TEMU gets into trouble again: a lawsuit was filed against the Chinese shopping site by SHEIN, the competing Chinese shopping site. According to reports abroad, in the lawsuit filed this week in the federal court in Washington, SHEIN accuses TEMU of copyright infringement, forgery and copying of designs. The plaintiff also claims that TEMU uses the photographs published on its platform.
“Enticing consumers with promises of low pricing”
SHEIN accuses TEMU, which is owned by Chinese e-commerce company PDD Holdings, of encouraging sellers on the app to steal designs from other brands — and not removing those products from the platform even after being caught.
“TEMU entices US consumers to download the app with promises of extremely low pricing,” the lawsuit states. “These products are priced so low that the company must subsidize each sale and actually lose money on each transaction. The way to minimize these huge losses is by encouraging its sellers to infringe the intellectual property rights of others, and to sell fake or low-quality goods.”
It was also stated in the lawsuit that at least one of TEMU’s employees stole trade secrets from the Chinese competitor, which revealed information about pricing. “‘Armed’ with stolen information, TEMU directed sellers which products to copy and sell cheaper versions on its website and app,” it said. According to the report, SHEIN has applied to the federal court in Washington for an injunction to prohibit TEMU from using the information it claims was stolen.
To the lawsuit, SHEIN attached screenshots from Instagram and Tiktok of influencers whom TEMU allegedly paid to “praise her” at the plaintiff’s expense. Among other things, surfers wrote that “SHIEN is not the only option for cheap clothes! Check out TEMU, it’s cheaper and has much better quality”, and “Looking for cheaper and better clothing than SHEIN? Come to TEMU”. Thus, in October 2022, an influencer with approximately 140,000 followers published several posts in this style, and in January 2023, another surfer published similar things on Instagram, which raised the ire of SHEIN.
The two companies have already met in court before
This is not the first time that the two Chinese retail giants have met in court. Last year, TEMU sued SHEIN, alleging that it was abusing its monopoly power by entering into exclusive agreements with suppliers and using “mafia-style” scare tactics.
Chris Shaw, founder of SHEIN / Photo: from YouTube
Last year SHEIN itself was sued for copyright infringement by several companies, including H&M. In response, SHEIN claimed that the company takes disciplinary action against designers and manufacturers who commit copyright violations, and admitted that mistakes do happen – and when they are discovered, it stops production of that item.
The competition for the heart of the western consumer
In recent years, the Chinese websites have conquered the markets around the world with low prices, a huge selection and the ability to respond to trends quickly. However, at the same time, TEMU and SHEIN, two prominent platforms in the market, received enormous criticism for poor working conditions for their employees, copyright violations and a host of other accusations.
The shopping forecast report published by Salesforce for the shopping days of November and December indicates that during the shopping months, Chinese shopping apps will take over $160 billion of the e-commerce market share outside of China (about 21% of all sales during the period). According to the report, in the first half of this year, two-thirds of the consumers from the western markets made at least one purchase on one of the leading websites, with TEMU leading the way with 43% of the purchases made by consumers in the west during the period under review.
TEMU is a privately owned company, so most of the data is based on estimates. The net worth of the parent company, PDD Holdings, is about 200 billion dollars, when in February the value was 128 billion dollars (an increase of about 56%).
SHEIN itself is expected to go public this year with a value of about 65 billion dollars, after its net profit in 2023 was about 2 billion dollars.
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