KENFOX IP & Law Office > Risks facing traders of “hand-held” products / “smuggling goods” in Vietnam

Risks facing traders of “hand-held” products / “smuggling goods” in Vietnam

Most of Vietnamese consumers tend to think that goods imported from foreign countries are of better quality than those manufactured in Vietnam.

 

Seeking and consuming the foreign originated goods, especially, fashionable and quality products manufactured in foreign countries despite high prices thereof are Vietnamese consumer trends. Internet boom serves as a fastest bridge to connect the consumers and the traders. Higher purchasing power stimulates forming e-commerce websites/platform.  Today’s Vietnamese consumers are also more familiar with shopping online. Grabbing the xenocentrism of Vietnamese consumers, many traders have proceeded to order/choose the products for sales in Vietnam when going to foreign countries. Various Vietnamese retailers have recently set up websites, Facebook pages, etc. and make various advertisements of certain products for sales. Some invite internet users to place orders for the products based on the pictures in the websites, Facebook pages so that the retailers may take/purchase those products in foreign countries to re-sell them to the local customers. The products in such context are called “hand-held” ones. This means the genuine products are sold in foreign countries, then, purchased by Vietnamese retailers/traders for re-sale to the Vietnamese customers. Under the law of Vietnam, parallel imports are allowable in Vietnam. Under the laws of Vietnam, parallel imports are acceptable. In other words, importers in Vietnam are not banned from parallel imports. In particular, under Article 125.2.b, the Law on Intellectual Property of Vietnam 2005, revised in 2009 (“the IP Law 2005/2009”), owners/ holders of industrial property rights shall not be entitled to prevent others from “circulating, importing, exploiting those products, which were lawfully put on the markets, including overseas markets, except those put on the overseas markets not by the mark owners or their licensees”. In a broader sense, it is impossible for the trademark owners to prevent others from importing into Vietnam genuine goods, which are manufactured or distributed in overseas markets by the trademark owner/ licensees/ distributors.  In both practice and legislation, there is no sanction imposed on the party(ies) engaging in parallel imports.

 

Parallel imports or “hand-held” ones has become a worrisome for the solely authorized sellers/traders in Vietnam because parallel imports often result in lower sales of authorized products.

 

Many clients have sought KENFOX advice on how to deal with parallel imports or “hand-held” ones. To the side of Vietnamese laws, we contend that despite being genuine products traded in Vietnam, the hand-held products are taken into Vietnam without customs declaration or legitimate invoices to indicate where the products are purchased are categorized as “smuggling” products under the laws of Vietnam.

 

KENFOX opine that those trading in “hand-held” products may face various legal risks by administrative regulations. The traders who are unauthorized re-sellers do not obtain/have the accompanied invoice from the authorized sellers will suffer most when such “hand-held” products  are deemed “smuggling goods” and, thus, may be seized by the Vietnamese competent authorities.

 

Please refer to some applicable legislations to handle the hand-held products as follows:

[Article 3.7(d) of Decree No. 185/2013/ND-CP dated 15 November 2013 providing for the penalties on administrative violations in commercial activities, productions of, trading in counterfeit or banned goods and protection of consumers rights:

 

Article 3. Interpretation of terms:

  1. “Smuggling goods” includes”
  2. d) Imported goods are circulated into the market without accompanied invoices, documents according to legal provisions or with invoices or documents but such invoices or documents are invalid according to legal provisions on management of invoices”]

 

Sanctions against the violators and smuggling goods are provided under Article 17of Decree No. 185/2013/ND-CP dated 15 November 2013 as follows:

[Article 17. Acts of trading in illegally-imported goods: + Imposing a monetary fine up to VND 200,000,000.00 VND against the violator, subject to the value of the products; + Confiscating the smuggling products, + Destroying the smuggling products]