Vietnam Intensifies Counterfeit Crackdown as US Trade Pressure Mounts

Raids expose the scale of Vietnam counterfeit trade

Vietnam has intensified its campaign against counterfeit goods after police discovered more than 23,000 fake slippers in two warehouses outside Ho Chi Minh City. The products carried the logos of Nike, Adidas, Crocs and Gucci, although none of the brands had any connection to the operation. Authorities valued the seized goods at about VND 2 billion, or roughly $76,000.

The warehouse raid offered a glimpse into a trade that has operated openly for years. Around 30 kilometres away, markets in Ho Chi Minh City tourist districts continued to sell similar imitation products. Slippers that can cost hundreds of dollars when genuine were available for about $30, while stalls displayed fake Chanel handbags, Prada shirts and Rolex watches.

For Vietnamese authorities, the campaign is about more than removing illegal products from market stalls. The government is also trying to protect the country reputation as a major manufacturing centre and reassure foreign trading partners that Vietnam can control goods moving through its territory.

On May 7, the government launched a nationwide operation targeting intellectual property violations. The campaign covers counterfeit merchandise, trademark abuse and online piracy. It followed a series of earlier raids, yet vendors and market managers say this latest action has brought longer closures, heavier inspections and greater fear of prosecution.

Why Washington pressure changed the response

The crackdown has taken place as Vietnam faces intense pressure from the United States. An April report by the Office of the United States Trade Representative designated Vietnam a priority foreign country over what it described as a persistent failure to protect and enforce intellectual property rights. The designation was the first of its kind in 13 years, according to the report, which also described Vietnam as the world worst offender in this area.

Washington has linked the dispute to wider concerns about trade. US officials have accused Vietnam of allowing Chinese products to pass through its territory and reach American consumers while avoiding higher duties. The United States has also threatened a tariff of 46 percent on Vietnamese imports, giving Hanoi a strong reason to show that it is responding to American complaints.

Vietnamese authorities pledged to raise the number of intellectual property enforcement cases by at least 20 percent in May compared with the same month a year earlier. The government also ordered tighter checks on product origins. Those measures serve two purposes: protecting trademarks and showing the United States that Vietnam is taking control of its markets and supply chains.

Dr Nguyen Khac Giang, a visiting fellow at the ISEAS Yusof Ishak Institute, said the campaign also fits domestic goals, including a cleaner business environment and a more formal retail sector. He described the effort as partly a response to US concerns.

The effort partly reflects Vietnam intent to show responsiveness to US concerns.

The United States opened a further investigation in late May to assess whether Vietnam failure to control intellectual property violations was unreasonable and harmful to US commerce. For an export economy whose largest customers include American buyers, the cost of failing to respond could be much greater than the value of the domestic counterfeit trade.

Markets fall quiet as inspectors move in

Saigon Square and Ben Thanh Market in Ho Chi Minh City have become major targets. The two busy shopping centres are popular with tourists and are known for selling imitation clothes, handbags, shoes, watches and jewellery. Raids in mid May led to confiscations and fines totalling more than $19,000.

Other markets in Ho Chi Minh City, including An Dong Plaza and the Pharmaceutical and Medical Equipment Trading Center, also saw stalls close. In Hanoi, shops in the Old Quarter and Vinh Phat Market were reported to have shut or hidden contact details after inspections. Some vendors stayed inside their premises to watch for officials but avoided opening their doors.

A vendor at Saigon Square who uses the name Thanh Truc said enforcement was stricter than during earlier campaigns. She had sold a replica Loewe shirt for $17, compared with about $500 for the genuine item.

She said inspections had previously focused on a few high value shops, often in front of television cameras, after which trade gradually resumed. This time, sellers have reduced the branded goods placed on display and moved other stock into storage areas behind their shops.

Usually, before inspectors arrive, someone here blows a whistle to warn everyone. Some stores display fewer logo branded items, but they still have stock in the back.

Local reporting recorded more than 7,000 suspected counterfeit cases in the first five months of the year, with seized goods valued at more than $8 million. In one major seizure, authorities recovered about 1,000 fake Rolex watches from Saigon Square. During the final three weeks of May, authorities reportedly handled more than 1,400 intellectual property cases.

From fake slippers to counterfeit medicine

The operation has spread beyond luxury fashion. On June 10, police in Thanh Hoa province dismantled a network that manufactured and sold more than 10,000 fake jewellery items carrying names associated with Bvlgari, Cartier, Louis Vuitton and Tiffany & Co. Investigators estimated the group had generated about $1.14 million in illegal profits.

Authorities have also seized fake sportswear, cosmetics, vitamins, sweets, cooking oil, health supplements and medicines. In northern provinces such as Hanoi, Bac Giang and Phu Tho, investigators have found factories accused of producing large quantities of imitation daily goods. Some cases involved records for more than 100,000 online orders.

Counterfeit medicines and food products create risks that go beyond lost sales for a fashion company. Buyers may have no reliable way to know what ingredients are in a supplement, whether a medicine contains the stated active substance or whether cosmetics meet basic safety standards. That wider threat has made the campaign a consumer protection issue as well as a trademark dispute.

Sportswear has also featured prominently. Investigators have seized fake Nike, Adidas, North Face, Lacoste and Uniqlo products. In one case, a seller was found with 200,000 pairs of socks carrying false athletic brand logos. Some goods made in China were marked Made in Vietnam, a practice that can mislead consumers and raise separate customs concerns.

How the supply chain keeps adapting

Much of the counterfeit trade begins across Vietnam northern border in China. Vietnamese wholesalers buy products in bulk, move them through border trade channels and distribute them to smaller retailers. Genuine trade volumes make it easier to hide illegal shipments among legitimate cargo, while geographic proximity keeps transport costs low.

