In-depth Analysis: Temu’s Entry into Vietnam amid Compliance and Market Dynamics

Temu’s Non-compliance with Vietnamese E-commerce Regulations

Chinese e-commerce platform Temu, owned by PDD Holdings, has recently entered Vietnam but is yet to register with Vietnamese authorities, raising concerns about regulatory compliance. Under Vietnamese law, cross-border e-commerce platforms are required to register if they meet any of the following conditions:

1. Use a Vietnamese domain (.vn).
2. Display content in the Vietnamese language.
3. Conduct over 100,000 transactions per year within the Vietnamese market.

Although Temu began offering services to Vietnamese consumers in September 2024, it has not fulfilled registration obligations, despite providing an interface in Vietnamese. Deputy Minister of Industry and Trade Nguyen Sinh Nhat Tan confirmed that the agency is monitoring the platform’s activities, especially its aggressive discounting policies, to prevent the distribution of counterfeit goods and protect local retailers.

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Temu’s Global Expansion and Strategic Entry into Vietnam and Brunei
Temu, first launched in the U.S. in September 2022, has quickly scaled its operations to 82 countries and territories, achieving a gross merchandise value (GMV) of $20 billion in the first half of 2023, surpassing the $18 billion GMV of the entire previous year. Temu’s entry into Vietnam and Brunei follows its ban in Indonesia, which was enacted to protect local micro, small, and medium-sized enterprises (MSMEs) from being undercut by cheap Chinese imports.

Indonesia has taken stringent measures, instructing Google and Apple to block Temu from their app stores, further limiting its market presence in the country. Indonesia’s e-commerce sector is a booming industry, projected to grow from $62 billion in 2023 to $160 billion by 2030, per a report by Google, Temasek Holdings, and Bain & Co.

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Challenges Faced by Temu in Vietnam
Temu’s entry into Vietnam appears to have been rushed, with several operational gaps reported:

1. Initial English-only Interface: At launch, the platform's website in Vietnam was available only in English, according to the South China Morning Post.
2. Limited Payment Options: Temu currently accepts only credit cards and Google Pay in Vietnam, omitting popular local digital wallets like MoMo and ZaloPay, which are widely used by Vietnamese consumers.
3. Shipping Time Advantage: The platform claims to deliver goods to Vietnam in four to seven days, a faster timeline compared to other Southeast Asian markets like Malaysia and the Philippines, where delivery takes five to 20 days.

While the Vietnamese e-commerce market is one of the fastest-growing in Southeast Asia, achieving 53% year-over-year growth in GMV in 2023, Temu’s non-compliance and limited localization raise questions about its long-term viability.

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Implications for the Vietnamese E-commerce Ecosystem
Vietnam’s booming e-commerce sector offers immense growth potential but also presents challenges related to market regulation and competition. The entry of aggressive platforms like Temu could disrupt the market, particularly for local MSMEs, which may struggle to compete with Temu's heavily discounted products. Regulators are scrutinizing Temu’s pricing strategies to prevent the sale of counterfeit goods and protect small businesses. This regulatory oversight reflects a broader trend across Southeast Asia, where governments seek to strike a balance between encouraging foreign investment and shielding local businesses.

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Comparing the Brunei Launch
In contrast to its rollout in Vietnam, Temu’s launch in Brunei appears smoother, with the platform offering services in both English and Malay, the official language. Brunei, known for its high standard of living, provides Temu with access to a niche but affluent market.

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Concluding Thoughts
Temu’s entry into Vietnam and Brunei underscores its ambition to dominate new markets despite regulatory challenges. However, the platform’s non-compliance with Vietnamese e-commerce laws and its lack of seamless localization might hinder its success. Temu’s experience in Indonesia serves as a cautionary tale, illustrating how Southeast Asian governments are increasingly adopting protectionist measures to safeguard domestic businesses. As Vietnam’s regulatory authorities continue to assess Temu’s impact on the market, the platform must either adapt quickly to local conditions or risk facing restrictions similar to those imposed in Indonesia.

The broader question remains whether foreign e-commerce giants like Temu can find a sustainable operating model in Southeast Asia, where local consumer behavior, regulatory frameworks, and competitive dynamics vary widely across markets.