Shein, Temu, escalate epic e-commerce squabble
- Reference: 1724221868
- News link: https://www.theregister.co.uk/2024/08/21/shein_temu_lawsuit/
- Source link:
The two Chinese outfits both focus on fashion items, which they sell at astoundingly low prices – think $5 for a top that might survive two washes – and promote with near-constant blitzes of online advertising. Neither is renowned for product quality, but both are infamous for offering goods that use suspiciously similar designs to those offered by big brands. It's widely believed many of the products sold by both platforms are made by workers who face dire conditions – or are even subjected to forced labor.
In a [1]lawsuit [PDF] filed on Monday, Nanjing-founded but now Singapore-headquartered Shein expressed its desire to hold Temu "accountable for an unlawful enterprise built on counterfeiting, theft of trade secrets, infringement of intellectual property rights, and fraud."
[2]
The complaint accuses Temu of "masquerading" as an e-commerce marketplace, encouraging IP theft, bullying vendors who use the platform, and turning a blind eye to human rights abuses.
[3]
[4]
In the filing, Shein cast itself as an "immensely valuable" brand and retail business that offers "highly sought-after clothing, accessories and homewares" internationally, and whose success was "achieved by designing products that consumers love and can afford."
In its 80-page filing, Shein also alleged Temu:
Misused Shein's trademark and even tricked internet users searching for Shein into clicking on Temu;
Paying influencers to spout false claims about the quality and price of products from both e-tailers;
Creating a deliberately confusing corporate structure;
Impersonating Shein on Twitter/X;
Unlawfully using Shein's proprietary data sets and obscuring its seller payments processes;
Lifting photos from the Shein website – and not even trying to hide it.
Shein claimed it was filing the complaint at a time when Temu seeks "to infiltrate the US.” Temu's presence in the States – which it operates as the international subsidiary of Nasdaq-listed PDD holdings and sister site of Chinese e-commerce platform Pinduoduo – appears to be a raw nerve for Shein.
"Through these unfair competition practices, Temu has, within two years of its launch, secured an unearned and illicit foothold in the US market," claimed Shein in its Monday filing. The complaint alleges that Temu is subsidizing its own US presence – losing 30 to 50 percent of the value on every order placed.
[5]
Shein also has its critics. The outfit aspired to list on the New York Stock Exchange, but faced resistance as investors and authorities pondered risks such as uncomfortably close ties to Beijing, the aforementioned forced labor allegations, systematic AI-powered [6]IP theft [PDF] and [7]interesting tax affairs .
In a statement sent to The Register , a spokesperson at Temu, said: "The audacity is unbelievable. SHEIN, buried under its own mountain of IP lawsuits, has the nerve to fabricate accusations against others for the very misconduct they’re repeatedly sued for."
[8]SHEIN has the look of America's next tech-meets-geopolitics fit-up
[9]South Korea cracks down on offshore e-commerce, with seeming focus on China
[10]Beijing wants more outfits like Temu teeming around the world
[11]Chinese chip equipment maker AMEC sues Pentagon for entity list removal
Like any good example of late-stage capitalism gone horribly awry, the feud between Temu and Shein has simmered for years. One or the other periodically slings accusations that allege manipulation of influencers, intimidation campaigns, copyright infringement, unfair exclusivity agreements for sellers, and interference with suppliers.
Shein has even reportedly [12]held some of its merchants captive and forced them to provide phone passwords and transaction records.
As one e-commerce lawyer [13]put it , the newest lawsuit resembles a "Spider-Man meme complaint if there ever was one."
[14]
The Spider-Man meme – Click to enlarge
The financial successes of its e-commerce giants has caught Beijing's eye. In June, the nation's Ministry of Commerce [15]issued a policy calling for massive expansion of its cross-border e-commerce industry while state-sponsored media has [16]celebrated the "seamless sales overseas" of Shein and Temu.
Temu's founder was recently [17]named the richest man in China.
[18]
Beijing has been reticent, however, on the matter of regulating the likes of Temu and Shein.
At the start of the year, The Cyberspace Administration of China did review Shein's cyber security and data practices. According to [19]media reports , the government was particularly interested in the type of Chinese data that would need to be disclosed for that now-abandoned US IPO.
But Beijing is not at all worried about offshore users' data – another matter of concern for the critics of these platforms. ®
Get our [20]Tech Resources
[1] https://s3.documentcloud.org/documents/25052072/shein_temu.pdf
[2] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2ZsW6xbabTtlU84sxn3NQvgAAAII&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZsW6xbabTtlU84sxn3NQvgAAAII&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[4] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZsW6xbabTtlU84sxn3NQvgAAAII&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44ZsW6xbabTtlU84sxn3NQvgAAAII&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://www.classaction.org/media/giana-v-shein-distribution-corp-et-al.pdf
[7] https://www.theregister.com/2023/03/29/shein_tax_accusation/
[8] https://www.theregister.com/2023/03/29/shein_tax_accusation/
[9] https://www.theregister.com/2024/03/13/south_korea_e_commerce_crackdown/
[10] https://www.theregister.com/2024/06/12/china_ecommerce_expansion_policy/
[11] https://www.theregister.com/2024/08/19/asia_in_brief/
[12] https://www.bloomberg.com/news/articles/2023-12-14/temu-files-new-lawsuit-against-shein-after-intensified-clash
[13] https://x.com/RobertFreundLaw/status/1825712080433066240
[14] https://regmedia.co.uk/2024/04/09/spiderman-pointing-meme.jpg
[15] https://www.theregister.com/2024/06/12/china_ecommerce_expansion_policy/
[16] https://www.chinadailyhk.com/hk/article/585448
[17] https://www.theregister.com/2024/08/19/asia_in_brief/
[18] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_offbeat/legal&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33ZsW6xbabTtlU84sxn3NQvgAAAII&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[19] https://www.reuters.com/technology/cybersecurity/chinas-cyberspace-administration-is-conducting-review-shein-wsj-2024-01-17/
[20] https://whitepapers.theregister.com/
So, for example, a fine quality red MAGA baseball cap made in the USA from home grown cotton gets no tax.
