Vietnam Reduces Restrictions on Sales Promotion Activities
In May 2018, the government issued Decree No. 81/2018/ND-CP (“Decree 81”) relaxing regulations on sales promotion activities. Decree 81 replaced Decree No. 37/2006/ND-CP, and will be in effect from 15 July 2018. Firms that carry out commercial promotion activities, such as direct promotions, or promotions through distributors and companies fall under the scope of Decree 81.
Changes in regulations
The maximum discount rate for promoted goods and services, during concentrated promotions, has been increased from 50 percent to 100 percent. Concentrated promotions are promotions during the holiday period or occasions as prescribed by the government during which sale promotions are organized by central and provincial authorities. Holidays include nine Vietnamese public holidays as well as the 30 days leading up to the Tet New Year holiday.
Value restriction is not applicable for sales promotions on:
- Goods and services that are implementing the price stabilization policy of the State;
- Fresh and raw products; and
- Items and services sold in case of bankruptcy, dissolution, or change of production or business location.
Duration of promotion
The total period during which discounts can be offered has been increased from 90 days to 120 days, excluding the sales promotion activities during concentrated promotions.
Firms conducting sales promotion activities in Vietnam are required to register and notify the Department of Industry and Trade. Once they receive the approval, they are allowed to conduct the sale promotion activity. This is a major administrative hurdle, as firms are required to reach out to all the provinces and cities for conducting nationwide sales promotions.
In Decree 81, the government has reduced the number of days a firm had to notify the authorities in advance about a sales promotion activity from seven to three working days. In addition, the deadline for the authorities to review and respond has been reduced from seven to five working days.
Under Decree 81, the notification requirement is removed in case:
- The total value of the promotional goods/services is less than VND 100 million; and
- Businesses are conducting sales promotions through e-commerce platforms and online promotional websites.
Under Decree 81, businesses can end promotions before the registered period in case:
- Force majeure;
- Goods and services are not available or completely sold; and
- A winner is announced and verified by authorities, in case of providing services along with lucky draw schemes.
Promotion by contest forms and games of chance
The time limit for announcing the prizes has been increased from 20 to 45 days from the end of the promotional duration.
Promotions being conducted through online platforms have to follow the same rules on promotions. Owners of the online platforms need to ensure that the information provided on their platforms is in accordance with the advertisements, promotions, and e-commerce regulations.
Consumers and traders
According to Decree 81, sale promotion activities need to be conducted in a lawful and transparent manner and should not harm the consumers, traders, or firms interests and rights. Traders involved in promotions which include prizes need to ensure favorable conditions for customers and settle any complaints with respect to their programs.
Traders are also required to guarantee the quality of their promoted goods and services. In addition, traders are not allowed to compare their goods and services with other traders, nor ask consumers to exchange, reject, or give up goods or services of other traders to avail their promotion schemes.
Businesses that have not registered for multi-level marketing activities are not allowed to conduct multi-level sales promotion activities. They can conduct programs in accordance with the legal regulations on the management of multi-level marketing activities.
Sale promotions cannot be conducted for products such as alcohol, lotteries, cigarettes, milk products replacing breast milk, and medications. However, in the case of medications, sales promotions granted to pharmaceutical distributors are exempted.
Traders can also use money in promotions, in place of goods or services, under certain conditions.
The increase in discount cap and the promotion period will allow businesses to increase their sales promotion offers, allowing them to sell their excess inventory and recover their costs. In addition, consumers will also benefit from the increase in competition between traders, and see an increase in product choices.