Ministry initiates probe into fraudulent silk scandal

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The Minister of Industry and Trade, Tran Tuan Anh, on Thursday asked the Department of Market Watch to look into the origin of products of the Khaisilk Group following a complaint that it was selling fake products made in China.

Anh also asked the department to clarify the signs of fake goods and trade fraud in the scandal.

On the same day, inspectors raided a shop owned by the famous Vietnamese silk brand in Ha Noi.

Tran Hung, the department’s deputy director told Nguoi Lao Dong (Labourers) newspaper that they had seized suspected counterfeit products worth VND30 million (US$1,320) from the shop. He further said the import of counterfeit goods and selling under “Made-in-Viet Nam” brand has ruined its image among people.

“Hoang Khai, the owner, had built Khaisilk as a symbol of a national brand. Khaisilk products are much sought after by many tourists in Viet Nam,” he added.

He said all the relevant State management agencies should rush to clarify the issue and ensure prosecution in case of serious violations.

Khaisilk is a renowned high-end brand with a history of over 30 years. The scandal has caused a shockwave among many customers.

The scandal broke out when a business in Ha Noi posted on Facebook on Monday to complain about products it had bought from the brand saying they were actually made in China.

According to the post, the company bought 60 Khaisilk-branded scarves at the Hang Gai shop in Ha Noi for VND644,000 ($28) each. However, one scarf had two tags including “Khaisilk Made in Viet Nam” and “Made in China.”

The company said it had checked the rest of the scarves and found signs that “Made in China” tags had been removed.

Group Chairman, Hoang Khai, said in an interview with online newspaper zing.vn, that the scarves were actually imported from China.

Khai has apologised and offered compensation to customers. He said that half of the silk used by Khaisilk came from China, while the rest came from Vietnamese craft villages. However, he insisted that it only uses high-quality material although not all of its products are made in Viet Nam, as advertised for years.

He said the reason was that Viet Nam’s silk sector has seen a material shortage from handicraft villages while the market demand has been fluctuating with diversified requirements. This is why they imported silk from China without taking into account the origin of products, he told the newspaper.

Lawyer Nguyen The Truyen, director of the Thien Thanh Law Firm, said the owner’s admission of importing silk from China and selling it as ‘Made in Viet Nam’ has signs of legal violations.

He violated the Law on Intellectual Property as businesses have to clearly show the origin of their products when registering for brand-name protection. In addition, the group also violated the Law on Consumer Protection.

Truyen added that the group could face criminal offence if management agencies discover fake products worth over VND30 million.

Pham Ngoc Hung, vice chairman of the Viet Nam Anti-Counterfeiting Fund, told Tuoi Tre (Youth) newspaper that Khaisilk is probably guilty of trade fraud for replacing a Chinese tag with its own tag to con customers.

It is unacceptable for a company to use its reputation to cheat customers with a fake product not to mention the quality, Hung said. — VNS

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