China’s cutthroat e-commerce tactic goes global as Shein-Temu war escalates


Share post:

The battle between two of China’s largest e-commerce firms is heating up, as they take the cutthroat tactics that have long been around in the country to the international markets they both covet.

Pinduoduo’s e-commerce affiliate, Temu, which is aggressively expanding overseas, recently filed a court document in the U.S. accusing fast fashion giant Shein of anti-competitive practices. Specifically, Temu claims that Shein has been “forcing exclusive dealing arrangements on clothing manufacturers.”

This allegation is reminiscent of Alibaba’s infamous “choosing one from two” policy, where vendors were asked to sell exclusively on Alibaba’s platforms and skip its archrival, Pinduoduo. As part of its sweeping crackdown on the tech industry, the Chinese government launched a probe into Alibaba in late 2020 over its monopolistic practices.

TechCrunch has reached out to Shein and Temu for comment on the case.

Since then, China has proposed an anti-monopoly law to rein in the power of its consumer internet giants. The question is whether China will take action on the spat between Shein and Temu, neither of which has business in China.

Shein’s holding company is domiciled in Singapore, though it has a significant operational footprint and sources mainly from manufacturers in China. In an effort to ramp up global expansion, the entity behind Temu and China-focused Pinduoduo recently made Dublin its base.

A closer look at what Shein and Temu are fighting over — clothing manufacturers — reveals an interesting detail. Besides price control, why would Shein keep such a tight grip on its apparel suppliers, given the abundance of resources in China? A post on Xiaohongshu, China’s lifestyle and experience sharing community, offers a clue.

The author of the post, who appears to be a Temu seller, claims that her jeans factory is having trouble procuring cotton that’s not produced in Xinjiang, the major source of cotton in China. For context, the U.S. fashion industry now must wean itself off Xinjiang cotton after a law came into force in 2021, giving U.S. border authorities greater powers to block goods linked to alleged forced labor in China.

The exclusivity requirement isn’t just about cotton.

As of May, Shein has required all of the approximately 8,338 manufacturers supplying or selling on its platform to sign exclusive-dealing agreements, preventing them from selling on Temu or supplying products to Temu sellers, according to Temu’s filing.

These approximately 8,338 manufacturers represent 70-80% of the total number of merchants capable of supplying ultra-fast fashion, Temu claims.

The legal dispute between Shein and Temu is not one-sided. Back in March, Shein made accusations that Temu “willfully and flagrantly infringed Shein’s exclusive and valuable trademark and copyright rights,” and engaged in a scheme to boost its own growth in the American market by “impersonating [the] Shein brand on social media, trading off of the well-known Shein trademarks, and using copyrighted images owned by Roadget as part of [its own] product listings.”

Source link

Lisa Holden
Lisa Holden
Lisa Holden is a news writer for LinkDaddy News. She writes health, sport, tech, and more. Some of her favorite topics include the latest trends in fitness and wellness, the best ways to use technology to improve your life, and the latest developments in medical research.

Recent posts

Related articles

California governor vetoes bill to ban driverless AV trucks

California Gov. Gavin Newsom vetoed a bill Friday that would have required a human safety operator to...

A conversation with Cruise’s Kyle Vogt, Bird scoops up Spin, and self-driving trucks live to see another day in Cali

The Station is a weekly newsletter dedicated to all things transportation. Sign up here — just click The Station —...

Building an equitable cap table puts more tools in a startup’s toolbox

The person a founder chooses to back their company is important beyond the capital these investors provide....

Despite the ups and downs of the fintech space, people still really care about it

Welcome back to The Interchange, where we take a look at the hottest fintech news of the previous...

Elon Musk threatens to charge for X, OpenAI launches DALL-E 3 and Cisco acquires Splunk

Welcome to Week in Review (WiR), TechCrunch’s regular newsletter covering the past few days in tech. The...

Disability tech startups kill the cynic in me

Welcome to the TechCrunch Exchange, a weekly startups-and-markets newsletter. It’s inspired by the daily TechCrunch+ column where...

India’s PhonePe launches app store with zero fee in challenge to Google

PhonePe launched the Indus AppStore Developer Platform on Saturday, promising zero platform fee and no commission on...

How CFOs can reduce SaaS spend by 30% in these tough times

CloudEagle founder and CEO Nidhi Jain has over two decades of leadership experience in companies like ServiceNow,...