Source: Taiwan Strait Net
At the end of 2023, the Jingdong v. Ali "choose one" case also has a first-instance result.
On December 29, JD.com v. Alibaba won the first instance of the "one of the two" case, and Ali was sentenced to compensate JD.com 1 billion yuan. JD.com said in a statement that the verdict is not only a fair ruling of JD.com's resistance to the "either-or" monopolistic behavior, but also a landmark moment for maintaining the order of fair competition in the market with the rule of law, and will also be a strong stroke in the process of China's anti-monopoly rule of law.
JD.com v. Ali won the first instance of the "one of two choices" case
In the domestic e-commerce industry, the "either-or" disease has been around for a long time, and many businesses have also applauded the verdict. However, for merchants operating cross-border e-commerce, the pain of "choosing one of the two" is repeating itself and intensifying.
Half a month ago, Temu sued fast fashion giant Shein again in the United States, using a 100-page lawsuit document to accuse the latter of illegally retaining merchants, threatening small and medium-sized merchants to choose one of the two, and seizing the merchant's copyright through an exclusive agreement.
Judging from this judgment, the regulator has new requirements for the fair order of the e-commerce market, but whether it can arouse the vigilance of cross-border giants, countless small and medium-sized businesses in the industrial belt are also looking forward to it.
Cross-border small and medium-sized businesses have become victims of "either-or" again
As early as July, Temu filed a lawsuit against Shein, accusing it of violating U.S. antitrust laws, and this time it used 100 pages of litigation documents to expose in detail all kinds of unfair competition methods after Shein's upgrade, and small and medium-sized businesses once again became victims of the latter's "either-or" choice.
According to the lawsuit, Shein illegally detained the merchant and seized his mobile phone.
According to the lawsuit, Shein lured merchants to Shein's Guangzhou office in the name of cooperating with internal anti-corruption, resolving operational difficulties, and discussing potential cooperation. However, many merchants are locked up in a small room for up to ten hours and threatened by Shein's employees as soon as they arrive at Shein's office.
A children's clothing merchant said that in the office on the 24th floor of Shein's headquarters, he was interrogated by four Shein legal counsel and asked to provide the account number and password of the Temu store, otherwise the store would be closed. "From 10 a.m. to 20:00 p.m., I was not allowed to go out to eat at noon. ”
During the subsequent interrogation, Shein employees illegally confiscated the merchant's mobile phone, demanded that the merchant provide the account numbers and passwords of all operating stores on Temu, and illegally exported all the transaction records of the merchant's store such as WeChat and Alipay.
Some merchants said that after getting their phones back, they saw a new verification code on their phones, only to learn that Shein employees had accessed their Temu accounts and stole Temu's store and transaction information.
As a condition for leaving Shein's office, merchants were also forced to sign documents, which were dozens of pages long, with general terms including the copyright of the merchant's goods owned by Shein, the recognition that the products in the Temu store belonged to Shein, and so on
"We thought they were exaggerating and I was angry. The above-mentioned children's clothing merchants said that the 5 products in the Temu store are all self-developed models, and the pictures taken by ourselves are different from Shein's pictures.
If Temu's merchant refuses to sign, Shein employees will intimidate and threaten the merchant with "punishment" and "store closure". Many merchants "just want to leave as soon as possible" and are forced to sign documents or even make false statements, including claiming that the copyrights of the products sold on Temu belong to Shein, even if they are independently developed by the merchants.
"There were three businesses that were illegally detained with me that day, and at least 50 businesses in the industry were illegally interviewed. According to the above-mentioned merchants, Shein's interview started from the early merchants and gradually expanded to the middle and waist merchants.
According to the lawsuit, Temu accused Shein of using its market monopoly to force apparel manufacturers to sign exclusive agreements with them to prevent apparel manufacturers from cooperating with Temu. According to data given by Temu, as of May this year, about 8,338 manufacturers had signed the agreement, and these 8,338 manufacturers accounted for 70% to 80% of the total number of capable merchants.
