National Assembly delegates worry that the Temu tornado will destroy domestic goods

At the socio-economic group meeting 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 overflowing. entering Vietnam without an operating license. According to him, the “whirlwind” of cheap foreign goods threatens domestic manufacturing enterprises.

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

The business form of e-commerce platforms like Temu is to directly connect buyers with manufacturers. The cheap factory sales model helps them attract users looking for cheap products. In the beginning, goods sold on this platform were heavily advertised, with discounts of up to 70-90%, transported to Vietnam through Chinese logistics businesses, namely Best Express and Ninja Van.

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

Mr. Hoang Van Cuong, Member of the National Assembly’s Finance and Budget Committee, said “this is a huge warning”, because cheap foreign products flooding in through this channel will destroy 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 the Tra Vinh Provincial Party Committee, this data shows that business through social networks and e-commerce platforms continue to flourish and increase rapidly. But he asked the question, what proportion of Vietnamese goods make up this 28 billion USD, what is the origin, or do we have to pay most of that amount for cheap goods from abroad.

Mr. Tuan sees cheap foreign goods with low logistics costs, sold on e-commerce platforms, making it easy for consumers to buy cheap, even super cheap goods “with just a few clicks”. On the contrary, the negative side is that it “is causing businesses producing domestic consumer goods to die”. The reason is that Vietnamese products cannot compete on price and design.

According to regulations, cross-border online retail platforms with Vietnamese domain names, Vietnamese display language, or with over 100,000 transactions a 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 fact there are still platforms that do not comply with this regulation. “The Ministry of Industry and Trade is increasing supervision and working with 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 the phenomenon of cross-border e-commerce platforms that have not asked for permission but operate aggressively in Vietnam.

“We need to take action, we must control the quality of goods, we cannot relax,” Mr. Cuong added.

In fact, before Temu’s whirlwind of cheap goods, many countries are cautious. Indonesia issued a ban, Thailand increased taxes, and Europe and America planned to tighten operating and import regulations. For Vietnam, domestic manufacturing enterprises and many consumers are concerned about this legal loophole, which is paving the way for cheap foreign goods to flood into the domestic market.

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 this activity to take 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 they sell it through cross-border e-commerce platforms like Temu or Shein, they will not.

“The management agency reviews all of this activity to take trade defense measures according to Vietnamese and international law. This is a big problem, the Government needs to have a solution immediately,” he added.

Meanwhile, Mr. Hoang Van Cuong suggested that management agencies need to review the solution on tariff barriers to protect small domestic manufacturers. Specifically, the authorities need to consider and amend the import tax exemption policy for goods worth less than 1 million VND, when amending the Value Added Tax (VAT) Law.

Sharing on the corridors of the National Assembly, Deputy Prime Minister, Minister of Finance Ho Duc Phoc said that cross-border e-commerce platform Temu is also subject to tax payment like Google, Facebook… Mr. Phoc said he asked request the General Department of Taxation to review and request 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,” said Mr. Ho Duc Phoc.

According to the latest data from YouNet ECI, Vietnamese consumers spent VND 87,370 billion shopping on four main e-commerce platforms in the second quarter. Of which, Shopee almost dominates the market with 71.4%, followed by TikTok Shop with 22%, Lazada 5.9%. Domestic exchanges such as Tiki, Chiaki, Sendo, Websosanh, Adayroi account for a very small market share, less than 1%.

To balance the e-commerce market, Mr. Hoang Van Cuong believes that there needs to be a policy to develop domestic platforms. He also said that domestic products must improve quality and take advantage of consumers’ preference for Vietnamese products.

In addition, management agencies must also warn and remind consumers to be alert to advertising products with unrealistically low prices, so that they can protect their rights.