The Revelation of China's cross-border e-commerce war - Read from Temu's lawsuit against Shein

Time: 2023-07-25 11:12

The Revelation of China's cross-border e-commerce war - Read from Temu's lawsuit against Shein
Cross-border "double male" fierce battle again, how should Chinese enterprises go to sea to remain invincible?
Recently, China's overseas e-commerce in the US market increasingly heated competition, Pinduoduo cross-border e-commerce Temu to Shein filed an antitrust lawsuit.
What does this leave us thinking? IAN Consulting has come up with three important lessons for Chinese companies going global.

I. Overview of Temu v. Shein case:
On July 14, Temu, the cross-border e-commerce platform of Pinduoduo, filed a lawsuit with the US court, accusing the fast fashion platform Shein of violating the US antitrust law.
"Shein used its dominant market position to force apparel manufacturers to enter into exclusive agreements to prevent them from working with Temu," Temu alleges in its lawsuit. "What Shein is doing is holding back the growth of the US super-fast fashion market," Temu said.
A spokesperson for Shein issued a statement on July 17 saying, "Temu's lawsuit is without merit and Shein will vigorously contest it."

Second, the root cause of confrontation: the positioning of the same lead to vicious competition
In the United States, Shein is based on the positioning of "China, low price, full category clothing"; Temu, as the "overseas version of Pinduoduo", is also good at low prices. The positioning and model of the two companies are too similar, in essence, they are competing for the low-cost fast fashion market of cross-border e-commerce, and at the same time, they are targeting low - and low-income groups, using the business model of low - and high-SKU, from positioning to marketing are highly similar, and are natural competitors.
So Evan believes that Temu's lawsuit against Shein is a "normal and slightly out of control" business competition, and that the war between the two Chinese companies may continue to spread as they expand globally. Although Temu started late, with the support of Pinduoduo's strong operational strength, it is only a matter of time to catch up with Shein.

Three important lessons from the incident
Chinese enterprises "going global" face multiple competition, how to maintain the development momentum in a complex environment? The recent case of Pinduoduo cross-border e-commerce platform Temu suing fast fashion giant Shein can bring some inspiration to overseas enterprises.
IAN makes the following three points:
1. Chinese enterprises' use of local laws to protect their rights abroad should be normalized
As an important field for Chinese enterprises to go global, cross-border e-commerce inevitably faces the problem of safeguarding the legitimate rights and interests of enterprises. Pinduoduo's cross-border e-commerce company Temu filed a lawsuit against Shein, making full use of the US judicial process, which is a good start and will serve as a good example and guide for other Chinese companies. Encourage more companies to stand up to power and dare to defend their rights overseas through litigation in the United States.
If Temu wins the lawsuit this time, it will not only benefit Temu itself, but also have a positive impact on the entire Chinese e-commerce industry and even all overseas enterprises, and will become a model.
As more Chinese companies go global, using judicial procedures to defend their rights will become the norm in the future. Chinese enterprises need to learn, or consult professional lawyers, financial advisers, etc., to use local legal weapons overseas to defend their rights and interests.

2, quality and brand shape the core competitiveness of cross-border enterprises, simple price war is meaningless
Shein and Pinduoduo's rapid growth model is worthy of attention, which needs to withstand the test of time, but obviously, over-reliance on low-price competition is not a long-term solution, the quality of goods and brand image is the core competitiveness.
This tells us that enterprises should actively explore their own distinctive internationalization path and build differentiated competitive advantages, rather than simply relying on price wars. Enterprises need to invest a lot of resources in brand building, towards the brand development road, learn from each other's strengths, and carry out positive competition, so as to promote the healthy development of the industry. Litigation and public relations can not fundamentally enhance their own strength.

3. Service experience is the key to the choice of suppliers and consumers
Temu and Shein are both rapidly growing cross-border e-commerce platforms, and the competitive relationship between the two companies will not be terminated by this lawsuit, regardless of the outcome of the lawsuit, the two companies will still survive and develop in the competition.
For clothing suppliers, the choice of platform cooperation is more important to which platform can bring them more orders and revenue, rather than just based on competition disputes between platforms.
For consumers, what is more important is what kind of product selection, price advantage, shopping experience and so on the platform can provide, rather than judging the quality of the platform only by this lawsuit case.
So, regardless of the outcome of the lawsuit,Temu and Shein need to continue to improve their services and user experience to win the choice of suppliers and consumers.

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