Vietnam has recently issued a firm directive requiring Chinese e-commerce giants Shein and Temu to register with the government by the end of November. This ultimatum stems from rising concerns about the influence of foreign online retailers on the local market. The Vietnamese government is particularly focused on protecting local businesses from aggressive pricing strategies and potential counterfeit goods flooding the market.
Deputy Trade Minister Nguyen Hoang Long emphasized the government’s stance, stating that failure to comply with the registration requirement could lead to technical restrictions that would block access to their platforms. This is not merely a bureaucratic obstacle; it is a regulatory measure aimed at ensuring foreign entities play by the same rules as domestic businesses.
Shein, which has operated in Vietnam for two years, has acknowledged the regulatory demands, reaffirming its commitment to compliance. In contrast, Temu, which only recently entered the Vietnamese market, has yet to respond officially. Such differing responses from the companies highlight a broader theme in e-commerce today—how foreign brands adapt to local regulations and market dynamics.
The e-commerce landscape in Vietnam is vibrant, boasting a market size of $22 billion, primarily driven by platforms like Shopee, Lazada, as well as local contenders Tiki and Sendo. Shein and Temu’s entry into this market has sparked intense scrutiny from local businesses. The underlying concern is that such giant international players might leverage their resources to offer ultra-low prices, undercutting local vendors who cannot compete with such pricing strategies.
This situation mirrors recent actions by other Southeast Asian nations, such as Indonesia, where the government has taken steps to limit the influence of foreign platforms like Temu to foster a supportive environment for local businesses. These actions reflect a growing trend among countries in the region to safeguard their domestic markets amid an influx of foreign competition.
The overarching fear is not without merit. A report from the Vietnam E-commerce Association argues that foreign platforms can disrupt local supply chains and sales, threatening the livelihoods of small and medium-sized enterprises. The disparity in operational scale and marketing budgets often means that local businesses find it increasingly challenging to maintain their market share.
Moreover, consumers are attracted to platforms like Shein and Temu for their promise of low prices and fast delivery, often enticing buyers with discounted products. However, these practices raise issues about sustainability and the authenticity of goods, leading to concerns about counterfeiting. The Vietnamese government is thus caught in a balancing act: on one hand, fostering a competitive market that benefits consumers, and on the other, protecting local businesses from being overwhelmed.
The demand for compliance from Shein and Temu is not only a protective measure but also a strategic move to establish a more leveled playing field in the e-commerce sector. Vietnam’s actions echo global trends where governments are increasingly scrutinizing e-commerce practices, particularly those involving large foreign entities.
As the deadline approaches, the next steps taken by these companies will be crucial. Shein’s willingness to comply may set a precedent, potentially influencing how other foreign companies approach market entry in Vietnam. Conversely, Temu’s silence may reflect a strategic hesitation or an oversight in understanding the regulatory landscape in new markets.
In conclusion, Vietnam’s directive to Shein and Temu encapsulates a broader concern about foreign e-commerce’s impact on local industries. As the digital marketplace expands, it is imperative for governments to establish robust regulatory frameworks that protect local businesses while simultaneously encouraging a competitive, fair environment for all players. The outcome of this situation will not only affect Shein and Temu but will also shape the future of e-commerce in Vietnam and beyond.
