PLF Tutorials

LEGAL TUTORIALS FOR DOING BUSINESS IN VIETNAM

How to deploy promotion activities legally in Vietnam?


Since promotion activities can be quite costly, enterprises are encouraged to gain a good knowledge of Vietnamese regulations in order to implement effectively and correctly.

 

Forms of promotion

Giving free samples of goods or providing free samples of services to customers for trial use.

How to deploy promotion activities legally in Vietnam

Head & Shoulders offers free samples of shampoo

Presenting goods as gifts or providing free-of-charge services to customers, not accompanied by the purchase or sale of goods or provision of services.

How to deploy promotion activities legally in Vietnam

Cola-Cola offers free drinks on the streets

Notice:

Sample goods and services are those that have not been consumed or supplied on the market.

Gifted goods and services are goods that are traded widely on the market.

Although both of the abovementioned methods are free of charge, they are regulated by different provisions on promotion.

 

Price discounts

How to deploy promotion activities legally in Vietnam

Nike offers discounts on sports shoes

The total duration of promotion for a type of goods or services cannot exceed 90 days in one year.

A promotional program must not last longer than 45 days.

Differentiate between trade discount and price discount

Criteria Trade discount Price discount
Condition Achieve a certain amount of purchase as agreed. Not necessary to achieve a required amount.
Registration An agreement between 2 parties, which is not required to be registered with a managing authority. Must be publicized and notified or registered with the Department of Industry and Trade where the sales promotion is held.
Subjects Generally applicable to wholesale customers Applicable to all customers, usually retail customers
Duration As agreed, can happen regularly. Within the duration registered with the managing authority, and limited to a specific period of time.


Selling goods or providing services together with coupons

How to deploy promotion activities legally in Vietnam

King BBQ restaurants give customers vouchers to use for next time


Selling goods or providing services together with sweepstake entrance tickets

How to deploy promotion activities legally in Vietnam


Sweepstake entry form for customers purchasing products from Tran Anh Company


 

How to deploy promotion activities legally in Vietnam

Sweepstake entry form with thousands of dollars’ worth of prizes by Craftwell Inc.

 

Selling goods or providing services together with opportunities for customers to participate in games of chance

How to deploy promotion activities legally in Vietnam

Customers purchasing mobile phones from Mobile World doing a lucky draw

 

Programs for frequent customers

How to deploy promotion activities legally in Vietnam

Membership card issued by Aeon supermarket

 

Organizing cultural, artistic, entertainment programs or other events for promotional purposes

How to deploy promotion activities legally in Vietnam

Nestle Milo organizes a Walking Day in which participants are offered free Milo
 

In addition, traders are permitted to creatively come up with other forms of sales promotion and submit them to competent authorities for consideration.

Article 92 of the 2005 Commercial Law  

Article 7, 8, 9, 10, 11, 12, 13, and 14 of Decree No. 37/2006/ND-CP dated April 4th, 2006

 

Maximum value of goods or services used for sales promotion

Sales promotion accompanied with coupons of goods purchase or coupons of service use: the value used for promotion must not exceed 50% of the price of one unit of primary goods or services before the sales promotion.

Example: The original price of a TV before sales promotion is USD500, therefore the discounted price must not be less than USD250 during the promotion.

Notice: This limit does not apply to the following:

  • Giving of sample goods or provision of sample services free of charge to customers for trial use
  • Providing free goods and services without sale and purchase of goods or provision of services
  • Sale of goods or provision of services together with promotional contest entry forms
  • Sale of goods or provision of services together with participation in games of chance
  • Frequent shopper programs

The total value of goods and/or services used for sales promotion must not exceed 50% of the total value of primary goods and/or services (except for the method of free trial use).

Example

To celebrate the launch of new iPhones, the first 1,000 people to order will be gifted an iPod. The price of an iPhone is USD1,000.

The total value of 1,000 iPhones is USD1,000,000.

Therefore, the total value of 1,000 iPods, which are used as gifts, cannot exceed USD500,000 (meaning each iPod does not cost more than USD500).

