On Thursday, December 5, the two major online retailers in China, Temu and Shein, announced that they have suspended their operations in Vietnam. Currently, both companies are in the process of registering their e-commerce services with the Vietnamese authorities.
The Vietnamese government and local businesses have expressed concerns about China’s online platforms’ low-price sales strategies. The Ministry of Trade also expressed worries that these platforms might be selling counterfeit goods.
Vietnam required Temu and Shein to complete the registration process with the government by the end of November, or they would face domain name blocking and application usage suspension.
Temu, a subsidiary of the Chinese e-commerce giant Pinduoduo, launched in Vietnam in October, while the fast-fashion retailer Shein has been selling products in Vietnam for over two years.
The Ministry of Industry and Trade in Vietnam stated on Thursday that it has ordered Temu to suspend its operations in the country until the licensing procedures are completed.
“The platform (referring to Temu) has submitted an application to conduct e-commerce activities in Vietnam and is currently under review by the authorities,” an official statement said.
The ministry did not specify how long the suspension would last, nor did it outline the steps Temu must take to lift the suspension.
A spokesperson for Temu stated on Thursday that the company is cooperating with Vietnamese government officials regarding the matter and has submitted all necessary documents. However, Temu did not specify when its operations in Vietnam would resume.
According to Reuters, when visiting the Temu website within Vietnam on Thursday, the Vietnamese language option was missing.
In a notice on its website, Temu stated, “Temu is collaborating with the Vietnam eCommerce and Digital Economy Agency, as well as the Ministry of Industry and Trade, to register its e-commerce services in Vietnam.”
Currently, it is unclear if Vietnam has also suspended Shein’s operations. The Vietnamese language website of Shein was inaccessible on Thursday, with the company stating that it is working with the Ministry of Trade to register its services.
In an email statement on Thursday, Shein said, “Shein is committed to complying with the laws and regulations of the countries where we operate.”
The statement added that although its Vietnamese language website is temporarily unavailable, Vietnamese customers can still shop on its international platform.
Furthermore, Temu’s expansion in Indonesia has also faced setbacks. Indonesian regulatory authorities have requested Google and Apple, subsidiaries of Alphabet, to block Temu in their application stores in the country to protect small businesses.
Vietnam is in the process of regulating e-commerce platforms. Last week, the Vietnamese parliament approved legislative changes requiring local operators of foreign e-commerce platforms to pay value-added tax (VAT) and urged the cancellation of tax exemptions on low-cost imported goods.
At the same time, the Ministry of Finance has begun the process of canceling tax incentives.
This policy change is a blow to the foreign-dominated e-commerce industry, as since 2010, the industry has benefited from VAT exemptions and provisions allowing them to be exempt from import duties for goods valued at less than 1 million Vietnamese dong (approximately $40).
(Partial content in this article is based on reports by Reuters)