National Assembly delegates worry about Temu 'tornado' destroying domestic goods

At the socio-economic discussion session on the morning of October 26, Mr. Phan Duc Hieu, Standing Member of the National Assembly's Economic Committee, expressed concern that cheap goods sold on international e-commerce platforms are flooding into Vietnam without operating licenses. According to him, the "tornado" of cheap foreign goods threatens domestic manufacturing enterprises.

Since early October, Temu, a subsidiary of PDD Holdings (China) - the group that owns the e-commerce site Pinduoduo - has not officially announced its entry into Vietnam, but users can access app stores on their phones to download the app and make purchases and payments on this platform with the Vietnamese version.

The business model of e-commerce platforms like Temu is to connect buyers directly with manufacturers. The factory-direct low-cost sales model helps them attract users looking for cheap products. In the beginning, products sold on this platform were advertised heavily, discounted by 70-90%, and transported to Vietnam through Chinese logistics companies, such as Best Express and Ninja Van.

Previously, other Chinese e-commerce platforms such as Taobao, 1688, Shein have approached the Vietnamese market.

Mr. Hoang Van Cuong, member of the National Assembly's Finance and Budget Committee, said "this is a very big warning", because cheap foreign products flooding in through this channel will eliminate domestic goods.

In the first 9 months of the year, e-commerce revenue reached about 28 billion USD, up 36% over the same period last year. According to Mr. Tran Quoc Tuan, member of the Standing Committee of Tra Vinh Provincial Party Committee, this data shows that business via social networks and e-commerce platforms continues to flourish and increase rapidly. But he raised the question of how much of this 28 billion USD are Vietnamese goods, what is their origin, or do we have to pay most of that money for cheap goods from abroad.

Mr. Tuan believes that cheap foreign goods with low logistics costs, sold on e-commerce platforms, help consumers easily buy cheap, even super cheap goods "with just a few mouse clicks". On the contrary, the negative side is that it "is causing domestic consumer goods manufacturing enterprises to slowly die". The reason is that Vietnamese goods cannot compete in terms of price and design.

According to regulations, cross-border online retail platforms with Vietnamese domain names, Vietnamese display language, or with more than 100,000 transactions per year from Vietnam must register their operations with the Ministry of Industry and Trade. This is to ensure compliance with standards on consumer protection, information security, and related legal regulations.

However, the Department of E-commerce and Digital Economy (Ministry of Industry and Trade) said that in reality, there are still platforms that do not comply with this regulation. "The Ministry of Industry and Trade is increasing supervision and working with relevant parties to ensure that platforms comply with the law and protect the rights of domestic consumers," the agency said.

Mr. Cuong raised the issue of the responsibility of state management agencies when allowing cross-border e-commerce platforms to operate vigorously in Vietnam without permission.

"We need to take action, we need to control the quality of goods, we cannot be lax," Mr. Cuong added.

In fact, many countries are wary of Temu's cheap goods. Indonesia has imposed a ban, Thailand has increased taxes, and Europe and the US are planning to tighten regulations on operations and imports. In Vietnam, domestic manufacturers and many consumers are concerned that this legal loophole is paving the way for cheap foreign goods to flood into the country.

In the context of global trade, Mr. Phan Duc Hieu said that cross-border e-commerce activities, such as Temu or Shein, should not be banned. "However, the Government needs to review these activities to have measures on taxes, rules of origin, import and export to ensure fair trade," he said.

Because, for the same item, Vietnamese businesses importing it will have to pay taxes and label the origin, but if selling through cross-border e-commerce platforms like Temu or Shein, they will not.

"The management agency is reviewing all these activities to take trade defense measures according to Vietnamese and international laws. This is a big problem, the Government needs to have an immediate solution," he added.

Meanwhile, Mr. Hoang Van Cuong suggested that the management agency should review the solution on tariff barriers to protect small domestic manufacturers. Specifically, the authorities should consider and amend the policy of exempting import tax on goods valued under 1 million VND when amending the Law on Value Added Tax (VAT).

Speaking on the sidelines of the National Assembly, Deputy Prime Minister and Minister of Finance Ho Duc Phoc said that the cross-border e-commerce platform Temu is also subject to tax like Google, Facebook... Mr. Ho Duc Phoc said that he has asked the General Department of Taxation to review and require this platform to declare and pay taxes and collect statistical data. "In case Temu does not pay taxes, the management agency will inspect and handle it," Mr. Ho Duc Phoc said.