Goods and services used for promotional purposes are iPods.

Primary promoted goods and services are iPhones.

Article 5 and 6 of Decree No. 37/2006/ND-CP dated April 4th, 2006

 

Promotion activities subject to registration

  • Sale of goods or provision of services together with customers' participation in games of chance
  • Other promotional programs created by traders, which are yet to be regulated by Vietnamese law.

Other promotional programs must be approved in writing by the Ministry of Industry and Trade.

After obtaining the approval from the Ministry of Industry and Trade and before conducting any promotion activities, traders must send a notice enclosed with a copy of the written approval issued by the Ministry of Industry and Trade to the Department of Industry and Trade where such promotional programs are to be organized.


Dossier of registration for promotional activities to be filed with the Ministry of Industry and Trade includes:

  • A registration form for sales promotion;
  • Rules of promotional programs;
  • Design of prize-drawing tickets for promotional programs involving the issuance of prize-drawing tickets;
  • Pictures of promotional goods and goods used for sales promotion;
  • Specimen of prize-winning proofs (if any);
Example: Scratch card, bottle cap, sweepstake ticket, soda can tab, etc.

How to deploy promotion activities legally in Vietnam

  • Copies of certificates of quality of goods and services promoted or used for promotion (if any).

Where to apply:

  • The Department of Industry and Trade for promotion activities taking place in one province or municipality.
  • The Ministry of Industry and Trade for promotion activities taking place in two or more provinces.

Processing time: 7 working days from the date of receipt of sufficient documents

In Ho Chi Minh City, traders may register their promotion activities through this website: www.khuyenmaihcmc.vn

When choosing our In-house counsel service, enterprises will receive detailed, case-by-case consultation on how to correctly organize promotional programs in compliance with the law.

Article 101 of the 2005 Commercial Law  

Article 16 and 17 of Decree No. 37/2006/ND-CP dated April 4th 2006 by the Government

 

Promotion activities subject to notification

  • Giving sample goods or providing sample services free of charge to customers for trial use
  • Giving goods or providing services to customers free of charge without the purchase and sale of goods or services;
  • Selling goods or providing services at lower prices;
  • Selling goods or providing services together with coupons of goods purchase or coupons of service use;

  • Frequent shopper programs;
  • Organizing cultural, artistic, entertainment programs or other events for promotional purposes.

Time of notice: No later than 7 working days before the sales promotion.

Dossier comprises of: Notification of promotional program

Example: Notification of a promotional program in which 1 An Phuoc shirt is given as a gift when purchasing a Brother printer.

How to deploy promotion activities legally in Vietnam 

Where to apply: The Department of Industry and Trade where the promotion takes place.

Notice: Promotional programs that have already been notified are not required to be registered.

Article 97 of the 2005 Commercial Law 

Article 15 of Decree No. 37/2006/ND-CP dated April 4th 2006

2007 th6Clause 1, 2, and 12 of Section 2 of Joint Circular No. 07/2007/TTLT-BTM-BTC dated July
 

Amendment and supplementation of the contents of sales promotion

Order of implementation:

  • Traders submit a written form of registration for amendment and supplementation of the contents of sales promotion to the Department of Industry and Trade.
  • The Department of Industry and Trade shall examine the validity and sufficiency of the dossier and request for supplement or finalization in case of an incomplete dossier.
  • Traders receive written confirmation.

How to apply: Directly or via the websites of the Departments/Ministries of Industry and Trade where the promotion activities are registered.

Dossier includes: 1 written form of registration for amendment and supplementation of the contents of sales promotion.

How to deploy promotion activities legally in Vietnam

Processing time: 7 working days from the date of receipt of sufficient documents.

Clause 7 Section 2 of Joint Circular No. 07/2007/TTLT-BTM-BTC dated July 6th 2007 by the Ministry of Commerce and Ministry of Finance
 

Announcing the results of sales promotion and awarding prizes

Forms of sales promotion subject to announcement of results of sales promotion and award of prizes:

  • Selling goods or providing services together with sweepstake contest participating form for customers
  • Selling goods or providing services together with the participation in promotional activities determined by chance

Time frame: within 30 days after the promotional program ends.

