Temu and Shein, two prominent Chinese online retailers, have temporarily suspended their operations in Vietnam as they grapple with registering their e-commerce services with the local authorities. This decision comes after the Vietnamese government set a business registration deadline that both companies missed, raising concerns about their impact on the market.
Government Directive and Compliance
According to the Vietnam News Agency, the Ministry of Industry and Trade mandated that both Temu and Shein complete their registration by the end of November 2024. Failure to do so would result in blocked internet domains and restricted app access.
As a result, Temu, which commenced operations in Vietnam in October 2024, has been asked to halt its activities until it satisfies the registration requirements. On its website, Temu has noted that it is currently collaborating with the Vietnam E-commerce and Digital Economy Agency.
Local Market Concerns
The Vietnamese government and local businesses have expressed unease regarding the influence of Chinese platforms in their market, particularly due to issues surrounding deep discounting practices and the potential for counterfeit goods. The trade ministry has been vocal about these concerns.
Changes in E-commerce Regulations
The situation has been compounded by recent legal adjustments. Last week, Vietnam’s parliament approved a new regulation that requires foreign e-commerce operators to pay value-added tax (VAT). This is a significant shift, as it aims to curb the advantages enjoyed by foreign companies exploiting low-cost import exemptions.
- Temu started services in Vietnam in October 2024.
- The registration deadline set by the government was 30 November 2024.
- Shein’s operations are also under review, with its Vietnamese site currently unavailable.
- The new tax regulations may pose challenges for foreign e-commerce players.
As the situation evolves, it remains uncertain how long the suspension will last or what steps Temu must take to resume operations. However, the trend indicates a tightening of regulations for foreign e-commerce platforms in Vietnam.