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Earlier this hebdomad , The Exchangeargued that the PDD - Shein rivalry was deserving keeping an center on . PDD is a Formosan companionship that owns the well - known Pinduoduo e - commerce business as well as Temu , a discount rate online retailer that has see ready growth in the U.S. securities industry in late twelvemonth .
The Exchange explores inauguration , grocery store and money .
Our post was well - timed . Two days after our short look into the competition , Temufiled suitagainst Shein . It was not the first time the company has done so . Earlier this year , the two ship’s company had sued each other only todismiss the lawsuits in October . Now Temu is back with a fresh case that alleges a barrage of illegal human activity by Shein .
How did we go from the two companies dropping their dueling lawsuits to yet another suit ? Per the ailment , since the prison term when the first suit of clothes were dismissed , “ Temu has discovered that Shein ’s anticompetitive behavior has not only persisted but intensify , ” the ship’s company claim . It ’d be useful to recall at this degree that Temu ’s parent company PDDrecently overtookAlibaba in market crown , and Sheinwants to go public in the United States .
A Shein representative told TechCrunch+ that the company “ believe[s ] this lawsuit is without meritoriousness and will vigorously defend ” itself .
What does Temu say Shein is up to?
The suit ’s claims are varied . Some deal with Temu ’s view that Shein is filing a 10000 of “ dubious copyright infringement lawsuits ” against it and alleges that the latter is make out “ voluminous , bad - faith DMCA takedown posting ” against its competition .
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But that ’s just the start . Temu also aver that Shein abuses its provider by leveraging what it considers a “ monopoly power in the U.S. ultrafast mode market ” to go in into “ undivided - Dealing Agreements with ultra - firm - fashion suppliers , and through those correspondence Shein improperly seize supplier ’ IP rights ” so that it can forbid supplier from list and selling similar products on Temu or other retail platforms .
maltreatment of legal system and aggressive contract are corporeal allegations , but there are some trulywildstatements elsewhere in the complaint :
Most notably , upon information and impression , Shein has now resort to more belligerent methods of aim suppliers believed to be selling products on Temu , admit an on-going platform of rally Temu ’s suppliers on simulated guise to Shein ’s offices , hold up those provider ’ representative in Shein ’s spot for up to ten hour , clutch these Temu vendor ’ phones , search their phones for Temu gross sales , commercial-grade , and other fiscal information without permit , demanding the Peter Sellers ’ chat history and log - in credentials for their Temu account , compelling them to sign documents against their will , and threatening them with extensive penalty and termination of their Shein contracts for selling on Temu . Shein ’s persistent and increasingly belligerent employment of anticompetitive conduct , compulsion , and threaten demeanor necessitates this lawsuit .
That’sinsane . Here ’s how Temu alleges the practice is pass :
Shein ’s coercive conduct has become more wicked in late week and retain today . Upon selective information and impression , several suppliers who previously heel products on both Temu ’s and Shein ’s platforms have reported that their congresswoman were call into the “ review room ” in Shein ’s offices in Guangzhou , China . In recent weeks provider interpreter were lured to the offices on untrue pretension — to discuss “ likely collaboration ” between Shein and the supplier , to assist Shein in investigating depravity among Shein staff , or to talk over any difficulties the merchant were facing with their clientele and presumably any assistance that Shein could pop the question them . However , once there , the representatives were held at Shein ’s situation in a small room for up to ten hours and threatened by Shein employees until they acquiesced to Shein ’s need . These representatives often go far at Shein ’s offices alone , and Shein employee physically overwhelmed the supplier representatives , place multiple Shein employees around the merchandiser in a small quad during the ensuing interrogatory .
Apart from Shein taking mass ’s phones away to slip info , Temu alleges that Shein also wedge suppliers into entering contract :
On information and belief , the Temu suppliers incorrectly imprisoned at Shein ’s government agency also were coerced to contract a number of documents before they were allowed by Shein to leave . The Shein documents were lengthy , constitute dozens of pages , and provider were not given an chance to review their terms closely . If the suppliers refused to sign , Shein endanger them with punitory bar , including refusing to allow the suppliers to provide Shein ’s “ review room , ” end the provider ’s storefronts on Shein , and threaten more generally that the provider would face consequences for failing to collaborate .
If all that ’s on-key , it ’s really not okay . In fact , it ’s incredibly abusive and speak to a business concern clime in Guangzhou that sounds more like a scene from a gangster motion-picture show . We are discussing e - commerce companies here , not something outside the kingdom of normality . This is about chintzy dresses and shoes and pants !
Why bring all this up?
Well , because Shein want to go public in the United States . It may do so at avaluation in the 10 of trillion of dollars . And , per the Temu suit , a well part of its achiever may be attributable to practice that are certainly alfresco of business norms and may rise to criminal levels if the allegations hold up . The suit clearly face only one linear perspective and Shein will have a competing sentiment of the billet and pertinent matters .
Still , I can not recall a ship’s company of Shein ’s worth ( particularly one that ’s raisedbillions of dollarsfrom well - known venture and private equity brands ) being shoot with such a routine of serious allegations while endeavor to go public . The company will have to discuss the topic in its F-1 filing , unless it can find a agency to end the legal fight between itself and Temu .
I doubt that will happen . Shein could be racing toward another monolithic capital raise through its IPO , and Temu , of course of action , would prefer that its rival does not have more chapiter . It is not clean if Temu ’s suit can slow or check Shein ’s IPO , but it for sure wo n’t help .
We ’ll have more when Shein set up out its own statement , but for now , it ’s slightly less certain that a major IPO nominee will go public at all .
