Fashion chain troubled over label fraud suspicions

Fashion chains are in hot water over suspected label fraud

On November 12, all SEVEN.AM outlets in Hanoi were closed, despite no official announcement being made on the issue.

Dang Quoc Anh, CEO of Hanoi-based MHA JSC, which owns the SEVEN.AM brand, established in 2009 and has 24 outlets in 18 localities, told media that the stores were closed because the company is awaiting the investigation results from Hanoi’s Department of Market Surveillance.

On November 11, the department seized over 9,000 SEVEN.AM products from five outlets for which the company was not able to provide transaction records showing their origins.

The investigation was launched after media reports alleged SEVEN.AM was importing Chinese goods and replacing "Made in China" labels with "Made in Vietnam" on clothes, underwear, and scarves.

A representative of the surveillance department said that it was verifying the origins of these products. A product imported from another country and sold in Vietnam should carry the label of the country of origin, and replacing it with Vietnamese tags was illegal, he said.

Several days ago, on November 4, 2019, Hanoi’s Department of Market Surveillance found that a textile facility in Long Bien district had bought overseas goods and replaced labels with those of local fashion brands like NEM and IFU.

This included 66 packages of all kinds of goods sporting labels in a variety of foreign languages, 2,130 clothing products sporting IFU labels, 16 bags of clothes already labelled NEM Fashion, six packages of handbags, and four bags of clothes already missing their original labels. The goods weighed an estimated four tonnes and were valued at VND2 billion ($87,000). These goods were confirmed to had been produced overseas and the facility could not provide invoices to verify their origins.

Discussing with local media, both representatives of IFU Fashion and NEM Fashion denied having any relations with the textile facility.

Vietnamese fashion brand NEM, which was established in 2002, has 86 stores nationwide, including 19 in Hanoi. This brand has been acquired partially by Japanese Stripe International, however, Truong Viet Binh is still named as the owner in NEM's company registration certificate.

IFU appeared in Vietnam with 18 stores across the country but the company's contact information, headquarters, and ownership are not available. Notably, according to tuoitre.vn, IFU managed by the wife of Truong Viet Binh.

Recently, origin fraud allegations, especially for Chinese products, have been levelled at major Vietnamese companies, including silk brand Khaisilk and electronics maker Asanzo.