E-commerce in Vietnam has boomed in recent years and especially since the Covid-19 pandemic, fuelled by key factors such as progressive government policies and increased middle-income class and fast-growing internet economy. According to the Ministry of Industry and Trade (MOIT), the e-commerce market is expected to reach an estimated value of USD 35 billion by 2025 with annual growth rates of 30%. The most important platforms in Vietnam include:
- Shopee:
Currently one of the leading platforms in Vietnam, known for its user-friendly interface and extensive product range. It often employs aggressive marketing strategies and promotions.
- Lazada
A well-established player, Lazada focuses on a wide variety of products and offers a robust logistics network. It is part of Alibaba Group, which enhances its reach and resources.
- Tiki:
Starting a book retailer, Tiki has expanded into various categories now. It is known for its fast delivery service and focus on quality.
- Sen Đỏ (Sendo):
A local platform that has carved out a niche by focusing on smaller businesses and local sellers, offering a variety of goods, from electronics to fashion.
- TikTok
TikTok primarily attracts young users who are actively looking for new products and trends. This demographic group is crucial for the e-commerce market.
Legal Framework regarding the E-Commerce Market in Vietnam
Decrees 52/2013/ND-CP and 85/2021/ND-CP are the central provisions for regulating the e-commerce market. According to Article 25 of Decree 52/2013/ND-CP, e-commerce platforms can be broken down into the following:
- Sales E-Commerce Website
A sales e-commerce website is an e-commerce website developed by traders, organizations or individuals by themselves to serve their commercial promotion, sales or service provision.
- E-Commerce Service Provision Website
An e-commerce service provision website is an e-commerce website developed by traders or organizations to provide an environment for other traders, organizations or individuals to conduct their commercial activities. An e-commerce service provision website could be of the following types:
- e-commerce trading floor
- online auction website
- online promotion website
Cross-Border E-Commerce Activities
Until 2021, there was uncertainty regarding the scope of Decree 52/2013/ND-CP in the context of cross-border e-commerce activities. Subject to this decree were only foreign individuals and organizations that have a presence in Vietnam, or have websites under the Vietnamese domain name. Consequently, there was a great deal of legal uncertainty for foreign individuals or organisations who conducted e-commerce activities despite not having a branch or operating under a Vietnamese domain name. To address this situation, Decree 85/2021/ND-CP was issued, which amended and supplemented some of the regulations of Decree 52/2013/ND-CP and introduced further regulations regarding transparency and social networks.
- Applicability to foreign investors, traders and organisations
With the issuance of Decree 85/2021/ND-CP, it was clarified that Regulation 52/2013/ND-CP is fully applicable to all foreign individuals and organisations that engage in e-commerce activities. A branch is no longer required for application, instead depends on whether
- Foreign traders and organizations having websites providing e-commerce services in Vietnam, including (i) websites with a Vietnamese domain name (.vn), or (ii) websites with Vietnamese display language, or (iii) website have over 100,000 transactions from Vietnam per year.
- Foreign traders and organizations selling goods on Vietnamese e-commerce exchanges.
- Foreign investors invest directly in Vietnam in the field of e-commerce services. This changed with the enactment of Decree 85/2021/ND-CP, which, in addition to amendments to Decree 52/2013/ND-CP, also introduced regulations regarding transparency obligations and social networks.
- Transparency
Stricter transparency requirements now apply to goods and services offered on e-commerce platforms, such as product labeling or information on license and/or certificates showing the satisfaction of business conditions in the case of conditional business
- Social Networks
Furthermore, social networks will be classified as e-commerce platforms if they fulfil one of the following requirements:
- allowing users to open booths for displaying/promoting their goods or services. Service
- allowing users to open accounts to carry out the conclusion of contracts with customers
- having a trading section that allows users to post goods and services for sales
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Please do not hesitate to contact Dr. Oliver Massmann at [email protected] if you have any questions. Dr. Oliver Massmann is the General Director of Duane Morris Vietnam LLC.
