Management authorities are stepping up preventive measures to stop trade fraud and tax evasion related to Chinese commodities that illegally carry made-in-Vietnam labels due to escalating U.S.-China trade tensions.

Wooden furniture on display at an exhibition in HCMC. Vietnam is stepping
up preventive measures to stop trade fraud and tax evasion related
to Chinese commodities that illegally carry made-in-Vietnam labels.

The General Department of Vietnam Customs has asked the heads of customs departments in provinces and cities nationwide to direct customs subdepartments to step up checks and inspections of the origin of imports in line with the regulations on goods origin and labeling commodities, especially for imports from China.

The general department said that it is necessary to focus on checking names, origins and codes of goods to see whether they match the information declared in import applications and certificates of origin.

If goods carrying made-in-Vietnam labels are found, local customs authorities must identify the commodities and promptly address fraudulent acts and violations such as trading and producing counterfeit items, as well as impose administrative fines in line with the Government’s Decree 185/2013.

The rising trade conflict between the United States and China has raised concerns among experts over trade fraud from Chinese goods illegally bearing made-in-Vietnam labels. Foreign firms may take advantage of listing Vietnam as the country of origin to reap benefits from exporting these Chinese goods to the U.S. market.

The timber sector has seen some signs of fraud and tax evasion by some Chinese firms, according to the Vietnam Timber and Forest Product Association (Vifores). These firms considered Vietnam a transshipment venue to sidestep export taxes levied on wood and wooden products by the United States, Vifores said.

The Export-Import Department at the Ministry of Industry and Trade and Vifores have recently cautioned Vietnam’s wood and woodwork exporters to strictly comply with regulations on certificates of origin and avoid aiding and abetting fraudulent acts.

The transition of goods has always been followed by the transfer of foreign direct investment flows from China to Vietnam.

“The process of transferring goods and production processes out of China often happens faster than capital shifts,” Nguyen Minh Cuong, an economic expert at the Asian Development Bank, told a press conference assembled to discuss the first quarter economy in Hanoi.

“The trade growth will be in tandem with the shift of an order from one country to another,” he said.

“Both foreign enterprises operating in China and Chinese firms are struggling to transfer their production processes to Vietnam,” said Bruno Jaspaert, general director at DEEP C Industrial Zones Vietnam, adding that the number of firms studying to lease land at DEEP C has doubled since last year.

Data from the General Statistics Office show that among the 51 countries and territories licensed to operate in Vietnam in April, China was the largest investor, with over US$1.3 billion in capital, accounting for 24.6% of the total newly registered capital. Singapore came second, with its capital flow reaching US$700 million, making up 13.1% of the total.