Abstract: Decree 81/2018/ND-CP provides detailed guidelines for the 2005 Commercial Law on activities including sales promotion, trade fairs and exhibitions. The draft amendment to Decree 81/2018/ND-CP primarily focuses on revising regulations regarding sales promotion activities with the purpose of simplifying administrative procedures for notification of sales promotion and facilitating businesses.
Key words: #promotional_product #sales_promotion_programs #notification_of_sales_ promotion
On July 28, 2023, the Vietnam Chamber of Commerce and Industry has published the draft Decree amending Decree 81/2018/ND-CP detailing the Commercial Law on trade promotion (the “Draft Decree“) to collect the opinions of businesses and associations. Accordingly, the Draft Decree has some highlights, as follows:
1. Types of sales promotion
Forms of sales promotion under Decree 81/2018/ND-CP include[1]:
- Providing of sample goods or services free of charge;
- Gifting of goods or services;
- Sale of goods or provision of services at discounted prices during the announced period of sales promotion;
- Sale of goods or provision of services together with coupons;
- Sale of goods or provision of services together with promotional contest entry form for selecting the prize winner according to rules and prizes already announced;
- Promotional games of chance;
- Organization of frequent customer programs as the basis for awarding customers according to the quantity or value of goods or services purchased in the forms of customer cards or coupons acknowledging the goods or service purchase;
- Goods or service sales promotion with the use of the Internet, electronic media or information technologies.
The Draft Decree does not stipulate amendments and supplements to sales promotion forms.
2. Forms of promotional products used as prizes, rewards or gifts in sales promotion programs
According to Decree 81/2018/ND-CP, money can be used as promotional products[2], except for cases of promotion in the forms specified at Points (i), (iii), (iv) of Section 1 above[3].
The Draft Decree proposed to supplement the form of coupons or other forms of equivalent value (expressed in physical form or data messages or other forms of information) used as prizes or rewards in promotional programs[4]. The use of these forms as rewards in sales promotion programs is not a new regulation but has been recognized in the details of a number of promotional programs and has also been used a lot by businesses in practice.
Additionally, the Draft Decree also expands the scope of application of the above forms in sales promotion programs in all forms of sales promotion instead of only in the three forms in accordance with Decree 81/2018/ND-CP.
3. Maximum value of promotional products
Decree 81/2018/ND-CP stipulates that the promotional value of a unit of promoted product must not exceed 50% of the price of such promoted product unit before the promotion. Traders are exempt from this limit in the following cases[5]:
- Conducting sales promotion in the forms specified in (i), (v), (vi), (vii) Section 1 above; conducting promotions in the form of organizing cultural, artistic, or entertainment programs or other events for customers for the purpose of sales promotion; and forms of gifting of goods or services without accompanied goods sale and purchase, or service provision;
- Organizing concentrated sales promotion programs on holidays and New Year according to Law on labour such as Lunar New Year, New Year, …;
- The program is hosted by state agencies (central and provincial levels).
The Draft Decree proposed to supplement a form of goods or service sales promotion with the use of the Internet, electronic media or information technologies in the list of forms of sales promotion is not subject to the maximum limit[6]. Accordingly, sellers on e-commerce platforms such as tiki, lazada, and shoppe can promote goods and services with a value greater than 50% of the price. This can contribute to creating favorable conditions for sellers in dealing with inventory, obsolete goods, etc.
4. Removing the procedure for notification of sales promotion in certain forms of sales promotion
As per Decree 81/2018/ND-CP, traders must carry out procedures for notification of sales promotion to the Department of Industry and Trade before implementing sales promotion programs in certain forms of sales promotion. Sales promotion forms that must be implemented in this procedure include: forms of sales promotion at points (i), (ii), (iii), (iv), (v), (vii) Section 1 above and conduct promotions in the form of organizing cultural, artistic or entertainment programs or other events for customers for the purpose of sales promotion.
Draft Decree proposed to remove the procedure for notification of sales promotion for the forms of sales promotion at points (i), (ii), (iii), (iv) Section 1 above. In practice, this procedure takes a lot of time for traders because they have to send documents to all Departments of Industry and Trade where promotional activities are carried out. Therefore, if this abolition takes effect, it will greatly reduce time and cost for businesses. In general, the Draft Decree mainly focuses on reducing administrative procedures and clarifying uncertain regulations without making significant changes. Additionally, the provisions in the Draft Decree can help reduce the time and cost for businesses when conducting sales promotion activities.
[1] Decree 81/2018/ND-CP, section 2 Chapter II.
[2] Article 94.1 of the Law on Commercial 2005 provides that “Goods and services used for sales promotion mean those given as gifts or prizes or provided free of charge by traders to customers”.
[3] Decree 81/2018/ND-CP, Article 5.3.
[4] The Draft Decree, Article 1.1.
[5] Decree 81/2018/ND-CP, Article 6.1.
[6] The Draft Decree, Article 1.2.
