The domestic consumer manufacturing industry will be "destroyed" and not simply "filtered", the chairman of the Ho Chi Minh City Rubber and Plastic Association commented before the storm of Temu, Taobao, 1688.com...
The Rise of Platforms e-commerce Chinese e-commerce giants like Taobao, Temu and Shein are posing huge challenges to Vietnamese businesses, especially small and medium-sized enterprises (SMEs).
It's hard to survive against Chinese goods sold on e-commerce.
Speaking on the sidelines of the 22nd International Exhibition on Machinery and Equipment for the Plastic and Rubber Industry (VietnamPlas 2024) in Ho Chi Minh City, Mr. Nguyen Quoc Anh - Chairman of the Ho Chi Minh City Plastic Rubber Association - said that these platforms are disrupting manufacture domestically, especially in the footwear and consumer goods industries.
"Vietnamese consumers can now buy directly from Chinese e-commerce platforms, with delivery times of just a few days. This new way of shopping is creating fierce competition for domestic manufacturers, who are already struggling with high production costs," said Mr. Nguyen Quoc Anh.
In industries such as rubber and plastics, SMEs are under great pressure from this competition. A pair of domestically produced sandals priced at VND300,000-400,000 are now being undercut by Chinese imports at 20-30% cheaper via e-commerce channels. The convenience of home delivery and lower prices offered by Chinese e-commerce platforms have made it difficult for Vietnamese manufacturers to keep up.
Many domestic manufacturers have had to import products from China, label them as Vietnamese brands, and resell them in the domestic market. However, even this method is proving ineffective as Chinese imports still dominate in terms of price and supply.
Mr. Nguyen Quoc Anh emphasized the injustice that platforms like Taobao, Temu and Shein sell goods to Vietnam without paying taxes and benefit from the strong logistics system supported by the Chinese government .
Meanwhile, Vietnamese small and medium-sized enterprises face many barriers, including import taxes and high production costs, which prevent them from competing effectively. Production materials such as rubber, chemicals, plastics, etc. imported to the port are subject to VAT, which is very difficult to refund.
"The situation is no longer simply about competition, it has become a matter of protecting the market and domestic production. This is a macroeconomic issue that requires government intervention," he emphasized.
Call for fair trade practices
Unfair competition between imported and domestically produced goods has prompted domestic manufacturers to demand that the government impose import duties on Chinese goods sold through e-commerce platforms, to level the playing field for domestic manufacturers.
"Currently, domestic products sold on traditional channels are also subject to many types of taxes. This puts them at a disadvantage compared to tax-free goods sold through e-commerce platforms," Mr. Nguyen Quoc Anh added.
Faced with these challenges, if there is no solution, the "e-commerce storm" from China could permanently change the production landscape of Vietnam and this is predicted to happen in just 1-2 years. Right now, there are some small businesses struggling with the storm of Chinese goods via e-commerce.
"I have a friend who specializes in producing a single garment item and supplying it to traditional markets and supermarkets... Previously, this person used cheap materials imported from China to produce and sell domestically. But now this item cannot be cheaper than goods from China bought on e-commerce platforms, so it is almost no longer for sale," Mr. Quoc Anh shared.
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