A Hanoi market surveillance agency has claimed the attendants of a Khaisilk outlet in the Vietnamese capital deliberately sourced Chinese products and altered their labels to sell as ‘Made in Vietnam,' rather than follow a ‘policy’ of the company now mired in a mislabeling scandal.

The market watchdog inspected the Khaisilk Hanoi Main Store on Hang Gai Street in Hoang Kiem District at the request of the Ministry of Industry and Trade last week, after brand owner Hoang Khai admitted that 50 percent of his silk scarves were sourced from China and sold under the guise of Vietnamese products.

In a report released on Sunday, the Hanoi market surveillance agency said it was employees of the retail outlet that changed the labels themselves, as their supply of silk scarves had fallen short of demand in the lead up to Vietnamese Women’s Day on October 20.

The store at 113 Hang Gai is registered under the name of Nguyen Thi Thu Nga and has a business license from the Hoan Kiem administration, according to the report.

At the time of inspection, Nga assured them that her store specializes in only selling Vietnamese-made silk products.

According to Nga’s account, as demand for silk scarves soared, the store’s attendants sourced Chinese silk scarves from elsewhere to ensure sufficient stock.

Before selling them, the attendants removed the ‘Made in China’ labels and replaced them with the ‘Khaisilk Made in Vietnam’ ones.

The scarf with two labels is seen in this photo posted on the Facebook page of Dang Nhu Quynh.

Nga said only 60 silk scarves had had their labels altered in this way, with only four having been sold and the remaining 56 still in stock.

The incorrectly labeled items were on sale for VND644,000 (US$28) each. All of these products have since been seized by the market surveillance agency.

An official from Hanoi confirmed to Tuoi Tre (Youth) newspaper that the watchdog had made a report to the trade ministry-run Market Surveillance Department.

However, he underlined that it was only a record of the inspection of the 113 Hang Gai store, not a conclusion.

He added that officers were still verifying the relationship between Nga and Khaisilk, as well as investigating several other issues.

Contradictory statements

The main Hanoi store on Hang Gai Street is where the label scandal began for Khaisilk, owned by real estate tycoon Hoang Khai.

After a local company placed an order for 60 Vietnamese silk scarves earlier this month, at a cost of VND644,000 each, they soon discovered that one of them had both the ‘Made in China’ and ‘Made in Vietnam’ labels on it.

The other 59 scarves also displayed signs that a ‘Made-in-China’ label had been removed and a ‘Made-in-Vietnam’ label had been added.

The incident was first reported on October 23 by Vietnamese Facebook user Dang Nhu Quynh, with the Khaisilk company subsequently making several contradictory statements in its defense.

First, a Khaisilk representative said that all 60 scarves were made from “100 percent silk,” and that the only scarf in question belonged to another order, which the buyer had insisted be label ‘Made in China.’

However, Hoang Khai later admitted in an interview with Thanh Nien (Young People) newspaper that 50 percent of his scarves were from China, a practice he believed to be ethical "so long as the product quality is guaranteed."

Then came a report that Hoang Khai had nothing to do with the label-changing that had occurred in his Hanoi store.

Hoang Khai has since made no further comment and closed both his personal Facebook account as well as the Khaisilk Boutique page.

In addition to the main Hanoi store, two Khaisilk stores in Ho Chi Minh City have also been closed since last weekend.

Founded in the late 1990s, Khaisilk scarves are considered a premium product, popular amongst local luxury consumers and international tourists.

The closed Khaisilk store on Dong Khoi Street, Ho Chi Minh City

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