"Advice" to support Vietnamese businesses in preventing and avoiding fraud in international trade

Fraud is very sophisticated and complex.

Information at the Trade Promotion Conference with the Vietnamese Trade Offices Abroad in November 2023, held with the theme "Preventing fraud in international trade", showed that in 2022, global businesses suffered a loss of about 5% of their revenue each year due to fraud, with an average value of 1.7 million USD per fraud. It can be seen that trade disputes and fraud are currently an existing problem in international trade transactions that Vietnamese export enterprises must always take into account, in the context of international trade with many fluctuations and risks.

Mr. Hoang Minh Chien - Deputy Director of the Trade Promotion Agency, Ministry of Industry and Trade - said that although Vietnamese export enterprises have a lot of experience, most of them are small and medium-sized enterprises, lacking in experience in preventing and dealing with international trade fraud and disputes. In addition, "many enterprises are not familiar with the business culture of importing countries, sometimes do not understand much about partners, the dispute resolution system, the order and procedures for dispute resolution. Many enterprises are not familiar with the use of forms of trade dispute resolution such as commercial arbitration or commercial mediation. Many Vietnamese export enterprises have "fallen into the trap" of trade fraud, scams or "got into legal problems" recently" - Mr. Chien said.

Trade Promotion Conference with the Vietnamese Trade Office System Abroad in November 2023, taking place with the theme "Preventing fraud in international trade"

Faced with the increasing forms of international trade fraud, the Ministry of Industry and Trade has promptly directed functional units under the Ministry, the Vietnamese Trade Office system abroad, to coordinate with relevant agencies to regularly update information and warn localities, industry associations, and businesses about common or newly emerging forms of trade fraud and deception. At the same time, it has guided and enhanced the training of knowledge of international trade and finance, and training in international transaction skills for localities and Vietnamese businesses, especially small and medium enterprises, to improve the capacity of businesses in international trade transactions.

Sharing at the conference, Ms. Tran Thu Quynh - Commercial Counselor, Vietnam Trade Office in Canada, said: Recently, especially since the beginning of 2023, the Trade Office has recorded a rapid increase in the number of small-scale fraud cases in the local area, an average of 10 cases/month related to demands and requests from Canadian businesses for bogus certificates.

Ms. Quynh informed that the increase in cases has two factors: first, in recent years, Canada has had a massive immigration policy, about 500,000 people/year and all of them are of working age. In 2023, the number of immigrants to Canada increased to more than 1 million people, changing Canada's social structure. Next, domestic enterprises tend to be subjective in finding partners, especially when they see that partners from the Canadian market are highly trustworthy, so they are vulnerable in approaching and drafting contracts. The form of fraud by these subjects is very sophisticated and complicated because they can easily access and fake information of reputable Canadian enterprises, even fake the seal of the competent authorities of the host country.

In the Italian market, Ms. Duong Phuong Thao - Commercial Counselor, Vietnam Trade Office in the local market informed: Fraud occurs in many forms, both in export and import. In fact, the Trade Office has helped resolve many cases for Vietnamese businesses.

Ms. Thao said that common forms of fraud include: Buyers cooperate with fraudsters to falsify documents and appropriate original documents to appropriate goods; Vietnamese businesses have paid deposits to purchase goods but the partners do not deliver; Italian partners notify that they have opened an account at a reputable bank but it is not active; Italian partner companies do not deliver goods or deliver substandard goods; contracts are signed very roughly, and Italian partners do not comply with the terms.

The conference took place in both in-person and online formats, to facilitate the participation of a large number of delegates from Vietnamese Trade Offices abroad, relevant agencies and businesses from 63 provinces and cities across the country.

There is also another scam where Italian businesses import small quantities the first 1-2 times, pay in full, but then sign larger contracts and delay payment, causing pressure to reduce prices. "When fraud occurs, despite the cooperation of many parties, the damage to businesses is very large. Therefore, businesses need to pay attention and proactively prevent risks," said Ms. Duong Phuong Thao.

Accordingly, businesses first need to verify partners; draft tight contracts, need to have provisions for goods inspection before delivery; require a deposit of at least 15-20% depending on the risk level of the destination port and transit port; consider using specialized consulting companies to ensure safety in transactions.

Actively update information

Regarding brokers, the representative of the Vietnam Trade Office in Italy emphasized: In the past, many fraud cases were related to brokers, so when signing a contract with a broker, it is necessary to clarify the terms on the cost of recovering the goods, the responsibility to identify the buyer and should not use a pre-prepared brokerage contract or one provided by the broker. In addition, domestic enterprises should improve their skills, especially their knowledge of international trade. In case the enterprise does not have enough capacity to find experienced employees, they should hire seasonal employees.

Faced with this situation, Ms. Tran Thu Quynh also said that, in the face of rapidly increasing fraud, the Vietnam Trade Office in Canada has worked with banks and local authorities to prevent the counterfeiting of seals, but stricter measures from the provinces and the federal government regarding the counterfeiting of seals have not been effective.

“Therefore, to ensure safety in international transactions, the Trade Office recommends that businesses should verify clearly when receiving strange requests. In addition to the Vietnam Trade Office in Canada, businesses can contact the Canadian Embassy in Hanoi and Ho Chi Minh City for support,” Ms. Tran Thu Quynh emphasized.

Concluding the Conference, Mr. Hoang Minh Chien commented: To continue to improve the effectiveness of trade promotion to support businesses in boosting exports and imports, the Ministry of Industry and Trade requests relevant sectors, localities, agencies and units to focus on performing well the following tasks:

Firstly, Vietnamese Trade Offices abroad continue to proactively grasp, analyze and evaluate host country policies as well as needs and tastes to promptly advise the Ministry on strategic issues and propose policy responses to ensure the interests of seafood enterprises in international economic integration; receive opinions, requests and proposals from representatives of industry associations, have plans to effectively support associations and enterprises; update and share situations of trade fraud and deception, coordinate with the Trade Promotion Agency, Market Departments and related units to provide associations and enterprises with references and experience.

Mr. Hoang Minh Chien - Deputy Director of the Trade Promotion Agency, Ministry of Industry and Trade spoke at the Conference

Second, the Foreign Market Departments, the Import-Export Department and the Trade Defense Department coordinate with the trade system to closely monitor market fluctuations and trade policies, promptly advise and propose to the ministry's leaders according to their authority in developing and implementing solutions to remove obstacles regarding technical and non-tariff barriers, measures and policies to facilitate businesses in exporting; guide and provide maximum support to associations and businesses in handling trade disputes and trade fraud.

Third , the Trade Promotion Agency receives and synthesizes recommendations from industry associations, strengthens coordination with Vietnamese trade offices abroad to diversify trade promotion activities in foreign markets to support businesses in contacting, learning about and evaluating partners to develop stable and trustworthy partnerships.

Fourth, for industry associations and businesses, it is necessary to: Receive opinions and recommendations from trade counselors and trade agencies abroad to select appropriate trade promotion activities and suitable markets, promptly plan implementation and have information with the Ministry of Industry and Trade and the Trade Office to coordinate effective and safe implementation of activities.

Along with that, continue to grasp and update the production situation for export, regularly exchange with businesses to grasp the need for support in market development, coordinate with units under the Ministry of Industry and Trade to support businesses, proactively work with partner agencies and foreign industry associations to support businesses in resolving trade disputes if they arise, ensuring the legitimate rights and interests of businesses.

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