Adidas accused of dodging laws

According to the Ho Chi Minh City Planning and Investment Department, Adidas Vietnam was licenced to operate as an importer and wholesaler. However, many analysts claim Adidas has been retailing goods by investing in more than 50 retail outlets through investments in equipment and exclusive product distribution.

The government’s  Decree 23/2007/ND-CP on the activities of buying and selling goods stipulates that wholesaling is the activity of selling goods to traders and other institutions, which do not include the sale of goods directly to consumers - the end-user. Meanwhile, retailing is defined as the activity of selling goods directly to end-users.

Le Thi Thu Huong, deputy head of the Ho Chi Minh City Department of Taxation, said there was agreement between Adidas and retailers that Adidas provides shelves, wardrobes, furnishings to retailers, but the retailers must not re-lease or sell to the third parties in any forms.

Meanwhile, expenses on the furnishings provided to the retailers have been taken into account as sale expenses.

It was also said that Adidas and retailers signed contracts under which the retailers act as sales agents for Adidas with the sale prices set up by Adidas. This raises the specter that retailers act as the hired workers for Adidas. For these reasons, experts believe that Adidas has tried to put its hand into the retail sector in Vietnam.

VIR contacted Adidas to seek comments on the information, but the firm refused to answer questions.

Nguyen Hiep, a lawyer from the Ho Chi Minh City Bar Association, said that Adidas had violated the laws when they carry out the business types which have not been registered.

Lawyer Nguyen Thanh Tuan from the Dong Nai provincial Bar Association also said according to Decree 06/2008/ND-CP, if enterprises carry out the unregistered types of business, they would be imposed the fine of VND1-3 million. The fines are too low to deter violators, because the sums are minor compared to the potential profits for violators.