have escalated. They began to illegally detain merchants, forcibly asking for their phones, stealing our merchant accounts and passwords, stealing our business secrets, and simultaneously forcing merchants to leave our platform,” the spokesperson said.

The lawsuit also alleges that Shein poached Temu’s key marketing and advertising personnel. It did not specify where they were based.

This is not the first time the fierce rivals have traded barbs in legal suits filed in US courts. Both companies withdrew actions filed against one another in October without giving a reason.

Shein’s previous US lawsuit against Temu alleged Temu told social media influencers to make disparaging remarks about the fast-fashion retailer, and tricked customers into downloading the Temu app using “imposter” social media accounts.

In July, Temu filed its own lawsuit in Boston federal court, accusing Shein of violating US antitrust law in its dealings with clothing manufacturers.

Last month, Shein confidentially filed to list publicly in New York in what could be a $90 billion float, renewing scrutiny of its business practices and supply chain.

  • Reporting by Casey Hall; Editing by Brenda Goh and Jamie Freed, of Reuters.
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