However, the larger the playing field, the greater the risks. Alongside opportunities, many Vietnamese import-export businesses face fraudulent situations, leading to unnecessary losses and disputes in international trade.
Therefore, state management agencies need to continue issuing recommendations for businesses to avoid fraud traps. Simultaneously, they must focus on improving their knowledge of international transactions and information about partners, avoiding placing excessive trust in export intermediaries, and avoid becoming entangled in international fraud cases and disputes.
Increasingly sophisticated fraud tactics
According to the Ministry of Industry and Trade, from late 2023 until now, Vietnamese import-export businesses have repeatedly encountered fraud in international trade transactions. These incidents have occurred in markets everywhere, from Africa, the Middle East and India to developed countries like the US, the Netherlands and Italy, with increasingly sophisticated tactics and growing fraud values, with some cases amounting to millions of USD.
In most of these cases, the Vietnamese embassies and trade offices in these countries have provided support to recover lost goods or money, but finding the stolen goods or money is very difficult and costly in terms of time and money. Therefore, as Vietnam’s export activities strengthen, the risk of domestic businesses falling victim to international trade fraud increases.
According to the General Department of Customs, the total import-export turnover of goods in 2024 reached 786.29 billion USD (up 15.4% compared to 2023), of which exports reached 405.53 billion USD (up 14.3% compared to 2023), and imports reached 380.76 billion USD (up 16.7% compared to 2023).
However, alongside these achievements, stories of businesses being defrauded in international trade transactions remain very hot. The case of a Vietnamese business being defrauded of 71,900 USD in a transaction with a Pakistani partner in August 2024 is considered a misstep in international transactions.
In this case, the fraudulent business impersonated a reputable Pakistani seafood import-export company, opened an account at a foreign bank to sign an export contract with the Vietnamese business for one container of grouper valued at 81,900 USD.
The Vietnamese business paid 71,900 USD in advance, but afterwards, the Pakistani business withdrew all the money transferred by the Vietnamese business without sending shipping documents, while also cutting off communication. Although the Vietnamese trade office in Pakistan quickly intervened, the likelihood of the business losing this amount is very high.
In early 2024, a Vietnamese business was also defrauded of 526,257 USD by a partner business in the UAE. The Vietnamese business signed three contracts with the UAE partner to purchase 1,000 tonnes of PET plastic, with a total value of 665,500 USD, paying 526,257 USD in advance.
Subsequently, the UAE partner still delivered 25 containers of goods to the Vietnamese business. However, when opening the customs declaration and storing the goods, the Vietnamese business discovered that the actual weight of goods in each container was only 15% to 20% of what was stated in the invoice documents.
Fortunately, in this case, the amount was still in the bank account. Thanks to the intervention and support from the Vietnamese trade office in the UAE, they requested the UAE partner's bank to hold the transaction amount between the two parties to clarify the situation. Therefore, this helped the Vietnamese business recover the full amount of advance payment to the UAE partner, ensuring legitimate interests for the business.
Improving skills and knowledge for businesses
The two cases mentioned above are typical examples of fraud in international trade, but they are not unique. According to experts, Vietnamese businesses lack extensive experience in prevention and response, making them vulnerable to trade fraud and disputes.
A report by the Vietnam Chamber of Commerce and Industry (VCCI) indicated that global businesses lose approximately 5% of their revenue to fraud each year. The average value of a fraud case is about 1.7 million USD.
Specifically, in 2018, 49% of surveyed businesses reported being victims of fraud and economic crime, decreasing to 47% in 2020 and 46% in 2022. Regarding fraud classification, 43% came from external sources, 31% from internal sources, and 26% from collusion between internal and external parties.
According to a survey by PwC Vietnam, 52% of Vietnamese businesses reported having experienced international fraud. This figure is higher than the Asia-Pacific region's average of 46% and the global average of 49%.
According to Dr Nguyen Thi Thu Trang, Director of the WTO Centre at VCCI, the number of businesses defrauded in international transactions is extensive, causing significant losses. There remain limitations and gaps in transaction methods and preventive measures, negatively affecting the reputation of Vietnamese businesses.
In practice, fraud in international trade is not a new issue, but the continued occurrence of fraud and trade disputes is largely attributed to businesses being complacent, not thoroughly checking information about export partners, drafting contracts with loopholes and without tight commitments, or even placing excessive trust in intermediaries, allowing them to draft contracts that lack many important clauses but are still accepted.
Additionally, using inappropriate payment methods and lacking experience in reviewing the legality of contracts to detect calculated traps set by partners is disadvantaging businesses. Therefore, to limit risks, knowledge and experience in handling trade disputes are mandatory factors for businesses. They need to stay alert, vigilant, and maintain a right to be suspicious to thoroughly investigate order information and partners in international trade transactions.
According to recommendations from the Ministry of Industry and Trade, businesses must be cautious, research, verify partners, and require intermediary businesses to provide specific information about partners; fully understand the content of contract clauses, clarify the obligations of each party, cases of liability exemption, dispute resolution provisions, and compensation regulations to reduce potential losses.
For high-value contracts, businesses should accept the cost of travelling to research partners, survey the market, and expand relationships, helping to reduce risks. When transacting, they should sign payment contracts using a letter of credit, with deposits, and may request bill of lading codes according to bank orders. This is because even if someone has the bill of lading code without the bank's order, they still cannot receive the goods.
In particular, businesses should not pay any advance fees related to contract brokerage costs or invoice issuance fees, as this is a common fraudulent practice. Along with that, when detecting suspicious signs, businesses should seek support and advice from the Vietnamese embassy and trade office in the region before conducting international transactions.
