Without registration, Temu avoids paying taxes and evades quality control regulations in Vietnam, creating an unfair playing field for other businesses. How will authorities handle unregistered platforms?

The e-commerce storm brought by Temu intensified when the platform launched an affiliate marketing program in Vietnam, offering commission rates of up to 30% per product.

The multi-level affiliate model allows referrers to earn an additional 20% commission from the revenue generated by subsequent partners. Participants also receive VND 150,000 for successfully referring a new account that installs the app and makes purchases.

Participants can use these rewards and commissions for shopping on the platform, but they do not receive immediate cash payouts. If transactions are canceled or refunded, the corresponding commissions and rewards are withdrawn.

While many items on Temu are priced similarly to those on other e-commerce platforms, new users receive substantial discount vouchers, ranging from 30% to 90%, along with free shipping. This has fueled Temu's rapid rise in popularity.

According to Bui Quang Cuong, a member of the Executive Committee of the Vietnam E-commerce Association (VECOM), registered e-commerce platforms must pay taxes, while unregistered platforms avoid taxes and regulations. This creates an unfair competition.

"Temu needs to register officially in Vietnam to ensure fair competition, avoid counterfeit goods, and prevent tax revenue loss for Vietnam," said Cuong.

Nguyen Thi Diem Hang, Vice Chairwoman of the Vietnam Agricultural Business Council, expressed concerns: “Temu has not registered its operations in Vietnam, yet it offers products at incredibly low prices, sometimes unthinkably cheap. Backed by a major corporation, they are ready to launch aggressive 'flash sales' and large-scale affiliate campaigns.”

Hang warned that without caution, Vietnamese businesses might be pushed out of the market due to these “unfair competitive practices.”

Hang also noted that for consumers, there is currently no clarity on which agency monitors the quality of products sold on Temu in Vietnam. It is also unclear who would resolve issues if users encounter problems with products purchased from Temu, given that the platform is not officially registered.

Dinh Viet Hoa, Chairman of the National Startup Association, shares the concern that unregistered operations by Temu could lead to various issues, from poor product quality and potential health risks to tax revenue loss and a business environment affected by unfair competition.

However, Hoa pointed out that this is only the beginning of Temu’s activities in Vietnam. The platform could serve as a channel not just for importing goods into Vietnam but also for promoting Vietnamese products globally.

“Instead of waiting for problems to arise before imposing penalties, government agencies should proactively engage with Temu, guiding them through the necessary procedures. Addressing issues after the fact is not the optimal solution,” Hoa suggested.

Nguyen Van Thanh, Director of the E-commerce Development Center under the Ministry of Industry and Trade, mentioned that Decree No. 52/2013/ND-CP on e-commerce and Decree No. 85/2021/ND-CP serve as the primary regulations for handling administrative violations by e-commerce platforms operating without notification in Vietnam.

Additionally, Decree No. 98/2020/ND-CP outlines penalties for administrative violations in commerce, production, trading of counterfeit goods, and consumer protection. Section 10 specifically addresses violations in e-commerce, including “failure to notify e-commerce websites or sales apps to competent authorities as required by law.”

“Many e-commerce platforms have been penalized for operating without notifying authorities, with fines reaching up to VND 80 million,” Thanh revealed.

Temu registers with the ministry of industry and trade following 'underground' operations allegation

After reports of unregistered sales operations in Vietnam, Temu promptly sent an official document to the Ministry of Industry and Trade, outlining their intent to comply with Vietnam's e-commerce regulations as they enter the market.

By the evening of October 24, the E-commerce and Digital Economy Department confirmed that Temu had submitted an official document regarding compliance with Vietnam's e-commerce laws as they seek to enter the market.

Temu has now formally applied for permission to operate in Vietnam through the E-commerce and Digital Economy Department.

Temu is a cross-border e-commerce platform that offers services in Vietnamese and falls under the jurisdiction of Decree No. 52/2013/ND-CP issued by the Government on May 16, 2013, concerning e-commerce (amended by Decree No. 85/2021/ND-CP).

According to the E-commerce and Digital Economy Department, Vietnam is among the fastest-growing e-commerce markets, with an average growth rate of 25% per year, ranking among the top in Southeast Asia.

The retail e-commerce market in Vietnam is estimated to reach $20.5 billion in 2023, with over 61 million consumers shopping online. This makes Vietnam an attractive destination for cross-border e-commerce platforms, including Temu.

The Department has recommended that the Ministry of Industry and Trade issue a directive to the Prime Minister to strengthen state management of e-commerce. This includes researching and proposing specific e-commerce laws to enhance state oversight of cross-border e-commerce activities and revising Decision No. 78 on the value threshold for tax-free goods sent via express delivery services.

Tam An – Binh Minh