The two most ferocious players who go to sea, Temu and Shein, have a lawsuit battle again.
Recently, SHEIN was rumored to be in the United States IPO, and at this juncture, Temu sued SHEIN again, why are the two cross-border platform giants from China in dispute continuous?
According to Bloomberg, Temu's U.S. parent company, WhaleCo, filed a lawsuit in the U.S. District Court for the District of Columbia on December 13, accusing SHEIN of adopting inappropriate tactics against Temu and its merchants. The lawsuit alleges that SHEIN, which sells clothing and other household items, is suspected of disrupting Temu's operations and damaging Temu's brand value and image.
According to the financial community, people close to Temu said, "Their (SHEIN's) behavior is too exaggerated;."We have no choice but to sue them. According to the lawsuit, SHEIN filed tens of thousands of copyright takedown notices against Temu and forced fashion ** companies to sign exclusive agreements.
According to the "Pengbai News", a person close to SHEIN said that TEMU has not only been plagiarizing SHEIN's own brand products on a large scale and continuing to engage in unfair competition, but also reversing black and white, shouting to catch thieves, and trying to retaliate and smear with malicious lawsuits An emergency restraining order was issued to compel TEMU to cease and desist from the infringement.
Foreign media reports on this.
China's cross-border e-commerce is born from the same root, so why be in a hurry?
At the end of 2023, at the same time, SHEIN is also at the critical juncture of being rumored to be listed, Temu has set off a storm of lawsuits, and the industry is discussing, or to snipe its listing
Commercial litigation between competitors is extremely common, with Samsung and Apple, for example, suing each other more than 100 times in the decade between 2010 and 2020. But coincidentally, Temu's latest lawsuit against SHEIN happened to appear at the key point where SHEIN was rumored to be listed, which made the market question Temu's motives, which naturally attracted widespread attention at home and abroad.
The development of SHEIN in recent years is obvious to all. The sales volume of 1 billion yuan in 2016 has exceeded 16 billion yuan in 2019, which is extremely rare in both the traditional clothing industry and the cross-border e-commerce industry.
In the following two years, SHEIN continued its efforts, reaching $22.7 billion in revenue in 2022. In the six years from 2016 to 2022, SHEIN's compound annual growth rate is as high as 132%. According to the law of economy, the higher the compound annual growth rate, the stronger the growth of the enterprise, taking domestic enterprises as an example, the compound annual growth rate of more than 20% can be regarded as an excellent enterprise, and the compound annual growth rate of SHEIN is more than 6 times this standard.
In 2022, SHEIN's 54% revenue growth will decline, after all, the volume has reached a certain scale, and the growth rate of the parent group of ZARA's company of the same scale has slowed down to more than ten percent. The 54% increase is only a slowdown compared with SHEIN's previous high-speed growth, and it is still a high-speed growth enterprise in the entire track or the whole domestic industry. In this year, SHEIN surpassed H&M, approaching ZARA, or has become the world's largest fast fashion company. The products cover more than 150 countries and regions such as Europe, America, Australia, and the Middle East.
As an emerging cross-border e-commerce platform, temu has the strong support of Pinduoduo, and its business has also expanded rapidly around the world. According to Gelong's report, Temu's business scope covers 48 countries and regions, and it has set off a low-price trend in all markets and has become the leader of the list of major markets.
It is worth mentioning that SHEIN is not exchanging price for volume or "throwing money for sales", compared with those companies with high sales but high losses, SHEIN has made a profit in 2018, with a net profit of about 4.8 billion yuan in 2022. This may be an important reason why the capital market values SHEIN and gives a valuation of tens of billions of dollars.
Jiang Han, a senior researcher at Pangu Think Tank, believes that it can be seen from the complaint of both parties that the clothing field is one of the focuses of competition between the two sides, but in terms of model, there are differences between TEMU and SHEIN. Temu is a fully managed model, similar to the domestic Pinduoduo model, the difference is that merchants do not enjoy pricing power, but the products are from third-party merchants and are sold under the product name of third-party merchants.
The ** chain model of SHEIN is more abundant, with both third-party merchant products (in the form of full custody cooperation, as well as the independent operation mode of merchants' independent pricing), and some of them are SHEIN's own brands, among which the eponymous clothing brand SHEIN is currently one of the most preferred fashion clothing brands by overseas users, even surpassing brands such as Zara in Spain and H&M in Sweden.
Jiang Han analysis pointed out that the different models determine the cooperation between the two sides and the garment factory, the cooperation between the SHEIN brand and the garment factory is mainly to make its own brand products, similar to the relationship between ZARA and the first business, the factory supplies according to the standards and requirements given by the SHEIN brand, without the consent and authorization of SHEIN, the first merchant cannot provide SHEIN brand products and products for other third parties without authorizationTemu adopts a different model, and the cooperation between clothing merchants and temu is more like a supply relationship.
