Inadequacies in managing cross-border online sales platforms such as Temu and Shein

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. But since the beginning of October, Temu belongs to PDD Holdings (China) – the group that owns the e-commerce site Pinduoduo – has not registered to operate in Vietnam, still allowing users to download applications (apps), make purchases and make payments. math on this platform with Vietnamese version.

Mr. Hoang Van Cuong, Member of the National Assembly’s Finance and Budget Committee, said the Temu tornado flooding cheap goods into Vietnam is a big warning for the domestic market. He raised the issue of the responsibility of State management agencies, when allowing the phenomenon of cross-border e-commerce platforms to sell aggressively in Vietnam without asking for permission.

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

Nearly half a month after Temu quietly entered the Vietnamese market, the Ministry of Industry and Trade assigned the Department of E-Commerce and Digital Economy to request this exchange to comply with the law. Not only Temu, recently, other cross-border e-commerce platforms such as Shein and 1688 also do business in Vietnam but have not registered.

Lawyer Nguyen Dinh Hiep (Hoanganh IBC Law Company Limited) said that the fact that a foreign online platform is not registered but still operates and sells in the domestic market shows that the management agency lacks a strict monitoring mechanism to detect show violations of this activity.

In fact, Vietnam has regulations on administrative penalties for unregistered e-commerce websites. But according to Mr. Hiep, the fine is too low, maximum 30 million VND for individuals, 60 million VND for organizations. “With the growing scale and profits of e-commerce platforms, this fine is not enough to prevent or deter. We lack strong enough sanctions to manage these platforms when they violate,” he said.

According to Lawyer Nguyen Quoc Toan, Director of IAM Law Firm (Ho Chi Minh City), new regulations related to e-commerce are regulated by sub-law documents (decree) and have been edited and supplemented since then. 2013 to 2021, but not yet universal in all cases. For example, the regulations only handle websites with the domain name “.vn”, but in reality, like the case of Temu, the website has the domain name “.com”.

Lax management, according to the Chairman of SB Law Firm, puts consumers at risk when the exchanges lack policies to protect them. “Online platforms that sell without permission often do not commit to product quality or return or warranty policies,” admitted lawyer Nguyen Thanh Ha, Chairman of SB Law Firm.

Therefore, when a dispute occurs, consumers have no basis to protect their rights. It is also difficult for the authorities to control the quality of goods as well as determine legal responsibility and handling, because many exchanges are not registered and do not have a clear headquarters address in Vietnam.

Not to mention, Mr. Ha is concerned about tax revenue loss from unlicensed online sales platforms, such as Temu and Shein. “This creates an unfair competitive environment by putting businesses that comply with regulations at a disadvantage,” he commented.

According to data from the Posts and Telecommunications Joint Stock Corporation (VNPT) in March 2023, every day there are about 4-5 million small value orders (under 1 million VND) shipped from China to Vietnam. through e-commerce platforms. That is, on average every day, there are 45-63 million USD of small value goods that are not subject to import tax and VAT.

Meanwhile, goods worth less than 1 million sold through online platforms are exempt from tax, according to the Government’s decision since 2010. Assuming the average of each order of this type is about 200,000 VND, then there are 4-5 million orders. , total value up to 800 billion VND. Correspondingly, the budget may lose a large amount of tax revenue if this type of goods is exempted from tax.

Recognizing that exchanges like Temu and Shein circumvent and take advantage of tax exemption for goods under 1 million to sell cheap goods into Vietnam, Deputy Prime Minister Ho Duc Phoc said the Government will abolish this regulation. That is, goods imported into Vietnam are subject to tax.

However, to fill legal gaps and gaps in cross-border e-commerce platform management, Lawyer Nguyen Dinh Hiep said that competent authorities need to increase supervision by coordinating with network service units to review e-commerce domain names. From there, detecting and handling violations will be timely and quick.

In terms of technology, Mr. Tran Minh Tuan, Director of Digital Economy and Digital Society (Ministry of Information and Communications) said they can support the Ministry of Industry and Trade and Finance in checking and controlling when trading floors online to operate in Vietnam.

According to the Electronic Transactions Law, businesses operating in this field, including e-commerce, are responsible for periodically reporting to management agencies. This Ministry is building a mechanism to receive and manage trade and electronic transactions. This system will support ministries and branches to connect and share data.

In addition to increasing scrutiny, experts believe that authorities need to increase sanctions against violating exchanges, including fines and additional forms such as suspension of operations and revocation of business licenses when they intentionally violate the law. violation. “This is to deter similar acts in the future,” said lawyer Nguyen Dinh Hiep.

Besides, international cooperation on cross-border e-commerce management is essential in the context of globalization. “Coordinating with other countries will help Vietnam monitor and trace transactions of foreign exchanges, protecting the interests of consumers and the domestic market,” Mr. Nguyen Thanh Ha commented.

Regarding the management agency, the representative of the Department of E-commerce and Digital Economy (Ministry of Industry and Trade) said that this Ministry has reported to the Prime Minister on the proposal to promulgate a specialized law on e-commerce. This is to increase State management of cross-border transactions. This agency also proposed that the Ministry of Finance research a plan to monitor and manage goods imported through exchanges that do not comply with the law.

The Ministry of Finance said they will remove the regulation on VAT exemption for imported goods under 1 million VND sold through e-commerce platforms in the VAT Law being submitted to the National Assembly, to avoid tax revenue loss.