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​In Vietnam, false information from inspectors spells disaster for businesses

Saturday, August 25, 2018, 17:14 GMT+7
​In Vietnam, false information from inspectors spells disaster for businesses
A worker operates a machine at a food-processing facility of Vietfoods in Binh Duong Province. Photo: Tuoi Tre

A single piece of negative information tied to a business can cause it to suffer huge losses or even go bankrupt, but it is often the case in Vietnam that public inspectors are eager to release early ‘findings’ of their inspection without proper consideration, only for them to turn out false or misleading.

The most notable example of such cases is the one that haunted Vietfoods, a Hanoi-based company specializing in food production and processing, two years ago.

In 2016, Vietfoods was involved in a food safety scandal when over two metric tons of its sausages were confiscated by a market watchdog in Hanoi for containing a chemical known as sodium nitrate.

At the time, the authority said they suspected sodium nitrate to be a carcinogen, raising health concerns and prompted a nationwide boycott of Vietfoods sausages.

It was later clarified that the substance was safe for consumption and Vietfoods was cleared of any wrongdoing.

However, the damage was already done and the company never really recovered from the public trust crisis.

According to Vietfoods’ owner Luu Minh Sang, the company only managed to restore 30 percent of sausage production compared to the pre-scandal period, and was eventually forced to shut down its production of sausages entirely due to the bad reputation.

“A good name is sooner lost than won, so a single piece of negative information can spell death for a business,” Sang said.

“Authorities should take this fact into thorough consideration before deciding to release information regarding ‘wrongdoings’ at a business,” he suggested.

Sang added that the amount of sausages confiscated by authorities for inspection had already gone bad by the time Vietfoods got them back, but no compensation was made to the company.

The owner said he did not want to seek court actions against the market watchdog, as he had no belief that a favorable outcome would be on his side in such a legal battle.

A worker stocks unsold sausages at a Vietfoods warehouse in 2016 after rumors spread that the food contained a cancer-causing substance. Photo: Tuoi Tre
A worker stocks unsold sausages at a Vietfoods warehouse in 2016 after rumors spread that the food contained a cancer-causing substance. Photo: Tuoi Tre

Con Cung, a retail store chain selling mother and baby products, also fell victim to misleading information when more than 180 out of the company’s 350 locations nationwide were subject to inspection in July for alleged dishonest practice.

The large-scale inspection followed a customer’s complaint that the ‘Made in Thailand’ label on a clothing set sold at one of its stores seemed to have been attached after removing a previous tag.

However, it was later concluded that the clothes’ origin was authentic, as Con Cung was able to provide import papers for all of its products.

According to Luu Anh Tien, general director of Con Cung, the company had suffered a loss in daily revenue of VND1-2 billion (US$43,000-86,000) compared to before the scandal as a result of plummeting sales.

Change needed

Pham Ngoc Hung, vice president of Vietnam’s Anti-Counterfeiting Fund, said authorities should be more cautious in releasing information to the public before there is official conclusion on any business inspection.

Authorities’ suspicions or speculations should not be made public until there is concrete evidence to back them up, Hung said.

Dang Duc Tri, a lawyer based in Ho Chi Minh City, said businesses have the right to seek legal actions against authorities if they suffer losses as a result of false information.

“If they can prove that the business is affected by rumors originating from the false information, they can demand compensation,” Tri said.

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Tuan Son / Tuoi Tre News

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