April 26, 2019 17:03

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Innovation to promote e-commerce

10:12 | 05/12/2018

VCN – The industrial revolution 4.0 and Vietnam’s deep integration into the world’s economy creates a big opportunity for e-commerce. However, the development of e-commerce in Vietnam is also facing many challenges, which require the flexibility to catch the opportunity and the better management to promote the development of this economic type in line with the current trend.

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The potential for e-commerce development in Vietnam is increasing when people are more and more interested in online shopping. Photo: H. Anh

Great potential

According to PhD. Nguyen Dinh Cung, Director of the Central Institute of Economic Management (CIEM), e-commerce is an issue that has received great attention and potential in the Industrial Revolution 4.0. Therefore, the demand for e-commerce development will become a natural need. According to CIEM, the potential for e-commerce development in Vietnam is increasing. In particular, Vietnam has developed a policy framework for e-commerce, the scale of domestic and international commerce is constantly growing together with the emergence of the middle-income class which has led to significant changes in consumer behaviour in the economy, especially consumption on technology platforms.

In recent years, with the emergence of many e-commerce brands such as Lazada, Tiki, Sendo, Shopee, Adayroi and so on, the online shopping market is increasingly exciting... The percentage of consumers engaging in online shopping in general and social networking in particular also tends to increase. Large foreign investment inflows via big companies engaging in e-commerce also show promising development potential of this sector in Vietnam. In addition, the Vietnamese economy is opening more with the participation of 17 FTA agreements, including CPTPP, which will create more new business opportunities for e-commerce. The awareness of enterprises and people about e-commerce and the industrial revolution 4.0 has improved and their demand on e-commerce is increasing.

Le Thi Ha, head of policy division under Vietnam e-commerce and Digital Economy Agency (Ministry of Industry and Trade) said that Vietnam is considered as a fast-growing e-commerce market, especially in the recent five years. The statistics show that the e-commerce market has a steady growth rate and a gradual increase of over 20% per year, from US$ 2.2 billion in 2013 to US$ 6.2 billion in 2017. In 2013, the rate of shopping through mobile devices was 6%, in 2017, it was 41%, which was reflected by the ownership of smart mobile devices. According to Le Thi Ha, this may significantly affect e-commerce.

It is known that retail sales of e-commerce in Vietnam increased by 24% compared to 2016. This number corresponded to about 500,000 orders per day. With this development momentum, e-commerce revenues will exceed US$ 10 billion by 2020.

The healthy and sustainable development of e-commerce requires basic foundations including technological infrastructure, including e-payment, e-commerce security; the legal framework facilitates to promote the e-commerce development, to selectively attracts strategic private investors for e-commerce development, and the active role of the Government in international cooperation in e-commerce development. However, besides the advantages, Vietnam also faces many challenges and difficulties in preparing the foundations for e-commerce development.

For example, in Vietnam, the direct payment is still common, rather than online payment. Currently, Vietnam has more than 80% of companies supporting the direct payment method compared to the average rate of 47% in the region, and this rate is only about 20% in Singapore and Malaysia. In addition, the market share of e-commerce in Vietnam is mainly dominated by FDI enterprises, while the participation of local SMEs is still limited. Technology infrastructure has improved but still has many inadequacies, especially stability, ability to cope with security and information security errors

Need a thinking revolution

In addition to the challenges, evaluating the real emerging issues in e-commerce development in Vietnam, Le Thi Ha emphasized that the more the technology is increasingly developed, the more the e-commerce is constantly changing in terms of models and methods and participants: Web owners, sellers, buyers, technical infrastructure providers, intermediaries, etc. One of the emerging issues in e-commerce is the emergence of new e-commerce models which are complex in the operation way and the participants. There are even new models that we cannot apply Decree No. 52/2013 / ND-CP dated May 16th, 2013 on e-commerce, "Le Thi Ha said.

Nguyen Anh Duong, head of the Macroeconomic Policy Department (CIEM) emphasized the control of the quality of goods in e-commerce. According to Duong, the control of goods in traditional commerce is difficult, but this is more complicated and difficult in the e-commerce environment. "For example, the handling of the case of sale of toys enclosed flags printed with a map inconsistent with the national security and the seller does not know information on those products. The handling of this case is so difficult and complicated” Duong said.

Another issue is the concern of the people about the protection of consumer interests. Accordingly, the survey results of E-commerce and Digital Economy Agency show that people are more interested in and more satisfied with online shopping, but too many companies which do not inform and register with the Ministry of Industry and Trade also worries consumers about the quality of goods. Meanwhile, despite regulations on consumer protection, consumers still do not know the address and must spend a lot of time and expense for complaints about problems related to e-commerce transactions.

In addition, many people said that the management of e-commerce for cross-border transactions is also posing many challenges, how to manage transactions from Vietnam to foreign countries and vice versa, which requires a unified policy system related to e-commerce. In addition, tax collection from e-commerce is one of the challenges in e-commerce management in Vietnam.

Relating to the legal framework for e-commerce, it is known that since 2005, the National Assembly adopted the first three laws laying the legal foundation for e-commerce: the Commercial Law, the Civil Code and the Law on E-Transactions. In the period 2011-2015, many legal documents related to e-commerce were issued, including Government Decree No. 52/2013 / ND-CP on e-commerce. However, according to the assessment, the legal regulations are not consistent and do not provide a solid foundation for the healthy development of e-commerce in particular and the new business methods and models in the context of industrial revolution 4.0 in general.

Regarding e-commerce management in the new context, according to PhD. Nguyen Dinh Cung, the industrial revolution must starts from the thinking revolution to the industrial revolution. Accordingly, the first thing is not thinking about how to change the "management", but is thinking about how to promote e-commerce, because e-commerce is a new field, when we have no idea about management, we must think about what to do to develop then review and discover problems to give suggestions for the management.

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More money has been injected into the e-commerce market, while leading e-commerce firms have expanded.

For new e-commerce methods like Uber or Grap, PhD. Nguyen Dinh Cung said that the problem is not trying to get rid of them but how to develop the Uber, Grap of Vietnam and develop technology companies of Vietnam. We can restrict Uber, Grap but not eliminate new business methods, we must create opportunities. From lawsuits related to this new business methods, Cung said that the transfer of labour and capital from ineffective operators to effective operators should be promoted, this is the distribution of resources in the market economy. "We should not stop it, we cannot suit these companies for the reason that they take all of our resources. E-commerce provides great opportunities for SMEs, so how to develop and support it is a current concern. It is necessary to change the thinking and the way of State management to promote the development, otherwise, we will curb the development and only focus on solving market failures. Management is nothing more than protecting consumer interests. " Nguyen Dinh Cung said.

By Hoai Anh/ Huyen Trang