Challenge of combat against fake goods in e-commerce environment

	Various tricks of storing fake goods, goods of unknown origin
	Approving the Scheme on combating fake goods in e-commerce
	Spreading fake goods, smuggled goods offered for sale online

On April 12, 2023, Hanoi Market Surveillance destroys a place to distribute smuggled Chinese domestic cakes for traders on e-commerce. Source: Directorate of Market Surveillance

Many consequences

In Vietnam, e-commerce is one of the pioneering fields of the digital economy, creating a driving force for economic development and leading digital transformation in businesses. Vietnam’s retail e-commerce sales in 2022 were estimated to grow by 20% year-on-year to US$16.4 billion, accounting for 7.5% of the country’s total retail sales of consumer goods and services. The number of consumers participating in online shopping is over 54.6 million people, and the online shopping value of one person reaches nearly US$270 per year. In the first 6 months of 2023, Vietnam's retail e-commerce sales were estimated at US$10.3 billion, up about 25% year-on-year, accounting for 7.7% of the country’s total retail sales of consumer goods and services.

On the other hand, when the boom of e-commerce also leads to the problem of counterfeit goods. Mr. Tran Huu Linh - General Director of the Vietnam Directorate of Market Surveillance assessed that e-commerce on social networking platforms and e-commerce trading platforms is now the main channel for consuming fake goods, goods infringing intellectual property rights.

Only in the first six months of the year, the market surveillance agency inspected nearly 3,000 cases related to counterfeit goods and issued a decision to impose a fine of nearly VND30 billion. However, those cases still cannot fully illustrate the current problem of counterfeit goods, said the General Director of the Vietnam Directorate of Market Surveillance.

The first victim of fake goods and infringing goods is the consumer. From a business perspective, they are also suffering from great damage. For foreign-invested enterprises (FDI), they are affected and lose confidence. They will feel confident about Vietnam's business investment environment. As for domestic enterprises, they also suffer from band damage. “The brand is faked, which erodes the production capacity of businesses when they have to compete with fake goods at cheap prices which attracts consumers. Therefore, the genuine enterprises’ product brand is suffering from many disadvantages for the issue of counterfeit goods," said Mr. Tran Huu Linh.

For cross-border e-commerce, Ms. Le Thi Ha, Head of Policy Division, Department of E-commerce and Digital Economy (Ministry of Industry and Trade), said that in the past, when needing to buy something abroad, Vietnamese people had to re-buy from an importer when they redistribute, or had to go abroad to search and order. Now, just by accessing big e-commerce sites such as Amazon, eBay, and Alibaba..., anyone can access billions of products from countless suppliers around the world.

According to statistics in the Vietnam e-commerce report of the Ministry of Industry and Trade in 2023, 35% of consumers buy goods on foreign websites, 43% of consumers buy goods from foreign sellers on Vietnam’s e-commerce floors; 3.9% of e-commerce floors have booths of foreign sellers, accounting for 4.7% of the total number of booths on the floor; the number of successful orders of foreign sellers on the e-commerce floors accounted for 7.8% of the total successful orders on the floors.

The rapid development of e-commerce in the digital economy has led to the emergence of many new business models and methods in many different regions and industries (such as digital currency, business models applying blockchain, and artificial intelligence (AI...), which are posing significant challenges in terms of the adaptability of the legal framework.

Cooperation to prevent fraud

According to Ms. Ha, although the legal framework for e-commerce has gradually been completed, the management of cross-border e-commerce activities is still facing a number of difficulties and obstacles such as the identification of foreign traders and organizations providing e-commerce services in Vietnam; the management of foreign sellers on domestic e-commerce floors and sales management on foreign social networks.

Mr. Nguyen Bac Hai, Deputy Director of the Customs Control and Supervision Department (General Department of Customs), said that although e-commerce has developed strongly, Vietnam has not yet had separate regulations on management policies and customs procedures for goods transacted via e-commerce, therefore, import and export goods transacted via e-commerce are usually carried out depending on the mode of transportation.

Therefore, export and import goods transacted via e-commerce face difficulties, including difficulties in preventing and combating smuggling and illegal transportation of goods across borders. Smugglers use exchanges and make agreements through the e-commerce floor, thus making it difficult to investigate, verification, and clarification of violations. When the Customs authorities discovered violations, the smugglers colluded with each other to say that they "sent wrong goods", and "refused" to receive goods to evade responsibility. In addition, violations related to e-commerce transactions often involve foreign elements. Due to the fact that the case has foreign elements, many contents need to be verified and clarified, but the subjects related to the case are abroad depending on the cooperation of the customs administration of the countries. In fact, Vietnam’s authorities had many times required foreign customs administrations to provide information but neither received a reply nor received general or incorrect answers. This affects the efficiency of fighting and handling e-commerce-related violations.

Cross-border e-commerce: An important commodity export channel

A representative of the Department of E-commerce and Digital Economy said that the management of cross-border e-commerce requires close coordination of many management units. The Ministry of Industry and Trade plans to further strengthen coordination with ministries and agencies in sharing data related to e-commerce such as: coordinating with the Ministry of Finance in building mechanisms and solutions on data sharing on e-commerce, thereby, timely capturing information on cross-border e-commerce, and making a plan to promptly solve problems arising in the management of e-commerce activities after the Decree on management of import and export goods via e-commerce transaction is issued.