Chinese fast-fashion rivals Teemu and Sheen take the ‘war’ to court for America

GET FREE SHINE UPDATES

we will send you one myFT Daily Digest Latest Email Rounding she in News every morning.

Chinese online retailer Teemu has accused rival Sheen of “illegal exclusion tactics” as the two ecommerce groups take their battle for the US market to court in Massachusetts.

Teemu filed an antitrust lawsuit against Sheen in US federal court last week, accusing the fast-fashion company of forcing its Chinese factories to stop manufacturing for Teemu in an effort to maintain market dominance in the US. Was.

“We have been left with no choice but to take legal steps to protect our rights due to Sheen’s increasing attacks,” Teemu said in a statement on Wednesday.

Chinese companies selling ultra-cheap clothing and accessories sourced from China have topped the app download charts. Teemu, an online marketplace launched by Chinese ecommerce company Pinduoduo last year, is challenging Shein’s dominance.

Shein, founded in the eastern Chinese city of Nanjing more than a decade ago, pioneered the sale of ultra-cheap, fast-fashion designs to millennials in the US and Europe via its Hit app. According to the complaint, in 2022, its sales are projected to increase to $30 billion – a sales figure larger than that of H&M and Gap.

Shein’s rise to the top of the fast-fashion world and a $100 billion valuation spawned a string of Chinese imitators, including Teemu. The company’s valuation was reduced to around $64 billion earlier this year as a result of the tech meltdown.

Teemu alleges that its strong Chinese rival is using unfair tactics in China to inhibit its ability to buy and sell the $8 dresses that American buyers are eager to buy.

The complaint, filed in Boston federal court, said Sheen “engaged in an elaborate and anti-competitive scheme aimed at disrupting Teemu’s business.” “The US market is the primary theater of this war.”

Teemu’s lawyers alleged that Sheen was abusing his hold on 75 percent of the American “ultra-fast fashion” market to force his Chinese suppliers into exclusive relationships. The complaint states that this strategy denied American buyers “access to direct price competition” and suppressed Teemu’s ultra-fast fashion sales volume by 300-400 percent.

Sheen did not immediately respond to a request for comment.

As the souring of relations between Washington and Beijing has led to increased suspicion of Chinese companies in the US and Europe, both Teemu and Sheen have attempted to distance their brands from China, where most of their operations are based. Sheen re-incorporated in Singapore last year, while Teemu claims it was founded “in Boston, Massachusetts in 2022”.

But the complaint makes clear how tightly linked the supply chains of both groups are to China. Teemu said that Sheen had forced his network of “8,338 independent apparel manufacturers based in China” to sign exclusive agreements that barred the factories from producing for Teemu.

Also the group acknowledged that “almost all of TEMU’s products in the United States come from a network of manufacturers based in China”.

Teemu said he is bringing the lawsuit against Sheen because “the Chinese manufacturers whom Teemu and Sheen rely on are not familiar with the American legal system”.

The two companies are already fighting each other in Chicago federal court. Sheen filed a lawsuit in March alleging that Teemu was behind influencers disparaging Sheen on social media and that he was using his brand to “trick consumers” into downloading his app. had taken form.