Chinese online retailer Temu, a subsidiary of PDD Holdings, has been instructed to suspend its operations in Vietnam due to its failure to meet vital registration deadlines established by the Vietnamese government. Launched in October, Temu was mandated to register with local authorities to ensure compliance with national regulations, failing which it risked being blocked from performing e-commerce activities in the country. As reported by Vietnamese state media, the Ministry of Industry and Trade confirmed that Temu had not completed the necessary registration procedures by the end of November, leading to a directive for the company’s temporary suspension. Specific details regarding the duration of this suspension or the steps required for reinstatement have not been disclosed.
Following this directive, significant changes occurred on Temu’s platform. Users in Vietnam observed that the Vietnamese language options had been removed from the site, further indicating the company’s compliance with the government’s regulations. In a notification, Temu stated that it is actively working with the Vietnam E-commerce and Digital Economy Agency and the Ministry of Industry and Trade to sort out the registration for its e-commerce services. This failure highlights the regulatory complexities that foreign companies face in Vietnam, emphasizing the importance of adherence to local laws while operating in a rapidly changing digital marketplace.
Concerns over Temu’s impact on local businesses have also been voiced by the Vietnamese government, showcasing the apprehension regarding foreign online platforms, especially those from China. Many local operators worry about the deep discounting strategies employed by platforms like Temu that could disrupt the existing market dynamics. Furthermore, the Ministry of Industry and Trade has raised alarms about the potential proliferation of counterfeit products, a concern that resonates widely within the Vietnamese market where the integrity of local brands and products is crucial.
In recent legislative actions, Vietnam’s parliament approved amendments to a tax law that directly affects the foreign-dominated e-commerce sector. This change requires local operators of foreign e-commerce platforms to remit value-added tax (VAT), a significant shift that could alter the competitive landscape of the e-commerce industry. The changes also include calls to eliminate the tax exemption that was previously available for low-cost imported goods. Since 2010, regulations allowed imported goods valued under 1 million dong (approximately US$40) to be duty-free, rendering these developments a setback for many foreign businesses that previously benefited from more favorable tax conditions.
These regulatory developments reflect Vietnam’s broader strategy to bolster its domestic economy and protect local businesses amid the growing influence of foreign e-commerce platforms. As Temu navigates the suspension of its operations, the Vietnamese government is setting a precedent for how foreign companies must operate within its borders, especially as e-commerce continues to be a key area of growth. This scenario poses a challenging environment for new entrants who may be tempted by the lucrative Vietnamese market without fully understanding or preparing to comply with such regulations.
In conclusion, the situation with Temu emphasizes the critical balance that Vietnam seeks to maintain between encouraging foreign investment and safeguarding local economic interests. As the government continues to refine its regulations concerning foreign e-commerce, companies like Temu will need to adapt swiftly to these changes to re-establish their presence in the market. The response from local businesses and the government indicates a determined stance on protecting the domestic economy while recognizing the increasing importance of e-commerce as a tool for economic development. The unfolding situation will be closely monitored, as it may lead to further regulatory adjustments affecting the wider e-commerce landscape in Vietnam.
