The popularity of Shein and Temu has already caught the eyes of politicians and policy experts in Washington, who see them as the next privacy or intellectual-property threat from China. For more than a decade, companies like Meituan and Alibaba’s Taobao forbade vendors from working with competitor platforms, until the Chinese government explicitly banned such deals in an antitrust push in 2021.īut publicly exposing this practice today in the US doesn’t seem like a wise thing to do, at least in my opinion. Historically, exclusivity agreements have not been uncommon in Chinese tech fights. Many Chinese sellers have complained that the platform forces them to accept extremely low prices or arbitrarily ends their business when it finds a cheaper supplier.) (To be fair, Temu itself is no stranger to accusations of coercion against suppliers. This is essentially what Temu is accusing Shein of doing. Since both of them rely heavily on maintaining an expansive network of low-cost suppliers, it would be devastating if one platform-especially the more established one-forced producers to choose between the two. But each platform is now looking at the other’s primary product lines too, making the companies more direct competitors-meaning that they are going after the same suppliers. Both have capitalized on cheap international shipping, China’s strong manufacturing capacity, and, crucially, the supply chain that Shein pioneered.įor a while, the companies differentiated themselves by the kind of products they sold: Shein is more about apparel, while Temu is more about household products. The new player’s business model seeks to replicate the success of Shein’s in many ways. This has apparently created a big headache for Temu. “As the dominant ultra-fast-fashion retailer, Shein knows that manufacturers need Shein’s volume and its access to the US market and it is, therefore, able to coerce manufacturers into arrangements that force manufacturers not to do business with Temu,” says Temu’s filing. In exchange, it buys the products at very low prices and requests that the suppliers remain loyal to the brand. Shein offers these suppliers a steady stream of overseas orders. Most times, these factories create the designs, manufacture the products, and sell them to Shein, entrusting the platform to deal with other processes, like listing, customer service, and shipping. Instead of owning factories that make products for it exclusively, the company works with a vast network of independent Chinese factories. To take a step back: Shein doesn’t operate like traditional consumer brands. Meanwhile, a Shein spokesperson told MIT Technology Review, “We believe this lawsuit is without merit and we will vigorously defend ourselves.” Related Story However, Shein’s escalating attacks leave us no choice but to take legal measures to defend our rights and the rights of those merchants doing business on Temu, as well as the consumers’ rights to a wide variety of affordable products,” Temu told MIT Technology Review. “For a long time, we have exercised significant restraint and refrained from pursuing legal actions. It also claims Shein is using false copyright infringement claims to try to get Temu to take down certain products that Temu sells at cheaper prices than Shein does. According to the court filing, Temu says Shein has asked all of its more than 8,000 manufacturers to sign exclusive agreements and “loyalty oaths” that specifically prevent them from selling on Temu. Now Temu is striking back and accusing Shein of violating US antitrust law by forbidding suppliers from working with the newer platform.
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