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Vietnam warns Shein, Temu: Register or lose access to booming $22 billion e-commerce market

In a landmark decision on Nvember 11, the Vietnamese govenment has cautioned it will bar two Chinese online retailers, Shein and Temu from operating in Vietnam if they don't register with the government before the end of November. The move comes against the backdrop of increasing alarm from the Vietnamese government and domestic businesses as China's e-commerce platforms increasingly take over the domestic market.

Vietnam's Ministry of Industry and Trade has also identified potential sales of counterfeit products and deep discounts on these platforms. The Vietnamese government threatens to act if retailers do not toe the line.

Nguyen Hoang Long, Vietnam's deputy trade minister, commented on the matter over the weekend. He said, "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 the applications and domains." Long confirmed that the ministry has already reached out to Shein and Temu over licensing requirements but no response has been received from them to the requests from the ministry.

Shein is a fast-fashion popular retailer that has been in Vietnam for more than two years. On the other hand, Temu is owned by Chinese giant PDD Holdings, which recently opened to Vietnamese users to shop last month. Generally, both retailers have built massive grounds within the Vietnamese market through their affordable goods.

The local Vietnamese companies are concerned over the discount policies of these Chinese platforms as they might lead to the domestic sellers getting crowded out of the market. Moreover, the Ministry of Trade has raised its concern over the fact that these websites may sell counterfeit products, which may cause both harm to consumers and domestic producers.

To address this concern, Vietnam is reviewing its tax policies for e-commerce. Goods imported from abroad costing less than 1 million dong, or about $40, are exempted from VAT, and most of the products taking advantage of that tax exemption are imported via e-commerce. That's something the finance ministry intends to change and eradicate.

This regulatory move comes as a similar action across Southeast Asia. Last month, Indonesia asked Apple and Google to block Temu on their platforms to safeguard small merchants against ultra-low-priced items competing with them.

Vietnam's e-commerce industry is said to be growing at a breakneck speed. It has grown by 18% this year and now stands at an impressive $22 billion, thereby making it one of the biggest e-commerce markets in Southeast Asia after Indonesia and Thailand. The platforms dominating Vietnam's e-commerce landscape are Singapore-based Shopee, Alibaba-backed Lazada, and local companies Tiki and Sendo.

As the deadline nears, the stance of the government reflects a broader trend: Southeast Asian countries assume more decisive control over foreign e-commerce sites. These manoeuvres spell out attempts to protect local industry and consumer protection.