Free market confused with freedom to cheat

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Vietnam has confused liberalization with loose controls and unscrupulous enterprises are making merry

A TV shows a commercial for Happy Shopping, which has been fined for selling smuggled and fake goods

In Vietnam, no agency conducts periodic monitoring of enterprises to ensure they are operating under mandates of their business licenses, creating a huge legal loophole that allows customers to be cheated with impunity, says Nguyen Van Nam, former director of the Institute of Trade Research.

Thanh Nien Weekly: The Ho Chi Minh City administration recently slapped a fine of about US$22,000 on local home shopping company Happy Shopping for selling smuggled and fake goods through television infomercials. How can false advertisements be aired so easily?

Nguyen Van Nam: This is due to slack and irresponsible management. It begins right at the licensing of enterprises. Some firms have been licensed to trade in many kinds of products, from medicines to home appliances.

Goods that Happy Shopping sold were advertised as high quality products, while they were, in fact, fake. Thus our management system, from licensing to market practices, is very loose.

The firm is very tricky. It has made highly corrupt use of TV, the most common communications channel, to advertise its products.

But it should also be said that the TV network itself has been irresponsible in its blind pursuit of profit, agreeing to run advertisements during prime time without checking the credibility of either the advertiser or the products it is advertising.

Meanwhile, consumers with rising incomes, who want to use more luxurious and fashionable products, believe in the advertisements that are run on state-owned TV. The firm has played on consumer psychology.

When there are false advertisements on TV, both the advertiser and the TV network should be fined.

Who should take responsibility for monitoring the quality of products advertised on TV?

In fact, relevant authorities have not carefully identified an enterprise's area of expertise when licensing it. Some firms have been able to obtain a license despite dubious qualifications. To make matters worse, there is no agency in charge of monitoring their real operations and guaranteeing compliance with licenses granted to them.

There is no agency responsible for managing the sector. Every administrative agency supervises a specific function or an area. For example, an agency of the Ministry of Health is in charge of supervising the hygiene and food safety, while the market management agency is monitoring trade fraud. Since their functions do not overlap in this situation, a big legal gap is created for firms to misuse.

In other countries, the issue is clearly regulated, which agency is in charge of licensing, which is in charge of managing and supervising, and so on.

So you are saying consumers should be smarter in choosing products?

Consumers should be vigilant and should not put much belief and trust in advertisements. Many false and unreasonable commercials are still run on TV.

What can we learn from the Happy Shopping case?

The case shows that we do not know how to manage a market economy. We have not yet found a suitable management mechanism, unlike other countries where all activities of an enterprise would be supervised despite their free market conditions.

Vietnam has just started to develop its market economy, and we have identified liberalization with loosening controls. This is very wrong.

So we just fine the enterprises and allow them to continue operations?

Actually, even our fines are also symbolic. Several offenders will never pay fines as regulated. It is very difficult to fine smugglers or traders and producers of fake goods, because they have already bribed officials of relevant agencies.

Is there any violation of the competition law in such cases?

- Obviously there is violation of the law when you find fake goods of a brand. We should have punishments based on the competition law, but the Vietnam Competition Council has not yet dealt with the issue.

Our firms do not have the habit of suing those who steal their trademarks or fake their products. In other countries, competition councils deal with such issues in a quick and equitable manner.

Here, firms whose products have been faked think it's a waste of time and effort to take action against it. The main reason is that our management system has not adapted to the current situation.

How should the Vietnam Association of Standard and Consumer Protection act in this situation?

The association's role is very vague. It has been around for a long time but has not done much. In fact, it can play its role only when there are regulations on its activities and it is able to get the state's support as well as local people's trust.

However, people have not placed much trust in it, and the state has not supported it, so it cannot operate very effectively.

Vietnamese consumers should be vigilant and should not put much belief and trust in advertisements, an expert advised


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