Temu files fresh lawsuit against Shein, accusing its rival of 'mafia-style intimidation'

Chinese low-cost online retailer Temu has launched a new lawsuit against its rival Shein over copyright concerns and "mafia-style intimidation of suppliers," a filing on Wednesday showed.

In the filing, Boston-headquartered firm WhaleCo, which operates as Temu in the U.S., alleged that fast-fashion brand Shein infringed on its intellectual property rights, falsely imprisoned its merchants, among other moves to halt Temu's growth in the U.S.

"We sued Shein because recently their actions have escalated," said a Temu spokesperson.

"They began to illegally detain merchants, forcibly asking for their phones, stealing our merchant accounts and passwords, stealing our business secrets, and simultaneously forcing merchants to leave our platform. Their actions are too exaggerated; we had no choice but to sue them."

Shein did not immediately respond to CNBC's request for comment.

This comes just weeks after both parties decided to drop their previous lawsuits against each other in October, over copyright and antitrust concerns.

In December last year, Shein sued Temu over intellectual-property infringement while Temu accused Shein in July of threatening and forcing manufacturers into exclusivity agreements.

The two companies are fierce competitors in the online budget shopping space. Temu focuses on selling made-in-China goods, from fashion to household products, at low prices and targets overseas consumers. Similarly, Shein relies on contracted manufacturers, mostly in China, to design, produce and ship its low-priced products.

"Though Temu's business model is very different from the fashion-focused, resale approach relied on by Shein, ever since Temu's U.S. launch in September 2022, the company has been seen by Shein as its greatest threat — and therefore the target of malicious and unlawful conduct intended to thwart Temu's success," according to the filing on Wednesday.

Temu is owned by Chinese tech giant PDD Holdings which also backs China-based e-commerce app Pinduoduo. Temu was PDD Holdings' first international foray and the app quickly found success among cost-conscious shoppers.

Within weeks of its launch, Temu topped app store rankings and subsequently expanded rapidly across countries such as Australia, New Zealand, France, Italy, Germany, the Netherlands, Spain, and the U.K.

Shein was founded in China in 2008, according to some accounts. But the company's official origin story began in 2012.

In November, Shein confidentially filed for an IPO in the U.S. It was last valued at $66 billion.

A U.S. House committee report in June claimed that Shein and Temu exploited trade loopholes to import goods into the U.S. without paying import duties or making shipments subject to human rights reviews.

— CNBC's Clement Tan contributed to this report.