The Ministry of Industry and Trade said on October 30 it had passed on all relevant documents to the police, who are set to launch a criminal probe into Khaisilk after an inspection last week uncovered fake Chinese-made products at one of its Hanoi outlets.

Trade Minister Tran Tuan Anh set up a joint task force on October 30, tasked with launching an independent probe into the case. 

“Khaisilk’s actions violated the law, damaged the value of Vietnamese brands, and deceived Vietnamese consumers,” Minister Anh said at a meeting on the same day.

The scandal came to light on October 23, when a businessman in Hanoi took to Facebook to rail against products his company had bought from the brand, saying they were actually made in China.

According to the post, the company bought 60 Khaisilk-branded scarves at the Hang Gai shop in Hanoi for VND644,000 ($28) each, but one scarf had two labels: “Khaisilk Made in Vietnam” and “Made in China”.

The company said it had checked the rest of the scarves and found signs that “Made in China” labels had been removed.

The brand’s owner, Hoang Khai, later admitted that half of the silk used by Khaisilk came from China, while the remainder came from Vietnamese craft villages. But he was adamant that his company always used high-quality materials.

Khai said there has been a shortage of domestic silk from handicraft villages while market demand saw diverse requirements. For this reason, they imported silk from China without noting the origin of the products.

He also admitted that, due to expanding business into other fields such as real estate and tourism, the silk business had not been controlled and supervised strictly.

Khai has apologized to customers and offered compensation. However, the public has begun questioning whether Khaisilk had received help from market surveillance authorities, as the brand’s shops have allegedly been selling Chinese silk for years without being detected.

Khaisilk is a renowned high-end brand with a history of over 30 years, famous for its supposedly high-quality “Made in Vietnam” products. 

The scandal has triggered widespread boycott calls. Vietnamese lawyers have also weighed in, saying aside from denting public confidence, the Khaisilk Group, which owns the eponymous brand, could face legal action.

Its outlets in Hanoi and Ho Chi Minh City have been closed since October 27.

VN Economic Times