Vietnam’s government has taken a decisive stand against two of China’s largest online retail platforms, Shein and Temu, declaring that it will block both platforms’ domains and apps within the country if they do not officially register their operations with the Ministry of Industry and Trade by the end of November. This stringent policy marks an effort to regulate foreign e-commerce giants whose competitive pricing and aggressive marketing strategies have stirred concern within Vietnam’s local business landscape.
Deputy Trade Minister Nguyen Hoang Long addressed the issue during a government meeting over the weekend, emphasizing the trade ministry’s commitment to fair market practices and local consumer protection. The ministry has reached out to Shein and Temu about the licensing requirement, indicating that the enforcement process will involve a coordinated effort between the Ministry of Industry and Trade (MOIT) and other agencies, using technical measures to block both applications and domains if the companies remain non-compliant.
Fast-fashion giant Shein has been an active player in Vietnam’s online market for several years, appealing primarily to young shoppers with a keen interest in trendy, affordable clothing. However, the recent entry of Temu, the discount-driven platform owned by PDD Holdings, has introduced an additional level of competition, intensifying the pressure on local retailers who are struggling to keep up with the flash sales and frequent discounts.
As Chinese e-commerce platforms grow in popularity due to their competitive prices and product variety, local businesses face mounting challenges. Many Vietnamese retailers express frustration, noting that the heavily discounted goods available on platforms like Shein and Temu set a low-price expectation that domestic retailers find difficult to match. For local businesses, the availability of such inexpensive products raises concerns over their quality and longevity, potentially creating negative consumer experiences and affecting the broader reputation of e-commerce products.
“The impact of these platforms is twofold,” explains Nguyen Tran, an economic analyst based in Ho Chi Minh City. “On one hand, they drive growth in digital commerce, but on the other, they create an unsustainable precedent with price undercutting and a lack of accountability regarding the quality and safety of the goods sold.”
Vietnam’s decision to impose these registration requirements is seen as part of a broader move to address the effects of foreign e-commerce giants on its domestic economy and online retail sector. By requiring registration, the government aims to enforce existing commercial regulations and establish greater oversight of international businesses operating in the Vietnamese market.
Deputy Minister Long indicated that without compliance, the ministry would have no choice but to resort to blocking access to Shein and Temu within Vietnam. He added that “technical measures” would include working with telecommunications and internet service providers to restrict access to the platforms’ applications and websites, a move typically reserved for severe cases of regulatory non-compliance.
This decision aligns with Vietnam’s increasing vigilance in regulating e-commerce activities, particularly amid the rising prominence of international platforms. The government’s stance underscores the need for foreign entities to respect Vietnamese trade laws and contribute fairly to the local market, where the presence of unregistered and untaxed companies could potentially harm local economic stability.
Vietnam’s online retail market has experienced significant growth in recent years, with internet penetration rates climbing steadily and consumer adoption of online shopping platforms on the rise. For consumers, platforms like Shein and Temu offer access to a vast array of low-cost goods that, in many cases, would be difficult to find locally or at competitive prices. The result is a complex balancing act between consumer demand for affordable choices and the imperative to protect local industries.
Local consumers, particularly younger demographics, are increasingly turning to platforms like Shein for affordable fashion. Shein’s ability to offer styles at prices often lower than local stores has made it a go-to source for Vietnamese shoppers looking for the latest trends. Meanwhile, Temu’s recent entry and aggressive discounting strategy, based on flash sales and significant markdowns, have introduced an appealing option for Vietnamese consumers looking for inexpensive goods across various categories.
Vietnam’s government, however, remains cautious about the potential longer-term economic impact of such platforms on local businesses and the possibility of them distorting the retail market. According to the Ministry of Industry and Trade, this new requirement is a part of a broader framework aimed at creating a level playing field where local and foreign companies can compete under the same regulations and standards.
For Shein and Temu, the government’s ultimatum presents both legal and logistical challenges. Registering with the Ministry of Industry and Trade means subjecting their operations to Vietnamese tax laws, consumer protection regulations, and quality standards—requirements that may entail significant changes to their business models within the country. Additionally, Shein and Temu would need to establish local representation or partnerships to comply fully with Vietnamese regulations, a move that might reduce the operational efficiency that enables their low-cost structures.
These e-commerce giants also face an image issue in Vietnam. While popular with consumers, both platforms have encountered criticism globally over labor practices, environmental impact, and product quality. These issues could further complicate efforts to build positive relationships with the Vietnamese government and consumers alike.
The requirement for registration may represent only the beginning of a larger trend where Southeast Asian nations enforce stricter regulations on international e-commerce businesses. “The growth of these platforms comes with consequences,” says economic researcher Pham Minh Hieu. “Governments need to think ahead about how to regulate them so that local markets are not overwhelmed or undermined.”
Vietnam is not alone in its struggle to regulate the influence of Chinese e-commerce platforms. Across Southeast Asia, countries are beginning to address the challenges posed by these retail giants, which are often able to leverage extensive logistical and manufacturing networks in China to offer goods at prices local businesses find difficult to compete with. In recent years, the ASEAN region has seen a surge in e-commerce activity, with platforms like Alibaba, Lazada, and Shopee taking the lead. The regulatory response in each country, however, has varied.
In Indonesia, for instance, the government has implemented stringent import duties and additional oversight measures on cross-border e-commerce to prevent foreign platforms from overwhelming local businesses. Similarly, Malaysia has considered imposing stricter guidelines for foreign platforms, and Thailand is debating regulations that would limit the reach of e-commerce giants that do not comply with local tax laws.
Vietnam’s response, therefore, signals a shift within ASEAN towards increased regulatory oversight of e-commerce giants, with a particular focus on creating fair conditions for domestic businesses. The government’s decision comes amid an economic climate where local businesses are increasingly vocal about the unfair competition posed by these platforms.
The upcoming deadline of November will serve as a critical juncture for Shein and Temu’s future in Vietnam. If these platforms choose to comply, Vietnamese consumers may experience a shift in their shopping experience, as registered companies must adhere to Vietnamese regulations, which include accountability for quality standards, return policies, and after-sales services.
Conversely, a withdrawal or forced shutdown of Shein and Temu could create an immediate gap in the online retail market, as few local players can replicate the diversity of products and prices that these platforms offer. In such a scenario, local retailers may gain temporary relief from intense price competition but may need to innovate and expand their product offerings to meet consumer expectations shaped by these e-commerce giants.
To address any consumer backlash, the Ministry of Industry and Trade has indicated that it will work closely with local businesses to expand their online presence and help them improve operational efficiency to compete with foreign players. Additionally, the government is considering incentives for Vietnamese e-commerce platforms to ensure they can sustain the increased demand if foreign competitors are forced to exit the market.
