Small retail business in Vietnam are struggling to stay afloat due to competition from cheap Chinese imports sold online, according to reports in Tuoi Tre. This is partly reflected in a fall in stalls operating at local markets, for example, Thu Duc market has a capacity of 936 stalls but only 572 are currently opening. In particular, the number of cosmetics stalls has fallen from 130 stalls to just 22.
This has become a common narrative over the last year or so and looks to be linked to a downturn in the Chinese economy which is seeing Chinese manufacturers look for new markets abroad. Whereas Vietnam has benefit from its proximity to China with respect to developing its own manufacturing industry as firms look to diversify their supply chains out of China, its proximity also means that it is much easier for Chinese manufacturers to access its consumer market.
Of note, earlier this year, Vietnam’s Ministry of Industry and Trade said that around US$1 billion worth of goods were being imported into Vietnam via e-commerce sites tax-free. This is inline with tax policy that exempts imported goods with a value of less than VND 1 million or about US$40 from Vietnam’s Value Added Tax. The Ministry went on to argue that this exemption should be abolished.
See also: How to Start an Import Business in Vietnam: Ultimate Guide 2024