At the juncture when SHEIN was rumored to be listed, Temu's lawsuit attracted the attention of the market. On Wednesday, local time in the United States, Temu filed another lawsuit in the court of the District of Columbia, accusing fast fashion platform SHEIN of increasingly intensifying anti-competitive behavior against Temu. This is the resumption of the war after the "great reconciliation" between SHEIN and TEMU in November this year. As recently as November, both sides dropped their lawsuits in the United States.
This is not the first time the two companies have been caught up in a lawsuit. According to Bloomberg, the two companies have previously filed lawsuits against each other.
In September 2022, when Temu just landed in the U.S. market, it was reported that Temu had put many of SHEIN's same products on the shelves in advance, and "knocked down" ** by more than 20%.
In December 2022, SHEIN claimed that Temu deliberately slandered SHEIN in social ** and online promotion, and plagiarized SHEIN brands and products.
In response, in July 2023, Temu filed a lawsuit against SHEIN in federal court in Boston, accusing it of violating U.S. antitrust laws. In the prosecution document, Temu's core claim is that SHEIN uses its dominant market power to prevent manufacturers from cooperating with Temu. Shein responded at the time that "Temu's lawsuit has no legal basis."
On August 1, 2023, a U.S. federal court issued a temporary restraining order against Temu, forcing Temu to stop "continuing to infringe" SHEIN-related copyrights.
According to court documents, Temu's infringements in the past few months include: 1. Copying a large number of copyrighted clothing designs and patterns on the SHEIN platform;2. Repeatedly ignoring the infringement notices (DMCA notices) issued by SHEIN;3. Delay the removal of infringing products from the shelves or put the product design back on the shelves after slight modifications, so as to maximize illegal sales;4. Misleading use of fake SHEIN logo in the title of TEMU's web page, unfair carrying of SHEIN's goodwill, etc.
In September, a UK court also issued an urgent temporary restraining order against TEMU, requiring it to cease its infringement of SHEIN.
The lawsuit between the two parties has made waves again, which has made the entire cross-border e-commerce industry quite worried.
Many sellers mentioned their good feelings for SHEIN in the community, hoping that SHEIN can be successfully listed in the United States, not only because SHEIN is a company that has gone out from China, but also because the upstream and downstream industrial chain behind SHEIN is related to the survival of many Chinese clothing manufacturers.
There is a point of view that in the eyes of many cross-border e-commerce practitioners, cross-border e-commerce is a vast blue ocean, and neither SHEIN nor TEMU can dominate, nor can they swallow this huge market cake.
According to the statistics of China Customs, the import and export value of China's cross-border e-commerce has continued to maintain rapid growth in recent years. In the first half of 2023, the import and export scale of China's cross-border e-commerce will be about 11 trillion yuan, of which exports were about 825.4 billion yuan, an increase of 206%, accounting for 7 percent of China's total export value in the same period2%。Zheshang** expects China's cross-border e-commerce retail market to reach US$1,101.9 billion in 2027, with a compound annual growth rate of 195%。
Even if the combined global scale of SHEIN and TEMU is still very small in the face of this volume, under the massive market scale, it can fully accommodate two giant cross-border e-commerce companies, and now Temu has chosen to file a lawsuit in the United States during the critical period when SHEIN is rumored to be listed, which is intriguing, and it is no wonder that it will cause the market to think that "targeted" questions.
Wang Bao, a cross-border e-commerce practitioner, said, "Chinese cross-border e-commerce enterprises should be consistent with the outside world, cross-border e-commerce is not only Chinese enterprises are expanding, but also the old powerhouses Amazon and eBay have been expanding." Internal friction may damage the overseas market share of Chinese cross-border e-commerce enterprises, and eventually damage the interests of the majority of merchants, which is harmful to China's manufacturing industry to go overseas, but will make overseas competitors profitable, and may even allow Southeast Asian manufacturing industry to take advantage of. ”
Wang Bao pointed out: "At present, China's cross-border e-commerce enterprises have to face foreign regional protectionism and possible policy risks, and they have to face strong competition from industry giants such as Amazon. ”Wang Bao expressed concern about the difficulties faced by domestic cross-border e-commerce enterprises, believing that it is not conducive to the development of China's cross-border e-commerce.
Nowadays, China's cross-border e-commerce has made achievements in overseas markets, but "it is easy to fight the country, but it is difficult to defend the country".
In such a huge cross-border e-commerce market, no company can afford to eat it all, and a giant like Amazon has a market share of only 86% (data**: IDC data). This market can accommodate both SHEIN and TEMU, even if both of them develop into 100 billion giants, they are still only the tip of the iceberg of the huge market.
During the Three Kingdoms period, Wei was strong and Shu and Wu were weak. The reason why it can stand on three legs is because Shu Lianwu resisted Cao, and after the internal friction between Shu and Wu began, Wu and Shu were all annexed by Wei in just over ten years, which seems to be very simple, but it is not easy to do.
Author |BT Finance.