In a recent development in the fast-fashion industry, Chinese-owned online marketplace Temu has filed a lawsuit against its rival, Shein. Temu has accused Shein of engaging in a campaign of "mafia-style intimidation" towards suppliers in China, alleging bullying, intimidation, and even detainment. The lawsuit reignites a long-standing legal battle between the two companies.

Temu has lodged a complaint with the US district court for the District of Columbia, claiming that Shein attempted to illegally interfere with its business operations. Furthermore, Temu alleges that Shein went to extreme lengths, such as confiscating merchants' cellphones during meetings, in order to obtain access to confidential information.

According to WhaleCo Inc, the parent company of Temu operating in the US, Shein has reportedly threatened suppliers doing business with Temu with penalties. The filing to the court spans a massive 100 pages, highlighting Shein's alleged misconduct towards its competitors.

In response to the legal action, Shein has dismissed the lawsuit as "without merit" and has vowed to defend itself. As one of the leading global fast-fashion e-commerce companies, Shein is currently preparing for a highly anticipated initial public offering, with reports suggesting that it has already filed confidential paperwork with US securities regulators in the past month.

Interestingly, just two months prior, both Temu and Shein had mutually agreed to end their legal disputes and requested the dismissal of their cases against each other "without prejudice." It appears that the truce didn't last long, leading to the resumption of hostilities.

Founded in China in 2012 by entrepreneur Chris Xu, Shein is now headquartered in Singapore. Its valuation skyrocketed to a reported $100 billion by 2022, making it the third most valuable startup globally. However, recent reports suggest that its valuation has significantly declined during a recent fundraising round.

Temu's latest complaint goes beyond allegations of intimidation and interference. It accuses Shein of misusing intellectual property legislation to disrupt Temu's operations, damage its brand, and unlawfully copy its intellectual property. Furthermore, Temu claims that Shein has resorted to desperate and coercive measures, including physical detention of merchants associated with Temu, personal threats, and illegal seizures of their personal devices to gain access to confidential information and trade secrets.

Temu details an ongoing program employed by Shein, where suppliers associated with Temu are called to Shein's offices under false pretenses and are subsequently detained and questioned for up to 10 hours. Shein's staff allegedly seizes the suppliers' phones, searches for Temu-related information without permission, demands chat histories and login credentials, forces them to sign documents against their will, and threatens them with penalties or termination of contracts for selling on Temu.

Shein's persistent and increasingly aggressive conduct, including coercion and threatening behavior, has led Temu to file this lawsuit. Shein, on the other hand, maintains its position that the lawsuit is baseless and has vowed to vigorously defend itself.

Temu, which rapidly gained popularity in the US market, has seen exponential growth in its business. Bloomberg Second Measure, which analyzes credit and debit card transactions, reported that earlier this year, spending on Temu surpassed spending on Shein, giving Temu a 20% lead in May.

The lawsuit filed by Temu also raises questions about Shein's public image. Temu's complaint describes Shein's brand as nothing more than a "shiny façade," accusing the company of copying trendy designs and reselling them. Temu claims that Shein is not a brand but rather a "glorified label maker."

As the legal battle unfolds, industry observers are keen to see how this lawsuit will impact the reputation and future plans of both Temu and Shein. With Shein's impending IPO, the outcome of this dispute could have significant consequences for the fast-fashion giants.