by Ngoc Bich
HCM City police recently busted four consignments of well-known Italian brand names such as Dolce&Gabbana and Gucci. Police said the clothes, handbags and footwear had been imported from Hong Kong and were Chinese-made products worth just a few dollars each.
The tax imposed on the total consignment was just VND27 million ($1,300) although this would be much, much more if the items were genuine.
While waiting for conclusion from investigators, people are considering two possibilities.
First, if the value of the declared goods is confirmed, it means they are sophisticated imitations of the Italian famous products. Alternatively, if the goods are genuine, it means the importer has intentionally lowered their real value to evade tax.
Whether the investig-ation's conclusion matches the first or the second situation, the story has come as a surprise to some Vietnamese consumers, especially the few who are "faithful" to legitimate brand names.
Sadly, a clampdown will probably encourage Vitnamese to buy luxury goods abroad, rather than invest in high-quality products made in Viet Nam.
People who are ready to spend billions of dong to buy a luxurious dress are not simply paying for the outfit, but also for the prestige of owning a famous brand name which can improve their social standing.
They argue that when they wear a shirt with a Hugo Boss or Pierre Cardin logo, others will immediately recognise it and be impressed, whereas clothes made by Vietnamese companies do not provoke the same reaction, despite their high quality.
According to a foreign expert working in market research, only one per cent of Viet Nam's population (equivalent to 1.5 million people) can afford luxury goods.
How do big brand names keep finding ways to integrate into the country's market? It is because they cleverly identify the aspirational psychology of sections of Vietnames society, coupled with the nation's general preference for foreign goods.
It is undeniable that the development of information technology and increase in disposable income for Vietnamese people, especially those living in urban areas, has made it easier than ever to purchase products made in foreign countries.
They buy various kinds of products from clothes, accessories and home appliances to formula milk for babies. However, the purchase is often made through "informal" ways such as asking friends or relatives living abroad to send the products to them as gifts.
These methods allow them to avoid paying tax on the goods.
Although not deliberate, it is this psychology and preference for foreign goods which unwittingly abet the smuggling of cheap, fake and low-quality goods from abroad.
Here, Vietnamese consumers are seemingly being caught in a vicious circle.
Their demand for foreign products leads to the smuggling of counterfeits and discourages domestic production; and when the contraband goods overwhelm the domestic market, consumers resolve to avoid buying them and accidentally boycott legitimate Vietnamese products of a similar ilk.
To boost domestic production of high-quality products and enhance competition against foreign rivals, the Government has launched the "Buy Vietnamese" campaign at the end of 2009. The campaign is also a measure for rebalancing the economy by encouraging the country to become less reliant on imports as it fights off the global recession.
Statistics released in a recent three-year review of the campaign show 70 per cent of Vietnamese people trust in Viet Nam's high-quality products compared to just 23 per cent before the campaign was launched. The increase in home-purchasing has contributed to the rate of enterprise localisation increasing by 25 per cent, and gaining a trade surplus of US$64 million in the first 11 months of this year.
To some extent, the campaign has been successful, but whether the gains are sustainable remains an unanswered question. If the campaign comes to an end, how much of the market share will Vietnamese goods enjoy? Will it continue to increase or start to slip?
You could say the current success was mostly achieved thanks to the core programme of bringing Vietnamese goods to rural areas, where 70 per cent of the population still resides. Through the programme, companies are encouraged to prepare shipments of goods to sell to farmers, but the shipments need to be organised more regularly.
Moreover, the products sold in the programme such as foodstuffs and household chemicals are cheap to produce, so companies can easily reduce their prices to make them affordable for low-income consumers.
Therefore, the social target of the campaign might be attainable but its economic objectives, such as increasing in the State budget or enhancing companies' competitiveness, remain elusive.
One official from the Ministry of Industry and Trade once admitted that the campaign had helped raise the coverage of Vietnamese goods in supermarkets to 90 per cent, but in a country where people are familiar with buying things outside of these outlets, selling Vietnamese goods in supermarkets is not enough. Domestic companies should expand their supply networks, not only to rural but also urban areas, so that their goods reach all sections of society.
Besides, they should be encouraged to produce goods with high profit margins and the Government should have supporting policies to advertise these products worldwide so the brand names become internationally recognisable like other famous foreign trademarks.
By that time, Vietnamese consumers will decisively shift towards Vietnamese goods, as they will have to spend less on high-quality, luxury products.
The Government set a target for the campaign to increase the proportion of people buying Vietnamese products to 80 per cent by 2015.
I think the figure can be reached, but the most important question remains how do we change Vietnamese people's perceptions of domestic products?
If consumers feel proud of goods made in Viet Nam, then there will no longer be a need for campaigns such as this - even in a time of economic downturn! — VNS