Vietnam cracking down on Chinese goods falsely labelled and shipped to US to avoid tariffs

Vietnam said it will impose higher penalties on Chinese goods transferred to the country and illegally relabelled as being “made in Vietnam” for export to the US to avoid tariffs.

The customs department has detected dozens of fraudulent certificates of product origin and illegal transfers of goods ranging from agriculture and textile to steel and aluminium, the Vietnamese government said on its website on Sunday.

Vietnam’s exports to the US have surged this year at the same time that China’s shipments to America have slumped amid a trade war between the world’s two largest economies. While there’s evidence of rising foreign investment into Vietnam as businesses adjust their supply chains, there are also worries Chinese products may be being rerouted via the Southeast Asian nation to avoid higher US tariffs.

Do Van Sinh, a standing member of the National Assembly’s economic committee, said Vietnam is concerned it may be punished by the US for allowing fake “made in Vietnam” products to be exported to America, according to the government’s post.

Fraudulent cases discovered by the government include packaging on Chinese goods being changed to say “made in Vietnam” before certificates of origin are processed. It cited an example of the US customs department uncovering Chinese plywood being shipped to America via a Vietnamese company.

Customs officials in Vietnam are strengthening their supervision and inspection of goods to crack down on the practice, the government said.

Vietnam is already under scrutiny from US authorities after the Treasury Department added the nation to a watch list for currency manipulation last month. Vietnam has said its exchange rate will not be used to create an unfair trade advantage.

Authorities in the Southeast Asian nation are concerned the US-China tensions will hurt economic growth. Deputy Prime Minister Pham Binh Minh told the National Assembly last week that gross domestic product could drop 6 trillion dong (US$256 million) in the next five years because of the trade war.

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However, a report by Japanese investment bank Nomura last month identified Vietnam as one of the big winners of the US-China trade war due to the reordering of supply chains.

The economy of the Southeast Asian nation has been boosted by almost 8 per cent because of the shift in production resulting from the US-China trade war, the Nomura report said.

The majority of Vietnam’s gains came from additional imports of goods covered by US tariffs on China, mainly electronic apparatus for telephones, furniture and automatic data process machines, likely because multinationals could swiftly relocate to factories outside China, the analysis said.

The Vietnamese government’s requirements for Chinese factories moving there have already been tightened, Zhou Pinxu, a Dongguan-based manufacturer told the South China Morning Post last month.

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“The taxes to transport machinery, equipment, and semi-finished products, as well as the cost for a certificate of origin, are much higher than before,” he said.

“It’s no good to voice these difficulties in public. We are also very afraid that Vietnamese society is opposed to Chinese manufacturers moving to their country.”