The production link is complicated by the structure of global manufacturing. Vietnam is a major producer of clothing and footwear for international brands, while China supplies materials, components and finished products to factories across the region. Skills, equipment and manufacturing knowledge used for legitimate production can also be diverted into illegal work.

Authorities face a second problem after goods enter the country. Distributors can break large shipments into smaller consignments and store them in apartments, private homes or small warehouses. A raid on one location then removes only a part of the inventory. Retailers can also use delivery services, social media and online marketplaces instead of keeping large stocks in visible shops.

When officials close a digital account, sellers can create another one. When a physical stall is inspected, a nearby seller or a hidden storage room may take its place. This makes occasional raids highly visible, yet less effective against the wider network unless customs checks, financial investigations and online enforcement operate together.

Some sellers also change logos and designs to get close to a famous brand without using the exact trademark. A product labelled Mike instead of Nike, for example, can retain much of the visual appeal while making prosecution harder. The approach depends on attracting customers who want the look and association of a luxury product, even when the name is slightly altered.

Why customers continue to buy the fakes

Economic conditions help explain why the trade has survived years of inspections. About 60 percent of Vietnam population lives in rural areas, and the average monthly income is around $225. Genuine luxury bags, watches and clothes are out of reach for most households. A fake shirt costing $17 or a replica bag priced below $40 fits a very different budget.

Huy, an office worker in Da Nang who buys imitation football shirts and shoes, said low prices and easy access were the main reasons for his purchases.

Arresting the vendors does not solve the problem. If counterfeit goods cannot be completely stamped out, and I can still easily buy them, I will maintain my old habits.

Thi Thanh Huong Tran, an associate professor at SKEMA Business School who studies ethical consumption, said many buyers understand that the products are fake. They still view them as the most practical option available. She also said the buyers of luxury counterfeits may have little or no overlap with the people who purchase genuine designer products, limiting the direct lost revenue for luxury companies.

Tourists add another layer of demand. Vendors in Ho Chi Minh City markets have become skilled at selling to foreign visitors, including by speaking Korean and other languages. Recent observations at Ben Thanh Market found sellers openly offering bags linked to Dior, Gucci and Louis Vuitton, along with Nike, Adidas and The North Face clothing. Prices were negotiated through calculators and mobile payment systems, showing how easily the trade can adjust to modern shopping habits.

Local designers see a chance to compete

Some Vietnamese businesses support the campaign because counterfeit goods make it harder for legitimate designers to build a customer base. Thi Nguyen, who designs and sells clothing in Ho Chi Minh City and Da Lat, said buyers sometimes paid $75 for a fake designer dress while complaining about the price of a custom garment costing half as much.

She said Vietnam has many skilled tailors and hand embroiderers, yet some are pushed into factories producing illegal goods because counterfeit operations offer faster income than developing a local label. In her view, the trade harms designers, confuses consumers and makes the retail market less fair.

Vietnam has no shortage of highly skilled tailors and hand embroiderers, but many of them are overlooked and do not receive the income they deserve.

Nguyen said the closures had made her more willing to invest in her own company and consider higher prices. A stronger enforcement effort could give legitimate Vietnamese brands more room to build trust, provided they can reach customers with affordable designs and reliable quality.

That transition will take time. Counterfeit sellers benefit from familiar international names, while domestic brands must spend money on design, marketing, distribution and customer service. Removing fake products does not automatically create a successful local brand. Support for small manufacturers, easier registration and access to finance may be needed if skilled workers are to move into legal production.

Can raids defeat a market built on demand?

The early results show that enforcement can disrupt the trade. Shops have closed, warehouses have been emptied and some sellers have lost their stock. A month long national operation inspected 3,891 locations and found violations at 3,114 of them, according to figures reported by Vietnamese authorities. Goods involved in the enforcement were valued at about VND 630 billion, while around VND 360 billion was recovered for the state.

Yet the return of sellers to tourist markets shows the limits of short campaigns. Vendors who previously relied on warning whistles now use hidden inventory, private delivery and online contacts. Consumers who cannot find a product in one market can search elsewhere, including through social media and informal courier networks.

Market managers have said that fully controlling counterfeit goods requires action against cross border smuggling. Small vendors also face practical difficulties in proving the origin of every item. Some lack invoices, legal knowledge or the funds needed to purchase genuine stock. The result is a difficult enforcement balance: weak action encourages illegal trade, while sudden closures can destroy the income of small sellers without providing an immediate alternative.

For Vietnam, the stakes extend beyond markets and tourist spending. The country wants to remain a trusted manufacturing base and a major supplier to the United States. Stronger checks on trademarks and product origin can support that goal, yet lasting results will depend on whether enforcement reaches wholesalers, factories, border routes, online platforms and the money moving through the network.

Professor Tran argues that the market will keep changing as long as customers want low cost products that resemble luxury goods. Closing stalls may push sales into homes, delivery networks and digital accounts rather than remove the demand. A lasting reduction would require consistent penalties, stronger border controls, protection for legitimate local businesses and affordable legal alternatives for consumers.

The Bottom Line

• Vietnam launched a nationwide intellectual property crackdown on May 7.
• Police seized more than 23,000 fake branded slippers from warehouses near Ho Chi Minh City.
• US trade pressure and a threatened 46 percent tariff helped drive the tougher response.
• Saigon Square, Ben Thanh Market and markets in Hanoi have faced raids, closures and fines.
• The trade extends beyond fashion into jewellery, medicines, cosmetics, food and online sales.
• Low incomes and tourist demand continue to support counterfeit purchases.
• Sellers are shifting stock into hidden storage, delivery networks and digital marketplaces.
• Long term results will depend on action across borders, factories, retailers and online platforms.