Online fast-fashion retailer Shein has filed a lawsuit in the US against its Chinese rival Temu, alleging that the latter engaged in improper marketing practices against it.
The lawsuit, filed in December in the US District Court for the Northern District of Illinois, claims Temu told influencers on social media to make disparaging remarks about Shein, and tricked customers into downloading the Temu app using "imposter" social media accounts, according to Reuters.
Influencers on TikTok often refer to Shein in posts about Temu, comparing the two companies and their merchandise, which has sparked Shein's displeasure.
Shein has asked the court to prevent what it alleges is Temu’s practice of using Shein’s name in its marketing. Shein is also seeking damages from the alleged “deceptive” or “infringing” marketing by Temu, according to its complaint.
A Temu spokesperson said the company “strongly and categorically rejects all allegations and is vigorously defending its rights” and the company has asked the court to dismiss the lawsuit. The court has not ruled on the case.
According to Reuters’ report, Temu maintains that it never impersonated SHEIN and “played no part in the creation” of the Twitter accounts, according to its motion to dismiss the lawsuit.
It also said “there is nothing actionable” about finding influencers who believe Temu compares favorably to SHEIN, or asking them to share those opinions.”
If Temu loses the lawsuit, it may be forced to reduce its use of social media influencers as a primary marketing strategy, said Reuters.
Launched in early September in the US, Temu is a cross-border shopping app owned by PDD, which also operates Pinduoduo, a budget shopping site and one of the largest e-commerce platforms in China.
The launch of Temu marks PDD's first foray into international markets, and so far the venture is going well as the company continues other market expansions, including into Canada in February and New Zealand and Australia in March. The company will reportedly increase its investment in overseas operations, with Temu's marketing budget set to exceed 7 billion yuan ($1.01 billion) in 2023.
Both Shein and Temu rely on China's strong, cost-effective supply chain to ship ultra-low-priced products to overseas customers, with Shein stronger in the fast fashion segment and Temu better at providing home basics.
Fueled by bargain-hunting shoppers and the company's wide-ranging promotions, Temu has been the No. 1 shopping app in the App Store in recent months, dethroning both Amazon and Shein.
Shein itself has faced lawsuits alleging copyright infringement. It was sued by dozens of independent artists and retailers including Nike, Decker's UGG brand, Luxottica Group's Oakley shades, and online retailer Dolls Kill, alleging stolen designs.
According to a January report by the Financial Times, Shein was seeking $3 billion in financing at a $64 billion valuation, down from a $100 billion valuation last year.