Police are set to step in to probe a scandal that has rocked the Vietnamese silk industry as the owner of a premier silk brand had admitted that half of its high-end ‘Made in Vietnam’ scarf stock comes from China.

Following a closed-door meeting on Monday, the Ministry of Industry and Trade announced on its official website that it had ordered the transfer of the scandal’s documents to the criminal police division under the Hanoi Department of Police.

All documents have been sent to the police ever since.

Tag removal?

Khaisilk, a premier Vietnamese silk brand, made headlines last week when one of the company’s scarves was found bearing both a ‘Made in China’ label and a ‘Made in Vietnam’ one, giving rise to suspicion of trade fraud.

A Facebook user, Dang Nhu Quynh, had reported that the scarf was part of a 60-item order his brother had placed with a Khaisilk store in Hanoi at VND644,000 (US$28) apiece.

In his status update, Quynh said that some of the remaining 59 ‘Made-in-Vietnam’ scarves displayed signs that a ‘Made in China’ tag had been cut off.

The brand owner, Hoang Khai, later confessed that 50 percent of his silk scarves were sourced from China and sold under the guise of Vietnamese products.

On Sunday, a Hanoi market surveillance agency stated in a report that it was employees of the Khaisilk outlet who had changed the tags without anyone else’s knowledge, as their supply of silk scarves had fallen short of demand.

Located at 113 Hang Gai in Hoan Kiem District, the store is registered under the name of Nguyen Thi Thu Nga and has a business license granted by the Hoan Kiem administration.

The Hanoi store has been closed while two Khaisilk shops in Ho Chi Minh City have also been shut down since last weekend.

Trade Minister Tran Tuan Anh has asked Hanoi police to look into the violations of Nga’s business.

He urged the establishment of an inspection group including police, customs, and tax officers to carry out a comprehensive examination of Khaisilk products.

The interior of the Khaisilk outlet on Hang Gai Street in Hanoi. Photo: Tuoi Tre

Minister Anh requested the People’s Committees in Hanoi and Ho Chi Minh City to direct close investigations into the activities of the firm in each locality.

According to Chu Xuan Kien, Deputy Minister of Industry and Trade, Nga is the representative of Khai at the 113 Hang Gai store.

An official from the Hanoi market watchdog said that its report only showed initial results, as competent agencies would continue their probe to reach a final conclusion.

Incredible report

V.A., business manager of the Ho Chi Minh City-based LP Textile Company, asserted that the report of the market surveillance agency is unreliable and unacceptable.

In accordance with protocol, all products and revenues at outlets must be reported back to the company on a daily basis, A. stated.

In case of a hike in demand, store managers always inform their firm to source additional products and check the origin of all merchandise.   

A former Khaisilk partner said that Khai, as the brand owner, has to supervise every step in the operations of his outlets, which makes it difficult for any manipulation by any employee to take place.

This could be a way to mitigate the firm’s wrongdoing, the former business partner remarked.

Tran Huu Huynh, chairman of the Vietnam International Arbitration Center, added that a business owner must take responsibility for all his merchandise under any circumstance. 

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

Khaisilk also trades wallets, bags, ties, and other items of clothing.

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