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Temu Files a New Lawsuit Against Shein, Alleging “mafia-style intimidation” Against its Competitor

Temu, a low-cost Chinese online retailer, has initiated a new lawsuit against its rival Shein, citing copyright infringement concerns and alleging “mafia-style intimidation of suppliers.” The filing by Boston-based WhaleCo, operating as Temu in the U.S., claims that Shein violated its intellectual property rights, engaged in false imprisonment of merchants, and took other actions to hinder Temu’s growth in the U.S. According to a Temu spokesperson, Shein’s actions escalated, including the illegal detention of merchants, theft of merchant accounts and passwords, and stealing of business secrets. Shein has not responded to CNBC’s request for comment.

This legal action follows a decision by both companies to drop their previous lawsuits against each other in October, which involved copyright and antitrust concerns. In December of the previous year, Shein sued Temu for intellectual property infringement, while Temu accused Shein in July of coercing manufacturers into exclusivity agreements.

As fierce competitors in the online budget shopping space, Temu focuses on selling low-priced made-in-China goods to overseas consumers, while Shein relies on contracted manufacturers, mostly in China, to design, produce, and ship its low-cost products. The recent legal disputes highlight the intense rivalry and potential threats each company perceives from the other.

Owned by Chinese tech giant PDD Holdings, which also supports China-based e-commerce app Pinduoduo, Temu rapidly gained success since its launch in September 2022, expanding across various countries. Shein, founded in China in 2008, confidentially filed for an IPO in the U.S. in November, with a last valuation of $66 billion.

An earlier U.S. House committee report in June alleged that both Shein and Temu exploited trade loopholes to import goods into the U.S. without paying import duties or undergoing human rights reviews of shipments. The legal battles and regulatory scrutiny underscore the complexities and competition within the rapidly growing online retail sector, particularly among companies aiming to provide low-cost offerings to global consumers.

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