Supply chains in the spotlight: Legal dispute between Shein and Temu

The Chinese fast-fashion online platform Shein and the online marketplace Temu have engaged in a legal battle at the start of court proceedings in Great Britain. Shein accused its rival of copyright infringements “on an industrial scale”; Temu countered that Shein is using the copyright allegations to suppress competition.

The trial at London's High Court, which began on Monday, is expected to offer observers a rare glimpse into the supply chains of Shein and Temu. It will also explore the way ultra-fast fashion providers compete for suppliers and overlapping production networks.

According to the news agency Bloomberg, the outcome of this legal dispute will have implications for their respective supplier relationships and likely for European retailers as well. Estimates suggest that Temu and Shein alone cost the German retail sector several billion euros. The German Retail Association (HDE) has already suggested an import ban in a strongly worded letter to the Federal Chancellor.

Lawsuit and Counter-Lawsuit

Shein sued Temu in 2023, after which Temu filed a counterclaim the following year. Both companies are seeking damages from each other for alleged losses caused by the opposing party. Shein accuses Temu of using thousands of photos from the Shein website to advertise copies of Shein's own-brand clothing on its own website. “This was an attempt to get ahead of an existing market participant, and Temu has tried to gain an unfair advantage,” Shein's lawyer Benet Brandreth said, according to the news agency Reuters.

Temu's lawyers rejected the allegations. The merchants responsible for using the images had the necessary permissions, they stated. The case has nothing to do with copyright protection for photographs but “is solely about the plaintiff's attempt to suppress legitimate competition,” explained Temu's lawyer Charlotte May.

In its counterclaim, Temu is seeking damages because the company had to remove thousands of product listings after an injunction obtained by Shein. Temu also claims that Shein violated competition law by tying fast-fashion suppliers to exclusive contracts. According to Reuters, this part of the proceedings is scheduled to be heard in court next year.

Rapid Expansion Course with Hurdles

Shein and Temu have expanded rapidly internationally in recent years with fast-fashion clothing, sports goods, and gadgets. However, the abolition of duty-free import for small consignments with low value in the USA last year could burden the future growth of the e-commerce platforms. Especially since the European Union (EU) also decided in February to end the previous duty-free import for small consignments under 150 euros. With the regulation coming into effect from July 2026, ordering from online giants like Temu or Shein in the EU will become pricier.

Furthermore, the EU Commission has initiated a formal investigation against Shein. The provider may have violated its obligations. Meanwhile, the Irish Data Protection Authority is investigating whether the fast-fashion giant Shein is illegally transmitting European user data to China without adequate protection.

(akn)