Cambodia and Vietnam’s online shopping industries

IP Mekong's latest article share updates and insights on South East Asia's shopping industry

Unlike much of the world, Cambodia’s most common e-commerce activity is sales facilitated directly through social media platforms such as Facebook and Instagram. Sellers post a number of direct advertisements on these platforms, usually reselling products which they themselves have purchased from Chinese e-commerce sites. These purchases are usually settled in cash upon delivery. This e-commerce trend is quite different to the larger online marketplaces in Asia where purchases direct from websites are far more common. There are many reasons why potential barriers remain to direct e-commerce in the Kingdom.

Trust – As there is no online consumer protection regulations in place, people tend to remain skeptical about paying before receiving goods.

Payment – There are still limited numbers of credit and debit card users in Cambodia, and with the lack of trust, people are reluctant to adapt to new digital payment methods.

Delivery – There is currently no national post code or systemised addresses in Cambodia. As a result, the buyer must go to the Central Post Office to retrieve their package (for goods purchased abroad) or use moto delivery drivers where frequent calls between the courier and the recipient are needed.

Cambodia remains the only country in ASEAN not to have any legal framework finalised around e-commerce. As online shopping becomes more prevalent, the need for e-commerce laws becomes essential. The draft law is greatly anticipated and is currently in its first draft. If the law is to pass, it would need to cover a wide range of areas including credit and debit card usage, use of online signatures, and a framework to ensure that fair trade is in place. Future provisions must be made to ensure that regulations are also future proofed as the e-commerce industry is only expected to increase. Alongside with this law, Competition Law and Consumer Protection Law are also being reviewed by joint ministerial committees.

Across the border in Vietnam, the story is quite different where online shopping sites are thriving. The top three e-commerce sites Lazada, Tiki and Shopee have combined web visits of over 100 million per month. Large portions of the traffic to these sites is driven from social media channels including Facebook, Instagram and YouTube. Direct selling through social media channels is still prevalent in Vietnam with many buyers purchasing directly off social media sites and paying cash upon delivery. This type of direct selling can prove to be a headache for governments regarding taxation and management. This also opens the doors to issues for rights holders in terms of counterfeiting and infringement activities. It can be near impossible to track these direct social media sellers engaging in the sale of counterfeit goods. Enforcement must be carried out based on combined online and offline actions.

Facebook Marketplace, an e-commerce platform, has been launched in around 70 countries and is used by 800 million people per month, but is not yet available in Cambodia or Vietnam. Once Facebook Marketplace is made available in the two countries, we may see a rise of online shopping on these platforms and right holders could expect to have a better mechanism for enforcing their IP rights like traditional e-commerce sites.

The challenge Cambodia faces now is that with the prevalence of direct selling on social media, the only option available for parties whose rights have been infringed are take-down procedures with social media networks (e.g. Facebook) taking down infringing posts. This does not allow them to tackle the roots of the infringement which could be repeated by different posts/social media accounts.

The e-commerce industries of these South East nations will continue to grow rapidly as they bypass the usual route of building more and more retail outlets, by providing things to buy for their growing middle classes. As Vietnam’s e-commerce industry grows by more ‘traditional’ sites, there is a distinct advantage in that rights holders can work with sites to ban suppliers of infringing/counterfeit goods and protect intellectual property. However, as it has been open for customers to order goods from overseas (i.e. China) on the larger sites which have been invested/managed by Chinese groups, cross-border infringements would be a new issue to deal with for IP right holders – and the issues are only going to get more tricky to deal with.

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