Temu suspended in Vietnam after failing to meet registration deadline

Online shopping app, Temu has been asked to suspend its services in Vietnam following its failure to meet an end-November registration deadline for its business. The country’s Ministry of Industry and Trade earlier raised concerns in October over the low prices on the online marketplace, stressing the impact on domestically produced goods.

Temu has been described as one of the world’s fastest-growing e-commerce platforms, with sales in the first half of this year estimated at $20 billion. That compares with $18 billion for all of 2023.

In a statement issued on Thursday, the Ministry said: “Temu operations will be temporarily suspended until it completes the registration procedure. The platform has submitted an application for e-commerce service activities in Vietnam which is under authorities’ review.” However, the ministry did not disclose how long the suspension will run or what steps the company must take to lift the ban.

On Temu’s App, Vietnamese has been found missing as an interface language with users only having options of English, Chinese, and French. Likewise, Vietnam’s customs have stopped clearing goods on the app after it missed the registration deadline.

“Temu is working with the Vietnam E-commerce and Digital Economy Agency and the Ministry of Industry and Trade to register its provision of e-commerce services in Vietnam,” a notification on the website said when accessed from Vietnam.

According to the company’s spokesperson, Temu has submitted all necessary items for regulatory approval. “We have submitted all required documents for the registration,” the spokesperson said.

Since its launch in 2022, Temu has driven consumers across the world with its low prices and all-powerful algorithms. Following its launch in Vietnam in October, its services have caught the eye of Vietnamese consumers with discounts of up to 90 per cent and free shipping.

According to the official Vietnam News Agency, the ministry raised concerns about the “unusually low prices of its goods, which may impact domestically produced products.” It also stated that “It is unclear whether they (the goods) are authentic.” 

Meanwhile, it is still unsure whether the Chinese-owned e-commerce company will be able to resume business in the country.

Temu’s struggle for regulatory approval

After its launch in Vietnam, Temu was notified that compliance with local regulations was essential to continue its operation. The ministry also warned that failure to register could result in restricted access to Temu’s apps and trade operations within the country.

However, the trade ministry and local businesses have expressed concern about the impact of Chinese online platforms on local markets over their deep discounting offers. The ministry has also said it is worried about the potential sale of fake items.

Also, Vietnam’s regulatory requirements for Temu include registration with the government and compliance with tax laws. Sources claimed the company has been facing challenges in Vietnam due to failure to fulfil legal procedures and customs regulations. 

On another end, a source claimed that Vietnam authorities have halted the operation of the Chinese fashion retailer, Shein after its Vietnamese website went off. Also, the company confirmed that it was working with the trade ministry to register services.

Last week, Vietnam’s parliament approved changes to a tax law that will require local operators of foreign e-commerce platforms to pay value-added tax (VAT). The legislative body also called on the government to scrap a tax exemption for low-cost imported goods.

The move has seen the finance ministry initiate the process of scrapping the tax break. The development served as a blow to the e-commerce industry dominated by foreign companies including Temu. These companies have, in recent times, benefited from VAT exemption and rules in place since 2010 which stipulate imported goods worth under 1 million dong ($40) be free from duties.

Just two months after its launch, the temporary suspension of the e-commerce company highlights Vietnam’s rigid stance on foreign online retailers.

Temu’s suspension in Vietnam is not the first

After its launch in 2022, Temu rose to become one of the most popular online shopping sites in the United States. It also claimed the title of one of the fastest-growing apps in Europe.

In April, South Korean regulators opened an investigation into the online shopping app on suspicion of unfair practices including false advertising and poor product quality. Also, the European Union (EU), in late October, hit the shopping platform with a probe over concerns that the site is not doing enough to stop the sale of illegal products.

The company likewise faced regulatory issues in Indonesia. In a move to protect small merchants, the country’s authorities asked Google and Apple to block the app stores within the country.

In the Nigerian scene, the Temu ads have recently dominated the e-commerce digital landscape as the platform appears to be testing the waters in Nigeria, sparking curiosity and conversation. Its targeted ads, social media buzz, and a growing number of attempted orders suggest that the platform is positioning itself to tap into one of Africa’s largest consumer bases.

Read More: Is the absurdly cheap e-commerce platform, Temu sneaking into Nigeria?