The results must be publicly announced on at least one mass media where the sales promotion takes place and at sale locations of promoted goods.

Clause 3 Article 15, Clause 6 Article 16, and Article 18 of Decree No. 37/2006/ ND-CP dated April 4th 2006 by the Government

 

Reporting the results of sales promotion

Forms of sales promotion subject to report:

Selling goods or providing services together with sweepstake contest participating forms for customers.

Selling goods or providing services together with the participation in promotional activities determined by chance.

Other forms of sales promotion.

Time frame:

Within 7 days from the expiration of the awarding deadline for the promotional method of selling goods or providing services together with sweepstake contest participating forms for customers.

Within 45 days from the expiration of the awarding deadline for promotional activities determined by chance.

Reports are sent to: the Department of Industry and Trade where the sales promotion takes place or Ministry of Industry and Trade (in case of promotional activities conducted in two or more provinces).

Contents of report:

  • The announced total value of prizes
  • The total value of prizes awarded
  • Value of unclaimed prizes
  • Solution for 50% of the value of unclaimed prizes
  • Report on the results of promotional program using the form provided
In case the Ministry of Commerce is the agency certifying the registration of sales promotion, apart from reporting the results of sales promotion to the Ministry of Commerce, traders are responsible for reporting to the local Department of Trade where the sales promotion was held.

Clause 3 Article 15, Clause 6 Article 16, and Clause 5 Article 17 of Decree No. 37/2006/ ND-CP dated April 4th 2006 by the Government

2007 by the Ministry of Commerce and Ministry of Finance.th6Joint Circular No. 07/2007/TTLT-BTM-BTC dated July Clause 12 Section 2 of

Termination of promotional programs

Promotional programs must not be terminated before the announced finishing date, except for circumstances as follows:

  • Force majeure (flood, fire, storm, earthquake, or tsunami, etc.)
  • Forced suspension by the Department of Industry and Trade or the Ministry of Industry and Trade.

Article 19 and 20 of Decree No. 37/2006/ ND-CP dated April 4th 2006 by the Government
 

Prohibited acts in promotion activities

Promotion in respect of goods and services prohibited and restricted from trading; and in respect of goods the circulation of which is not yet permitted and services the provision of which is not yet permitted.

Example: Promotional programs on military weapons, depraved or superstitious cultural products.

Use of the following goods and services in order to conduct a promotion: goods and services prohibited and restricted from trading, goods the circulation of which is not yet permitted and services the provision of which is not yet permitted.

Example: Use of veterinary drugs and plant protection agents, which are not yet permitted to be used in Vietnam, in sales promotion.

Curative medicines for humans, including medicines permitted for circulation, must not be used for sales promotion; unless the promotional programs are meant for drug traders.

Promotion of or use of wines and beer for sales promotion targeted at persons under 18 years of age.

Promotion of or use of tobacco or wines with an alcoholic content of 30 degrees or more for promotional purposes.

Untruthful or misleading promotions for the purpose of deceiving customers.

Example: An enterprise increases the price of their powder detergent product, whose original price is USD8, to USD10 and then announces a 20% discount on the product.

Promotion for the purpose of selling low-quality goods. Example: giving almost expired products as gifts.

Promotion activities taking place at schools, hospitals, and offices of state bodies.

Promises to give gifts or prizes which are not in fact given or not given correctly.

Promotions aimed at engaging in unfair competition.

Example: Giving customers gifts for trial use in exchange for products of other companies.

The value of goods and services used for promotion exceeds the maximum limit, or the price discount of the promoted goods and services exceeds the maximum rate.

Fines within a range of ~USD1,300 to ~USD2,170 shall be imposed on the aforementioned acts of violation.

Article 100 of 2005 Commercial Law;

Clause 4 Article 48 of Decree No. 185/2013/ND-CP;

Article 1 of Decree No. 68/2009/ND-CP dated August 6th 2009

 

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