Vietnamese businesses able to leverage e-commerce, overcome market challenges: experts

Amidst the rapid expansion of low-cost Chinese e-commerce platforms like Temu, 1688 and Taobao, several Vietnamese businesses have managed to hold their own, showing how e-commerce can be leveraged to achieve success, experts say.

E-commerce risks, growth potential

The Ministry of Industry and Trade (MoIT) recently issued an urgent warning regarding the risks of shopping on unregistered cross-border e-commerce platforms in Vietnam, including Temu, Shein and 1688.

While these platforms were luring Vietnamese consumers with an array of products and low prices, the lack of regulatory oversight posed significant risks, it said.

In a document sent to relevant agencies, the ministry emphasized the need for raising consumer awareness on online transactions and advising them not to engage with unlicensed platforms.

The ministry also urged agencies to work with Temu’s legal team to ensure compliance with Vietnamese laws. If necessary, they can collaborate with the Ministry of Information and Communications to take appropriate steps against illegal activities, it said.

The swift growth of Temu on Vietnamese social media has sparked concerns about the competitiveness of local businesses, particularly as consumers flock to the platform for its low prices and free shipping.

Several experts, meanwhile, have said that while the concerns are well founded, Vietnamese companies can still find success by effectively harnessing the advantages of e-commerce.

Nguyen Van Thanh, director of the MoIT’s E-Commerce Development Center, said Vietnam ranked third in Southeast Asia in terms of e-commerce investment and development.

“E-commerce in Vietnam has been growing at a rate of 20-30% annually over the past seven years. While the country’s total export turnover reached approximately $350 billion in 2023, e-commerce accounted for just $5-6 billion. This indicates substantial potential for small and medium enterprises in Vietnam to grow through e-commerce,” he said.

Global e-commerce retail sales hit $5.8 trillion in 2023 and it was expected grow 39% over the next few years to top $8 trillion by 2027. This global boom offered significant opportunities for Vietnamese businesses seeking to engage in international trade, he added.

“Data from Amazon shows that thousands of Vietnamese businesses have expanded their global operations through the platform over the past five years. These companies are not only selling products but also focusing on brand building and enhancing their international presence.”

Gijae Seong, CEO of Amazon Global Selling Vietnam, said that the number of products sold on Amazon by Vietnamese partners has increased by over 300% over the five years 2019-2023. Participation in Amazon’s Brand Registry has surged 35-fold among Vietnamese sellers. The top five product categories experiencing the highest growth were Health & Personal Care, Home, Kitchen, Apparel and Beauty.

These impressive numbers showcase the vast potential of Vietnamese businesses in the global e-commerce arena, Seong said.

Success stories

Rice producer APG Eco and healthcare brand Bong Bach Tuyet, which has been in the market for more than 60 years, are among the Vietnamese firms that have effectively utilized TikTok Shop’s live-streaming features.

Many wood and pharmaceutical companies like CVI Pharma have reported a monthly export turnover of $20,000 via Amazon.

APG Eco, specializing in rice sales through live-streaming, has achieved a remarkable 600% growth in the past year, thanks to its ability to use technological advantages and abundant materials supply.

CVI Pharma, founded in March 2013, has evolved from a startup into a global exporter. Its success, particularly in the specialized pharmaceutical sector, has been driven by serious investment and support from Daiwa-Siam Vietnam Growth Fund II L.P, an investment fund from Japan.

Meanwhile, Bong Bach Tuyet exemplifies a traditional company successfully dealing with market fluctuations.

Once a leader in Vietnam’s medical cotton and sanitary napkin markets, accounting for up to 90% of the market share for medical cotton and 30% for sanitary napkins, the company faced significant challenges that led to losses for many years.

In 2008, Bong Bach Tuyet was saddled with massive debt and had to delist from the stock exchange. The company's market share dropped to around 60% in the medical cotton segment and just 3% in sanitary napkins.

Senior company executives said that with “a determination to renew products, change sale methods and strongly invest in affiliate marketing on TikTok Shop,” the firm has been able to engage with young customers.

During the September shopping season (September 1-9), the company hosted over 4,000 live-stream sessions in collaboration with affiliate creators that generated nearly 50% of its total revenue during the period.

Temu, the e-commerce platform under China’s PDD Holding, has been given tax identification number 9000001289 for its tax duty in Vietnam, says the General Department of Taxation (GDT) under Vietnam's Ministry of Finance. Temu’s tax code was registered by its owner Elementary Innovation Pte. Ltd. But its activities are yet to be licensed by Vietnam's Ministry of Industry and Trade.