Evidence indicating Asanzo’s four violations of Vietnamese Law

Electronics company Asanzo is alleged to have committed violations related to the deception of consumers, origin of exported goods, counterfeiting of trademarks and evading taxes.

On October 28, the General Director of Vietnam Customs, Mr. Nguyen Van Can (Member of National Steering Committee 389) chaired a conference with the participation of relevant ministries and agencies to present evidence of the violations by Asanzo Group Joint Stock Company.

The Deputy General Director of Vietnam Customs – Mr. Mai Xuan Thanh stated that, based on the results of the investigation and verification, the Ministry of Finance determined that Asanzo had may have committed violations spanning 4 categories including infringement of trademarked industrial property rights (counterfeiting trademarks), “deceiving consumers”, origin of goods, and tax evasion.

The Deputy General Director of Vietnam Customs – Mr. Mai Xuan Thanh. Photo: Anh Tu.

Regarding the evidence of violations related to “deceiving consumers”, Mr. Thanh stated that the assembly processes of some products of Asanzo were not as advertised. The company utilized 12 rows of tables for assembly of televisions and air conditioners. These tables were stated to be 30 m long and 1.4 m wide (with an area of ​​45 m2), with each table able to accommodate a 50-inch television. The company also had 1 mainboard testing room, and 8 computers and 8 staff. However, the assembly of the products was done manually by a basic hand-screwing process and did not involve the manufacture of the main system components.

According to the assessment of customs agencies, assembling one television only required 12 staff and 30 auxiliaries over 30 minutes. After being assembled, the products would be placed into packages having the Asanzo trademark and logo, Vietnamese language instructions, and Vietnamese bar codes. Then, they would be sold to 19 other companies for circulation in the domestic market.

“Compared to the advertisement videos on media showing television assembly lines with modern equipment, the actual assembly lines at the production facilities of Asanzo were not as advertised”, the Deputy General Director of Vietnam Customs stated. Further, he also mentioned that the use of the phrase “peak of Japanese technology” on some products was also not true.

Regarding the evidence of violations related to counterfeiting trademarks, Mr. Thanh stated that Asanzo currently had not paid for the service mark as agreed to in the signed contract with Sharp Roxy Hong Kong Company dated January 24, 2017. The reason for this was that Asanzo had not yet obtained approval of the Ministry of Science and Technology for the technology transfer. Attending the conference, the representative of the Ministry of Science and Technology stated that they had replied to Asanzo by an official letter explaining that the certificate of technology transfer could not be granted because the signed contract did not reflect the technology transfer.

Regarding the evidence of violations related to the origin of goods, Mr. Nguyen Van Can repeatedly asked the representatives of the agencies at the conference to answer whether or not Asanzo had committed origin fraud in relation to the goods circulated in the domestic market. However, most officials stated that it was “inconclusive.”

The conference on initial conclusions concerning Asanzo chaired by the General Director of Vietnam Customs, Mr. Nguyen Van Can on October 28, 2019. Photo: Anh Tu.

“There are currently no specific regulations prescribing local value content for goods circulated in the domestic market. The Ministry of Industry and Trade is presently taking careful steps in drafting the origin regulations for domestic goods, so it is difficult at this time to make any conclusions”, said the representative of the Domestic Market Department – Ministry of Industry and Trade.

Ms. Tran Thu Huong, the Director of the Center for Certifying Commercial Documents of the Vietnam Chamber of Commerce and Industry (VCCI) also pointed out that it could not confirm whether or not Asanzo had committed origin fraud in relation to the goods circulated in the Vietnamese market. The reason was that Vietnam currently had no specific regulations.

However, the Ministry of Finance stated that Asanzo had committed violations related to simple assembly, the goods should not be allowed to be identified as Vietnamese origin when exported.  The competent agencies had reviewed 3 customs declarations of Asanzo Electronic Technology Investment Joint Stock Company for export of 661 Asanzo televisions of many types, with accompanying accessories such as mount brackets, remote controls, to customers in Japan. These customs declarations stated that the products were of Vietnamese origin.

According to the data obtained from the market surveillance agencies’ inspection and verification, the value of the cost price of the main materials accounted for 98-99% which resulted in the added value from the assembly being too low (1-2%). Therefore, the customs agencies concluded that Asanzo-branded exported televisions were only simple assembly. The parts constituting a finished product did not meet the Vietnamese origin criteria under Decree 31. As a result, there were indications of origin fraud in relation to the exported goods.

At the conference, the representatives of the Ministry of Industry and Trade, such as the Vietnam Directorate Department of Market Surveillance and the Domestic Market Department, said that they agreed with the report of the General Department of Vietnam Customs on Asanzo’s assembly process and production process.

Mr. Nguyen Van Can concluded that “Asanzo’s exports violate Decree 31. However, when circulating in the domestic market, there is no regulation governing their actions. This is unreasonable because they are the same television products.  Is the Vietnamese market different from other countries?”.

The representative of VCCI provided additional information that it had not yet received the Asanzo Group’s trading profile, which meant that this corporation had not yet registered with VCCI. Therefore, VCCI had no information and had not yet issued a C/O to Asanzo for its export of goods to foreign countries.

Mr. Lai Thanh Tuan, the representative of the Supreme People’s Procuracy. Photo: Anh Tu

Regarding evidence of violations related to taxes, Mr. Lai Anh Tuan – the representative of the Supreme People’s Procuracy stated that there were indications that Asanzo committed tax evasion, but there was not enough evidence to determine whether it constituted a criminal offense or not.

According to the conclusion of October 23, the Taxation Department of Ho Chi Minh City decided to fine Asanzo. The total amount of the fine and back taxes was more than VND 47.6 billion. Further, the representative of the Taxation Department stated that Asanzo had committed 3 violations. The first was failure to keep certain records in the books and failure to issue value-added tax (VAT) invoices with the goal of evading taxes. Asanzo purchased components which were subject to excise taxes but misleadingly declared them as finished air-conditioning products.

The second violation was illegal use of invoices. The invoices incorrectly stated the products were finished air-conditioning units while in fact they were components. The third violation was listing higher numbers in the invoices for the purposes of tax evasion. Several different companies were mainly controlled by Asanzo’s personnel and they overstated the numbers in the invoices. Inspection of bank accounts showed that money transfers were made straight to Pham Thi Hien, the wife of Mr. Tam – Chairman of Asanzo.

Mr. Tuan stated that “although the companies of Asanzo declared that they had bought and sold numerous goods, it is possible that such declaration was only for the purpose of improving their image. The actual trading amount may not have been that high”.

The General Department of Vietnam Customs were to collect the opinions and results of the investigation and verification from the relevant ministries and agencies to report to the Prime Minister on the Asanzo case before October 30. However, the representative of the General Department of Vietnam Customs also noted that this could be delayed by a few days.

Anh Tu (Vnexpress)

This is a typical case relating to business law and criminal law, we decided to make the English translation to help the foreign readers doing business in Vietnam have more business insights to comply with the Vietnamese legal regulations. Any constructive comments or discussion, you may write to us at info@letranlaw.com