With cheap prices, Temu convinces users with the slogan "shop like a billionaire", but on the contrary, this method may swallow up Vietnamese businesses.
Temu, a subsidiary of PDD Holdings (China) - the group that owns the e-commerce site Pinduoduo - has not officially announced its entry into Vietnam. However, users can access the app stores on their phones to download the app and make purchases and payments on this platform with the Vietnamese version. Previously, other Chinese e-commerce platforms such as Taobao, 1688, and Shein have also entered the Vietnamese market.
These are all traditional Chinese e-commerce platforms where their sellers have available shelves and shopping carts. Vietnamese businessmen predict that there will be a massive attack of Chinese goods on the Vietnamese market.
According to Mr. Luan, Chinese e-commerce platforms often take strategic steps to dominate the market. For example, they support domestic products with free shipping policies or vouchers. On the contrary, Vietnamese products will not enjoy this policy. Not to mention, these platforms also charge Vietnamese businesses higher fees.
Nguyen Duy Vi, marketing expert and CEO of Buzi Agency, said that domestic manufacturers will face pressure from the low competitive prices of imported products. However, many domestic companies cannot reduce prices to the level of foreign platforms due to higher production costs, labor costs, and taxes.
"This leads to the risk of losing customers, especially in the low and mid-range segments, where consumers are very price-sensitive," said Mr. Vi.
In fact, low prices are how Pinduoduo succeeded in China, and the international version Temu inherited the slogan "shop like a billionaire". They explained that the products are competitive because they sell directly from the factory, eliminating intermediaries. In addition, the strength of technology and logistics model also contribute to reducing selling prices and creating satisfaction.
“This allows them to offer very cheap product prices, often much lower than domestic products,” said the CEO of Buzi Agency, arguing that domestic consumers can benefit from this.
In addition to low prices, according to Mr. Vi, platforms like Temu and Shein offer a huge inventory of diverse products from clothing, household appliances, to technology and beauty. From there, consumers have many options, following international trends without having to wait through traditional channels.
However, this expert believes that low prices and product diversity are only short-term benefits. In the long run, consumers may be at risk of product quality.
"Many cheap items may not meet quality standards or come with adequate warranties," said Mr. Vi. The CEO of Buzi Agency also said that relying on foreign platforms can make it difficult to resolve post-purchase issues, such as complaints and product warranties.
According to the latest data from YouNet ECI, Vietnamese consumers spent VND87,370 billion on shopping on four major e-commerce platforms in the second quarter. Of which, Shopee almost dominated the market with 71.4%, followed by TikTok Shop with 22%, Lazada with 5.9%. Domestic platforms such as Tiki, Chiaki, Sendo, Websosanh, Adayroi along with big names such as Amazon Global, Alibaba or Shein compete with the remaining market share of less than 1%.
With the current market situation, Meet More CEO Nguyen Ngoc Luan admits that small businesses have almost no choice but to join the game. Their solution is to spread out to many different channels and platforms, including traditional channels such as supermarkets and retail stores.
Ms. Huyen Trinh (Tan Binh District, Ho Chi Minh City), who sells household appliances on Shopee, Lazada, and TikTok Shop platforms, said that "we should not worry too much". Admitting that she was quite cautious about the news that Shein and Temu were expanding their presence in Vietnam, Ms. Trinh did not see this as a big threat.
"At first, consumers may be curious and try it out, but they will quickly see the disadvantages and inconveniences of cross-border platforms compared to buying from domestic sellers," she said.
During that time, according to her, domestic sellers have time to adjust their strategies. "I will focus on after-sales customer care services, and move away from selling cheap products to compete directly with them, and focus on finding niche, unique, quality and more local products," she said.
Coolmate, a men's fashion brand that sells online on domestic e-commerce platforms, said it is "carefully observing the situation."
They said they remain optimistic that Temu and Shein will help the online shopping market grow further, attract more consumers who love online shopping and expand the share of e-commerce in the overall retail market.
The company said it is focusing on building its brand and improving the customer experience for its apparel products, two factors it believes local businesses can leverage to serve domestic customers.
In the immediate future, the State needs to have policies to limit products that do not ensure quality, according to Mr. Nguyen Ngoc Luan. In the long term, policies to protect domestic products, especially agricultural products, need to be taken into account. For example, tax policies need to be developed to differentiate between domestic and imported products, to increase competition for domestic production enterprises.
The solution of tariff barriers to protect domestic small-scale manufacturers has also been mentioned recently. Previously, the National Assembly's Finance and Budget Committee proposed collecting VAT on goods under 1 million VND through e-commerce platforms.
However, according to Mr. Nguyen Quang Dong, Director of the Institute for Policy Studies and Media Development (IPS), raising taxes too high or completely banning cross-border e-commerce platforms is not feasible. The reason is that Vietnam has deeply integrated into the global economy and participated in many free trade agreements.
Instead, Mr. Dong said that the authorities need to review and apply appropriate tax rates to goods that do not fully comply with tax obligations. They can also use management measures to combat unfair competition and comply with the law on personal data protection in Vietnam.
According to Mr. Tran Lam, an expert in online sales training and CEO of Julyhouse, to compete with cheap products from China, Vietnamese businesses need to invest in product quality or unique added value.
One strength of Chinese sellers is their modern and low-cost logistics system. To compete, according to Mr. Lam, Vietnamese businesses need to optimize their supply chains, reduce transportation costs, and increase delivery speed. This can be achieved through cooperation with local and international logistics companies.
Mr. Nguyen Duy Vi advised businesses to take advantage of opportunities to expand international markets through platforms such as Shopee, Lazada, or Temu, Shein. "Exporting specific products such as agricultural products, handicrafts, and traditional fashion helps businesses diversify their revenue sources and take advantage of the competitive advantages of Vietnamese goods in the international market," he said.
Experts also believe that Vietnamese businesses need to increase digital transformation in inventory management, logistics, build smart digital marketing campaigns or analyze user behavior, and personalize experiences.
"If businesses know how to take advantage of technology, improve production processes, focus on localization factors and sustainable development, they can create unique competitive advantages," he suggested.
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