Shein and Temu have found their latest regulatory hurdle in Vietnam.
Regulators in the country have stipulated that the two companies must register with the Vietnamese government by the end of November. If they fail to do so, regulators said, Vietnam plans to block their respective domains, preventing the companies from selling to consumers throughout the country.
Though Shein has been selling in Vietnam for several years, Temu is a newcomer to the country; it only expanded into both Vietnam and Brunei last month. At the time it launched its platform in Vietnam, the low-priced e-commerce player only launched its site in English and also failed to allow consumers to complete transactions with payment platform Momo, a hallmark of the consumer experience in Vietnam.
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According to the South China Morning Post (SCMP), Vietnamese regulators have expressed concern over the companies’ impact on its own economy and businesses, particularly given the deep discounting strategies the two offer consumers. Reportedly, regulators have also balked at the potential for sales of counterfeit goods that deceive consumers or infringe on brands’ intellectual property rights.
Nguyen Hoang Long, Vietnam’s deputy trade minister, said the government has already been in contact with both companies about the licensing and registration process, according to the SCMP.
“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 statement.
A spokesperson for Shein said the company has been working with Vietnam’s regulators. Its assortment in Vietnam includes “both Shein-branded products, as well as products we curate and procure for our Vietnamese consumers,” the company stated.
“Shein is committed to complying with Vietnam’s laws and regulations and we are working closely with local authorities on this matter,” the company’s spokesperson said in an email.
Temu did not return Sourcing Journal’s request for comment.
While forcing Shein and Temu to register in Vietnam is one regulatory intervention, Vietnam is considering another stipulation that could further impact the companies’ ability to operate in the country. According to the SCMP, government officials said they are considering altering or dissolving its version of the de minimis exemption. Currently, imports worth less than approximately $40 can enter the country with a value-add tax exemption. But as regulators note that the companies that gain the most from this are low-priced e-commerce platforms, they have begun thinking about ending the benefit.
Vietnam is far from the only country concerned with counterfeits and the viability of its own economy as players like Shein and Temu continue enticing consumers with low-priced goods.
Earlier this year, Indonesia banned Temu, citing concerns over the marketplace platform stifling local businesses and the country’s economy. Indonesia took similar action toward TikTok Shop earlier this year, though the platform found its way back in by purchasing an Indonesian e-commerce company. Reportedly, Indonesia plans to take similar action against Shein if it works to sell to consumers there; to date, the Singapore-headquartered company has not ventured into the Southeast Asian country.
And the United States and the European Union have each expressed alarm over the companies’ practices. Earlier this month, the EU Commission announced that it would carry out an investigation on Temu’s potential sale of illegal goods—among other issues it has with the company. Regulators in the United States have called on Shein and Temu to clarify their respective practices on ensuring products sold comply with consumer safety laws.
It’s also not the only company considering changing its tax rules. German officials have stated they would likely support doing away with the EU’s version of de minimis; South Africa has already done away with its exemption and the Biden-Harris administration is expected to take action on the de minimis threshold before exiting office.
