The Rise and Fall of Temu in Vietnam: From Consumer Craze to Fizzle in Just Two Months

From the Center of Attention with “Huge” Preferential Policies

In October 2024, Temu, a cross-border e-commerce platform from China, officially entered the Vietnamese market. With a strategy of low prices, attractive promotions, and a completely Vietnamese interface, Temu quickly attracted consumers’ attention. In a short time, the platform became a “fever” thanks to its low-price policy, making many domestic businesses wary.

The highlight of Temu compared to other e-commerce floors is its low prices thanks to its business model, which directly connects manufacturers and customers, eliminating intermediary costs.

In addition to applying unprecedented discount policies, Temu also created a multi-level commission model with an affiliate marketing program, sharing profits with those who share links to the app with other partners. According to this policy, users become marketing collaborators and will receive money when someone clicks on the link or banner introduction with the agreed commission policy.

Temu also started advertising heavily on social media platforms to reach Vietnamese users, especially Facebook, with a series of announcements of “grand opening discounts of up to 90%” and many other huge incentives such as a VND 490,000 discount package for all Vietnamese users…

To Disappointment and “Broken Dreams”

Temu’s expansion without a license raised concerns about consumer rights protection and unfair competition with domestic businesses. In this situation, the industry and trade closely monitored the activities of this e-commerce platform and assessed the impact of Temu on the Vietnamese market.

After a short period of experience, many people were disappointed with the prices, quality of goods, and service delivery time of Temu.

Many consumers who participated in the Temu floor shared that the actual transaction prices were not as advertised, and the quality of the products was disappointing. Moreover, returning items was very inconvenient, and the payment method was inflexible.

Temu’s commission policies, such as a 10-30% reward for each item sold or a gift of VND 150,000 when someone installs the app… are also not as easy as many people imagined.

Accordingly, users can only earn a 10-30% commission (based on an order value of VND 1.2 – 2.4 million) for the first ten purchases made by a new app user (a user who downloads the app and registers for the first time on the Temu app) when they use the intro link of the affiliate within 30 days, plus one condition, the account must have a new app user status and maintain this status during that time. If the new app user uninstalls the Temu app, they will be removed from the new user status, and the introducer will not receive any commission from that point on.

According to Temu, if any new app user does not meet the purchase requirements, the reward will be canceled. The reward will also be revoked if a qualified transaction is canceled, refunded, or returned, either partially or wholly.

Temu Officially Suspends Operations in Vietnam

According to regulations, cross-border e-commerce platforms with Vietnamese domain names, or with a display language of Vietnamese; or with more than 100,000 transactions from Vietnam in a year must register their activities with the Ministry of Industry and Trade; must establish a representative office in Vietnam according to the provisions of Vietnamese law or appoint an authorized representative in Vietnam.

On December 4, Temu unexpectedly announced the temporary suspension of its services in Vietnam after working with the Ministry of Industry and Trade and being requested to do so. Currently, it is unclear when Temu will resume operations. According to observations, Temu has now completely changed the interface language from Vietnamese to English on both the app and the website. Users in Vietnam only have three language options: English, Chinese, and French.

According to the leader of the Department of E-Commerce and Digital Economy – Ministry of Industry and Trade, Temu has submitted its registration dossier but is still in the process of completion. The Department has requested this platform to urgently complete the legal procedures. During the registration process, they must inform consumers and stop all commercial and advertising activities that violate Vietnamese law to protect consumers.

By November 30, if the registration procedure in Vietnam has not been completed, the Temu floor must stop operating. However, up to now, this unit has not completed the necessary procedures. Therefore, recently, the Ministry of Industry and Trade has requested Temu to temporarily suspend operations until the registration procedure is completed.

Accordingly, only when Temu completes the registration and licensing procedure with the Ministry of Industry and Trade will the customs proceed with the next procedures for goods traded on this floor.

Many consumers using Temu in Vietnam are concerned and confused about the delay in orders and refunds when this e-commerce platform stops operating in Vietnam. Unlike other popular e-commerce platforms operating in Vietnam, Temu requires consumers to pay immediately when purchasing goods, meaning they have to pay before receiving the goods.

The representative of the Department of E-Commerce and Digital Economy reassured consumers that there is no need to be too confused if they had placed an order with Temu before that, because if the delivery time has passed, the Temu floor must have the obligation to refund the money to the consumers.

However, according to Lawyer Tran Tuan Anh, Director of Minh Bach Law Company – Hanoi Bar Association, for the Temu floor, users must pay immediately with an international payment card. So, if Temu really stops doing business in Vietnam, the risk of buyers losing their goods and money is very high. The possibility of getting it back from the floor is also not high.

In theory, consumers can completely complain and sue to get back the money paid or the goods as ordered. However, in reality, this is almost impossible because the Temu floor is located abroad, and this commercial act is also abroad, so it is not controlled by Vietnamese law, although Vietnam has a full legal framework to protect consumers.

It’s not just Temu; recently, China has increased cross-border exports through digital platforms and e-commerce, including Tiktok shop, Shopee, and Lazada… Chinese enterprises establish warehouses in border areas or even have warehouses in Vietnam.

Many experts believe that with the appearance of e-commerce platforms like Temu, Taobao, and 1688… the penetration of cheap Chinese goods into the Vietnamese market is becoming a significant challenge for enterprises in all sectors.

A 2023 survey by the Department of E-Commerce and Digital Economy shows that 28% of Vietnamese consumers buy goods through foreign e-commerce websites, and 59% think that prices are cheaper. It is estimated that the value of goods/services purchased online from foreign merchants in 2023 is mainly for orders below VND 5 million, accounting for more than 50%.

Given this situation, National Assembly deputies and economic experts emphasize that management agencies need to take immediate action. Although it is difficult to take rigid actions such as banning cross-border e-commerce activities, many deputies propose that the Government needs to review this activity to have tax measures, rules of origin, import and export to ensure fair trade and a legal basis for e-commerce platforms entering our market later.