The intellectual property copyright of merchants has become the hardest hit area of "one of two choices".
In the lawsuit, Temu also detailed Shein's "overlord clause" in the field of intellectual property.
In August 2022, after the launch of Temu, Shein amended its exclusivity agreement with merchants, further expanding the exclusivity requirements in the agreement, forcing merchants to transfer the intellectual property rights of images, photos or videos of their products, and granting Shein an irrevocable and exclusive license worldwide.
For example, if a merchant independently designs a piece of women's clothing and sells it on Shein, the women's clothing will be permanently banned from selling on any other platform.
According to the lawsuit, Shein forced merchants to enter into exclusive agreements to transfer intellectual property.
"In the past, there was no overlord clause, and everyone's same products would be sold on other cross-border platforms, and Shein didn't care. Many merchants said that after Temu began to attract investment, Shein required all merchants to sign an exclusive transaction agreement in the background, forcing merchants to transfer their intellectual property rights to Shein, including self-developed and designed products, layouts, and product pictures taken by themselves.
Some merchants revealed that since they opened their stores on Temu not long after last year, Shein has asked to remove the products on Temu within three days, otherwise they will directly confiscate the merchants' popular products, and the latter restricts merchants from launching new products, "Many merchants have been found to be doing business in Temu, resulting in a 50% drop in the new quota, resulting in a large amount of inventory backlog."
On February 24 this year, Shein also issued a notice to all merchants on the "management of supplier defaults", saying that it would triple the fine for merchants who violated the "exclusive transaction agreement", from the original 3,000 yuan to 30,000 yuan.
In Guangzhou, Foshan and Humen, many clothing merchants have been fined tens of thousands to hundreds of thousands of dollars by Shein. According to the penalty notice issued by Shein, in September last year, merchants Zunqian and Heying were fined 200,000 yuan and 69,000 yuan respectively, and on February 7 this year, merchants Garment 3, Xinlianda, and ODM men's Xianyang were fined 50,000 yuan respectively.
"As a weak supplier, we have tens of millions of payments in Shein's hands, so we have to bow our heads and dare not speak out. Some merchants said.
Cross-border e-commerce ushered in a "moment of correction"?
For small and medium-sized merchants of cross-border e-commerce, the victory of JD.com v. Ali "choose one of the two" comes at the right time.
After winning the first instance, JD.com said that monopolistic behaviors such as "choosing one of the two" not only restricted market competition, harmed the legitimate rights and interests of brands, merchants and consumers, but also weakened the innovation and vitality of market development.
A number of industry insiders also said that the judgment has a record amount of compensation and has an exemplary effect. This judgment is a landmark judgment in mainland judicial practice against the monopolistic behavior of "choosing one of two", and it is also a landmark moment for maintaining the order of fair competition in the market with the rule of law, and further consolidating the foundation of fair competition order in the domestic e-commerce field.
As we all know, fair competition is the cornerstone of ensuring market vitality and innovation power, and behaviors such as "choosing one of the two" directly restrict competition, which not only restricts the choice of brands, merchants and consumers, but also seriously suppresses market vitality. Some cross-border merchants said that JD.com's victory in the lawsuit also gave small and medium-sized businesses of cross-border e-commerce confidence, and it is imperative for the industry to correct deviations.
Since the beginning of this year, in the overseas high-interest rate environment, foreign trade demand has weakened substantially. According to the foreign trade import and export data released by the General Administration of Customs, in November, the export value of the mainland's trade in goods was 2.1 trillion yuan, a year-on-year increase of 1.7%, and the year-on-year growth rate of exports in a single month returned to the right track and improved steadily.
At the critical moment of domestic manufacturing going to sea, although the competition in the field of cross-border e-commerce is fierce, fair competition has always been an important latitude of platform competition, and the giants of the cross-border e-commerce industry should play the role of "head goose", build a benign industry ecology, and promote the high-quality development of China's manufacturing industry, rather than repeating the mistake of "choosing one of the two".