In Vietnam, promotions are considered an effective sales and marketing tool to attract consumers. However, unlike many other countries, promotions in Vietnam are currently being excessively used, leading to situations of product underpricing for competitive advantage or the use of misleading promotional tactics, causing harm to consumers and the reputation of other businesses in the same industry.
For example, Black Friday is an annual promotion event in the United States where stores clear inventory at discounted prices, offering promotions of up to 50% or even higher for specific products. However, in Vietnam, while Black Friday promotions are also applied, businesses often falsely advertise the value of discounts.
For instance, claiming a 90% discount may only apply to a few low-value items like reusable bags, toy jewelry, etc., while other items remain unchanged in price or receive minimal discounts, leading consumers to misunderstand that the desired items are significantly discounted.
Notably, a recent practice involves businesses changing product prices without the consent of authorized agencies or reporting to them, then applying promotions to create the illusion of discounted prices a month or a few weeks before a major event like Black Friday.
Consumers perceive deep discounts, but in reality, the actual reduction may be nonexistent or result in higher product costs even after the promotional period. Previously, these behaviors were discreet, as consumers lacked information to compare with products purchased only once over an extended period.
However, with the rapid spread of information, such practices are now limited and leave negative consequences by eroding consumer trust. Stemming from these negative events, another issue that many consumers have questioned is whether extreme discounts of up to 90% displayed by stores are legal.
Legal aspects regarding business establishments in Vietnam issuing promotions
According to Article 88 of the 2005 Commercial Law No. 36/2005/QH11, promotion is an activity that traders undertake to stimulate the sale of goods and the provision of services by providing specific benefits to customers.
According to the provisions of Decree 81/2018/NĐ-CP, money can be used as goods or services for promotion, except in cases of promotion by:
- Providing product or service samples for customers to use without charge.
- Giving goods or providing services without charge.
- Selling goods or providing services at prices lower than previously offered (discount promotion).
Furthermore, businesses are prohibited from applying promotions in certain forms for products like alcohol, tobacco, and lottery tickets, as specified in Article 5 of Decree 81/2018/NĐ-CP. The promotion of medicines for humans is also restricted unless permitted by the Ministry of Health, along with goods or services banned from circulation in Vietnam.
The maximum discount for goods and services promoted must not exceed 50% compared to the pre-promotion prices, as regulated in Article 7 of Decree 81/2018. Exceeding this discount limit may result in fines ranging from 10 to 20 million VND according to Article 33 of Decree 98/2020/NĐ-CP.
However, in the case of organizing concentrated promotion programs such as hourly, daily, weekly, monthly, or seasonal promotions like 30 days before the Lunar New Year or Black Friday week, businesses may apply a maximum discount of up to 100%.