If you thought Kendrick and Drake had the most intense beef of the year, get ready for something unexpected: Shein vs. Temu.

The two Chinese discount e-retailers  are not just battling for lower prices and your dollar, they're also battling each other over…..well, a whole lot.

Beginning late last year, this most recent round of litigation kicked off when Temu filed suit against Shein accusing it of "mafia-style" intimidation tactics. "Shein recently has gone so far as to falsely imprison merchants doing business with Temu, including detaining merchant representatives in Shein’s offices for many hours while Shein confiscates the merchants’ electronic devices, obtains access to proprietary Temu information through the merchants’ seller accounts, and threatens the merchants with penalties for doing business with Temu,” claimed the suit, reports The Verge.

In response, Shein has now filed suit against Temu, claiming the company to be "an unlawful enterprise built on counterfeiting, theft of trade secrets, infringement of intellectual property rights, and fraud."

Is this back and forth business as usual for the e-commerce giants? Or will either suit have real teeth? It's hard to tell. However, this latest scuffle comes at a time when Shein—a Chinese company that moved its headquarters to Singapore in 2022—is readying itself to IPO this year, notes The Fashion Law. Oliver Scutt of Bates Wells adds, "despite public challenges to its processes and policies, there is still an absence of clear evidence that Shein is cleaning up its supply chains, treating its workers fairly and changing its behavior so as to minimize environmental damage."

De Minimis

One of the ways Temu and Shein keep prices so low is by using a tax loophole known as "de minimis", which allows them to skirt duties and certain taxes so long as their shipments are under $800 each. “It is a huge loophole that particularly enables these two companies to send a gusher of product to the U.S and undercut American businesses that are literally being driven out of business by this competition,” Congressman Earl Blumenauer, a Democrat from Oregon, told Time.

Last year, Shein acknowledged their leveraging of De Minimis, saying in a statement that it hurts “American companies that can no longer compete on price,” while adding that the policy “needs a complete makeover.”

However, Temu has been less vocal about their use of De Minimis. “We are open to and supportive of any policy adjustments made by legislators that align with consumer interests," a recent statement by the company said. "We believe that as long as these policies are fair, they won't influence the outcomes of competitive business dynamics.”

Verdict

In a globalized world where price wars come down to fractions of a penny, any edge helps. Be that the American De Minimis policy, or intimidation tactics. American politicians cannot stop Temu and Shein from their fighting in China, but they can certainly investigate the companies if they seek to list on US stock exchanges.