Fast-fashion giant Shein is facing a lawsuit filed by rival online retailer Temu, accusing the company of employing “Mafia-style intimidation” tactics to ward off competition. The lawsuit, filed in Washington DC, alleges that Shein threatened vendors and suppliers who also worked with Temu as part of a desperate plan to eliminate its competitor in the US market. Among the claims in the lawsuit is an allegation that Shein summoned Chinese suppliers believed to be working with Temu to its offices, where they were unlawfully detained for hours and had their mobile phones confiscated. The vendors were also allegedly threatened with penalties for doing business with Temu.

In addition to the claims of supplier intimidation, Shein is also accused of misusing intellectual property laws and poaching Temu's key marketing and advertising staff. Temu's parent company, PDD Holdings, described Shein's behavior as a campaign of “Mafia-style intimidation” in the lawsuit. A spokesperson for Temu stated that they decided to sue Shein because of the escalation of their actions, which included illegal detainment of merchants, theft of merchant accounts and passwords, theft of business secrets, and pressuring merchants to leave the Temu platform.

Both Shein and Temu are low-cost retail rivals with roots in China, and they operate in both the US and the UK. This is not the first legal battle between the two companies. Last year, both firms sued each other in US courts, accusing one another of various wrongdoing. However, they withdrew their cases in October without providing a reason.

Shein, which is based in Singapore, responded to the lawsuit by stating that it believes the claims are without merit and that it will vigorously defend itself. The company has recently held talks with the London Stock Exchange about the possibility of a public listing in the UK.

The lawsuit filed by Temu's parent company, PDD Holdings, provides further details about the allegations. It claims that Shein misused intellectual property legislation to prevent merchants and suppliers from working with Temu. The lawsuit also accuses Shein of falsely imprisoning vendors associated with Temu by detaining their representatives in Shein's offices, confiscating their electronic devices, and threatening them with penalties.

Both Shein and Temu have experienced significant growth in the US market in recent years, attracting consumers with their low-cost e-commerce offerings. Shein is known for its $5 T-shirts, while Temu offers $3 earphones. The majority of suppliers for both companies are based in China, and the alleged infractions in the lawsuit involve Chinese vendors. The lawsuit also accuses Shein of poaching Temu's key marketing and advertising personnel, although it does not specify their location.

This new legal battle between Shein and Temu highlights the intense competition in the fast-fashion industry. With Shein's potential $90 billion public listing in New York and increased scrutiny of its business practices and supply chain, the outcome of the lawsuit could have significant implications for both companies.