SSI: Established Businesses Like The Gioi Di Dong, FPT Retail, and Masan Benefit from the Crackdown on Counterfeit and Pirated Goods

Vietnam’s SSI Securities Corporation’s June strategy report highlights an interesting investment theme: stocks of companies benefiting from the crackdown on counterfeit goods.

The report also notes that authorities have recently intensified efforts to dismantle syndicates producing counterfeit consumer goods, such as dairy products, pharmaceuticals, and cosmetics.

This has raised concerns about product origins, prompting consumers to turn to reliable retailers in the form of MT channels (modern distribution channels, i.e., large supermarkets).

As a result, modern pharmacy chains and supermarkets stand to gain the most from the eradication of counterfeit goods production bases.

Additionally, the expected increase in tax revenue from business households may also benefit distribution companies operating through MT channels.

According to Decree 70/2025/ND-CP, from June 1, 2025, business households must be equipped to issue invoices when selling goods, thereby curbing tax evasion.

Some business households have temporarily ceased operations due to difficulties in adapting to the new legal procedures. Those that remain in business face higher tax obligations and may need to pass on the increased costs to end consumers, narrowing the price gap between GT and MT channels and further incentivizing consumers to shift their purchases to MT channels.

Statistics show a growing trend in the number of pharmacy and general merchandise chains over the years, despite the boom in e-commerce.

However, the competitiveness of informal businesses (those not paying full taxes) has diminished due to recent policy changes related to e-commerce:

Firstly, from April 1, 2025, e-commerce platforms will have to declare and pay taxes on behalf of individuals doing business on their platforms. This means that shops selling undeclared imported goods on e-commerce platforms will face higher tax obligations, narrowing the price gap with fully tax-compliant enterprises.

Secondly, from February 18, 2025, imported goods sent via express delivery services with a value below VND 1 million/order will be subject to VAT, whereas previously they were VAT-exempt. Products valued below VND 1 million are mainly clothing, cosmetics, phone accessories, and small household appliances.

Thirdly, from April 1, 2025, Shopee and Tiktok Shop, the two largest e-commerce platforms in Vietnam with a combined market share of over 90% in 2024, simultaneously increased seller fees.

As a result, formal businesses, mostly operating through MT channels, will enjoy a more level playing field and less cut-throat price competition.