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Temu (officially Whaleco Technology Limited) are an online retail platform founded just two years ago in 2022. It was founded in Boston, but is operated by Chinese parent company PDD Holdings (though now incorporated in Dublin).
The general business model is simple – very cheap consumer goods are shipped directly from manufacturers in China to consumers across the world (with a growing market in the Western world). They began to push into the US market immediately, and since last year have also entered into a number of European markets, too – including strong growth in France, Germany, and the UK.
In the past, Temu have already had their fair share of problems in court and in the news.
The most significant chain of events has been their ongoing conflicts with rival retailer Shein. They are another platform offering cheap mass-produced goods direct from suppliers in China (although often focused more on the fashion market than Temu is).
In late 2022, Shein accused Temu of paying social media influencers to spread false information about Shein and promote Temu goods instead. In mid 2023, the High Court in London was asked to consider whether Temu had been using Shein’s copyrighted images for their own listings. Later in 2023, Temu turned the trend around by suing Shein, arguing (via antitrust/competition law) that Shein had essentially established a monopoly on the online fast-fashion market. They did this by controlling around 80% of the entire industry and, most significantly, by forcing the majority of their suppliers to sign exclusivity agreements which meant Temu was left with limited options in terms of sourcing (and thus limited options for consumers, and higher prices as a result). Shein’s control was described as that of a ‘mafia’ in some news reports.
There have also been more general complaints over the last few years.
First, there have been a series of critical new stories published alleging that the quality of goods and services received by consumers were not up to standard. For example – late deliveries, substandard fabric quality, a lack of communication on Temu’s part, and more.
Second, there have been a number of concerns over data privacy. As is often the case, US lawmakers and politicians are suspicious of Chinese control over Western consumers via apps like Temu. The sister app to Temu (Pinduoduo) was found to contain malware in 2023, and removed from the Google Play Store. The state of Montana followed up on this with a ban on Temu being downloaded on government devices (as was similarly the case with TikTok). Apple (being in charge of the App Store) have similarly been investigating whether customers’ data is used in a proper manner by Temu since last year.
Third, there have been a number of accusations (as is often the case with fast fashion retailers, including those already found on the high street, like Primark) that Temu utilise low-paid or forced labour in developing countries. In particular, the ongoing Uyghur Muslim persecution by the Chinese government (being characterised by many as genocide within forced labour camps) has been linked by numerous outlets to Temu’s manufacturing chain.
The US opened an investigation into this link via their Uyghur Forced Labour Prevention Act (companies importing goods to the US from that region now need to proactively prove that their goods were not produced using any form of forced labour). Temu was found to have failed on this front – an ‘extremely high risk’ of such exploitation was present.
Finally, there have been a number of intellectual property (IP) debates over Temu products (other such low-cost online marketplaces are regularly hit with similar accusations). This has been a common theme amongst fashion retailers being accused of ‘dupe’ items (see Shein’s legal battle against Shein over a viral bag recently) which may violate IP rights including copyright, trademarks, and patents.
Set on top of the context above, Temu’s latest round of legal troubles are likely to cause their lawyers quite the headache.
The consumer group BEUC have brought together 17 companies within Europe who allege that Temu has broken numerous aspects of EU-specific law. Broadly, companies need to comply with EU law if selling to European customers regardless of whether any specific company’s operations are based outside of Europe (for example, in China).
Under this general principle, investigators have found illegal weapons, electrical products with insufficient safety mechanisms in place, and other such products on the site for sale. Another complaint from the group (several, including pricing discrepancies and poor data handling, are on the table, and interested readers may look to the report itself for even more detailed coverage) is that some of the sellers on Temu are hidden from consumers. This is generally also illegal under EU law (in the interests of transparency, they must be public-facing and accountable to at least some extent).
There are a number of points that aspiring solicitors and barristers can draw from this story – whether to use early on through application forms, or later during interviews. These can most easily be categorised by practice area.
First, there are clearly a number of EU law issues at the core of the story here. Larger international law firms with cross-jurisdictional capabilities will often be interested to hear how their applicants can engage with these issues. For example, you may want to research the regulations within the EU and how they are likely to apply to a company producing most of its goods in China before importing them.
Second, there are clearly a number of consumer law issues at play here. Many large law firms (for example, according to Legal 500 rankings, Dentons, DLA Piper and CMS in Tier 1) maintain strong teams in this area, and would be particularly interested to hear your thoughts on how this story could play out in their work.
There are also a number of specific issues clearly recurring for companies like Temu over the last few years, including IP, antitrust, and data privacy – all of which will require solid legal advice. You could think about discussing the idea of cross-selling within a law firm here (bringing in a client under one practice area for a specific piece of work, but then demonstrating how they could use the firm more broadly for their problems elsewhere, requiring other practice area specialities, too).
Outside of explicitly legal work, applicants can also demonstrate their broader commercial awareness by discussing how these allegations are likely to affect the public perception of Temu – as well as the legal position, lawyers are often expected to also consider these factors in practice today.
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