China's E-Commerce Giant Temu Suspended by Vietnamese Government

Stock image: In this photo illustration, the Temu logo is displayed on a laptop in San Anselmo, California, on February 26, 2024. (Photo Illustration by Justin Sullivan/Getty Images)

[People News] Chinese e-commerce platform Temu has suspended its operations in Vietnam after failing to obtain the necessary licensing from the Vietnamese government. According to Vietnamese media reports, this decision followed a meeting between Temu and Vietnam’s Ministry of Industry and Trade (MoIT), during which the platform was instructed to halt its services until it received formal approval.

According to Voice of America, Temu, which is owned by Chinese e-commerce giant Pinduoduo, began offering services in Vietnam in October. However, it faced scrutiny for launching sales and aggressive advertising campaigns without obtaining official approval. Temu was required to register with the Vietnamese government by the end of November or face having its domain and app blocked.

On Thursday, December 5, Vietnam's Ministry of Industry and Trade announced that Temu, having failed to complete its business registration by the deadline, was ordered to suspend its operations in Vietnam.

“Temu’s operations will be suspended until the registration process is completed,” the ministry stated in a press release. “The platform has submitted its application to operate e-commerce services in Vietnam, which is currently under review by the relevant authorities.”

The statement did not specify how long the suspension would last or what additional measures Temu would need to take to resume operations.

By Thursday, the Vietnamese language option had been removed from Temu's website when accessed from Vietnam. A notification on the site stated, “Temu is working with the Vietnam E-Commerce and Digital Economy Agency (VEDEA) and the Ministry of Industry and Trade to register its e-commerce services in Vietnam.”

In a response to Reuters, Temu confirmed it had submitted all required documents for registration but did not provide a timeline for resuming operations.

Vietnam’s Ministry of Industry and Trade, along with local businesses, has expressed concerns about the impact of significant discounts offered by Chinese online platforms on the domestic market. Officials also voiced fears about the potential sale of counterfeit goods.

Last week, Vietnam’s National Assembly approved amendments to its tax law, requiring foreign e-commerce platforms’ local operators to pay value-added tax (VAT). Lawmakers also called for the removal of tax exemptions on low-cost imported goods.

The Ministry of Finance announced last week that it had begun procedures to eliminate these tax breaks.

This legislative change will likely deal a blow to the foreign-dominated e-commerce sector, which has benefited from VAT exemptions and a tax-free policy for imported goods valued below 1 million Vietnamese dong (approximately $40) since 2010.

According to The Investor, a magazine published by Vietnam’s Association of Foreign-Invested Enterprises (VAFIE), orders placed on the Temu platform are no longer able to clear customs in Vietnam. The Ministry of Industry and Trade stated that customs authorities would not process shipments from Temu until the platform obtained the necessary approvals.

The report also noted that the Vietnam E-Commerce and Digital Economy Agency is collaborating with the National Competition Commission to ensure that cross-border e-commerce platforms fulfill their obligations to Vietnamese consumers. Vietnam’s General Department of Customs has issued directives to prohibit the clearance of goods from unregistered platforms.

Temu, the international version of Pinduoduo, connects users directly with Chinese manufacturers to offer affordable products to global customers. Since its launch in the U.S. in September 2022, Temu has expanded to Canada, Australia, New Zealand, Europe, and Southeast Asia.

Temu’s rapid expansion has raised concerns in several Southeast Asian countries. Indonesia has already banned the platform, while Thailand and others have introduced regulations requiring foreign e-commerce companies to establish local offices. These measures aim to ensure that foreign platforms comply with the tax and legal frameworks of their host countries, similar to the obligations faced by domestic businesses.