The same design made in a factory in Mexico with Egyptian cotton gets 15% tax while a disgusting Blue Harris/Walz cap made in Canada from hemp gets 50% tax?
Sometimes quality is in the eye of the beholder.
No, that's just your usual USA protectionism at play, which is great.
First step would be to remove China from developing country status so they pay full postage fees on the crap the post
"seamless sales overseas" of Shein and Temu.
That would explain them only lasting two washes
"Shop Like A Billionaire"
My understanding is that most billionaires have minions to do their shopping and wouldn't have the slightest idea that online tat bazaars like Temu or Shein even exist. That, and they also usually go to a swanky party or event and get given bags of free stuff just for turning up. It's a hard life being wealthy.
Re: "Shop Like A Billionaire"
Sort of.
They tend to go for quality. Quality items often come with a price tag, and aren't always from large sellers. Often they'll be from long established but small companies that may only have one shop, but in the circles they live in everyone will know about them.
One previous job of mine was for one such company and Reinhard Schneider came in for a few days with his wife. Very nice man actually. But he was there because Sheik Hamad (former Sheik of Qatar I think) recommended the place to him. Met him in passing once, again a nice man, but yeah. These people don't shop on the basis that something looks expensive or that someone famous has worn it. They go to places that aren't heard of for quality products and are willing to pay more for that because of the quality.
Re: "Shop Like A Billionaire"
"They tend to go for quality"
Strongly disagree...they tend to go for products that also happen to be good quality because the places they go to avoid the riff raff happen to stock high quality items...I doubt that it is a conscious decision. Doesn't matter how rich you are, you can be equally oblivious to quality...being wealthy doesn't suddenly make you aware of what high quality items are...it just unlocks your ability to easily acquire them because now you can shop in places that you previously couldn't...
For example, you're never going to see Le Crueset cookware in the "Middle of Lidl"...but it is sold in John Lewis.
Re: "Shop Like A Billionaire"
There is two types of wealth though at the same time. There is this inherited/long standing wealth, and then there is self made.
Self made will go and purchase their Le Crueset cookware.
Inherited/long standing wealth are going to use something from a no name company (in the wider consciousness) that have been making pans for 200 years.
"late-stage capitalism"
The phrase "late-stage capitalism" really confuses me, especially when applied to China that has barely got through "early-stage capitalism".
What does it even mean, other than a knee jerk dislike of businesses that make large profits? What is the assumed "final-stage" of capitalism, and why aren't we going to get just more capitalism, organised differently? How many times do you have to say capitalism before it starts sounding weird? And... given that capitalism has delivered us everything from heart valves to mobile phones, why are we now objecting to it when other people do it? Isn't that just late stage colonialism, trying to keep down the savages?
(For reference, yes businesses and individuals can achieve excesses that go way beyond the pale, and break both real laws and a range of moral codes - but like democracy, this imperfect system has not yet led to a better alternative, despite the dreams of many armchair economists. We can certainly do capitalism better and more fairly, but so far we've not really found anything to replace it.).
Re: "late-stage capitalism"
The late stage capitalism is in the "West" and refers to the inequalities etc born of capitalism as it is practised here. It's final stage might be terminal...
Adam Smith apparently believed in low profits, high wages, equitability, and protection of workers by law and regulation of the markets. His book is the "Wealth of Nations" not "The Wealth of Individuals".
Re: "late-stage capitalism"
It generally tends to cover the concept of making a maximum profit at the expense of everything else, trying to upsell the customer at every opportunity as well as trying to monetise all the data about those customers even if that might be illegal. In other words, just being bloody greedy for the sake of it.
Examples would be: Supermarkets where you have to pick, scan, bag and pay for your stuff with only a skeleton staff available if there's an issue; Software or Media companies who change the definition of the word 'purchase' in the T's & C's so you don't actually own the product you think you've just bought and subsequently have to pay a subscription to use; Having features fitted as standard to your new car which you can only rent on a monthly basis or pay a considerable 'activation' fee to turn on at initial purchase (again, a subscription); Social Media or Software companies who have clauses in their T's & C's so that they retain full ownership of any picture, photo, media or content you post or create forever, and which they can subsequently use however they want, even to make money off.
Or just watch a Louis Rossman video on YouTube - it shows just what happens when there are essentially zero consumer protection laws in effect in your country.
An alternate expression is 'enshittification'.
Junk slinger accuses junk slinger to sling junk at junk slinger's victims causing junk slinging across an even wider group of victims.
Maybe there should simply be a quality tax on all these junk imports at the inverse proportional level with respect to the quality of the product.