Vietnam Demands Registration From Chinese E-Retail Giants Shein, Temu or Faces Block

Vietnam is insisting that the two Chinese online retail giants, Shein and Temu, get licenses under a nationwide block at the beginning of December if they fail to comply by the end of November.

The Vietnamese government, accompanied by local businesses, voiced fears that ultra-low pricing by these platforms apart from damaging local retailers, might lean towards fake goods.

Government Raises Red Flags Over Shein and Temu's Impact on Local Markets

Vietnam Demands Registration from Chinese E-Retail Giants Shein, Temu

Recently, during a government meeting, the Deputy Trade Minister, Nguyen Hoong Long, said that the Ministry of Industry and Trade had held direct talks with Shein and Temu regarding licensing and regulatory requirements. According to Reuters, two of these companies have gained popularity by selling cheaper clothing and other consumer goods than their local counterparts.

Furthermore, the government argues that its aggressive discount policy may also give an edge to such companies, making it unfair competition for local businesses as they cannot compete with prices alone.

First, there are issues concerning counterfeit goods on foreign e-commerce platforms. Another significant issue that the Trade Ministry of Vietnam warned of is the emergence of fake products being sold on shopping sites.

Increasingly, counterfeit goods are very alarming as they would be detrimental to the consumers and gain against authentic brands through lowering trust.

According to the trade ministry, the gigantic, rather largely unchecked catalogs kept by Shein and Temu significantly increase the chance for counterfeit products to enter Vietnamese markets and bypass traditional rules and quality checks.

"After the ministry's notification, if these platforms do not comply, the Ministry of Industry and Trade will coordinate with relevant agencies to implement technical measures such as blocking applications and domains," Long said in a government statement.

Emerging Shein and Temu in Vietnam E-Commerce Market

Shein had been selling to Vietnamese consumers for two years already, while Temu, operated by Chinese e-commerce conglomerate PDD Holdings, was just about a month old.

Presented by the increased usage, the government acted to harden its rules as it attempted to keep them in accordance with the laws of Vietnam.

Currently, Vietnam will exempt value-added tax (VAT) on imported goods if the order is worth less than 1 million dong, which is about $40 USD, by allowing importations through e-commerce platforms. The South China Morning Post reports that the government is still mulling a decision to revoke this to limit the impact of low-cost imports on domestic businesses.

Greater Scrutiny and Legal Challenges Overseas

Many of Vietnam's grievances are reminiscent of similar ones raised in other Southeast Asian countries. In a recent move that saw some concern, Indonesia requested the removal of Temu from the stores of tech giants Apple and Google, citing its threat to local merchants in light of the offerings it had of low-priced products. It, of course, also reflects a broader regional pushback against major Chinese e-commerce platforms disrupting local markets.

Vietnam's Rapidly Expanding E-commerce Sector

Despite the challenges, Vietnam's e-commerce market is soaring. According to a report issued by Google, Temasek, and Bain & Company, the market grew 18% this year with an estimated value of $22 billion. Vietnam's e-commerce sector now stands at the third spot in Southeast Asia, after Indonesia and Thailand.

The increasingly growing market attracts local and international platforms. Among them are Singapore-based Shopee, Alibaba-backed Lazada, and Vietnamese platforms Tiki and Sendo.

This is Vietnam's effort at leveling the playing field in the retail space.
As the digital marketplace of Vietnam grows, it would seem the government is taking steps to make the playing field more level for everyone.

Making Shein and Temu register and then eliminating exemptions on VAT on imports of any e-commerce item are among the measures taken by the country to safeguard the local markets and to give them equal opportunities in this competition.

In doing so, Vietnam manages the rampant growth of foreign players in e-commerce while giving its market a chance to survive the competition as well.

In June, EU regulators questioned Temu and Shein regarding online content compliance. The two companies were given until July 12 to explain the EU-imposed regulations.