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Khaisilk faces criminal probe

Released at: 17:08, 12/12/2017

Khaisilk faces criminal probe

Mr. Hoang Khai, owner of Khaisilk brand (Photo from cafebiz.vn)

Trade ministry orders criminal charges against leading silk brand.

by Duy Anh

Amid widespread public backlash and a raft of looming investigations, the once-posh Vietnamese garment brand Khaisilk is now facing criminal charges after an inspection conducted by the Ministry of Industry and Trade (MoIT) found that it has ticketed products from other marketers and sold these to customers.

The trade ministry finalized a one-and-half month inspection on December 11 on Khaisilk, a renowned high-end brand with a history of over 30 years and famed for its supposedly high-quality “Made in Vietnam” products.

During the 2006-2009 period, the company imported fashion products from China and Thailand but then ceased to do so until October 15, 2017, according to the General Department of Vietnam Customs. From 2012, it also did not conduct any manufacturing or outsourcing activities with local businesses, instead mainly acquiring products from other local marketers, and ticketed those under one of its three “high quality” product lines to sell to customers.

Inspectors concluded that it violated criminal laws by selling fake products, with some of its 100 per cent silk products found to have no silk whatsoever. The company also exhibited signs of tax and product label violations, according the trade ministry, as it failed to provide invoices for products during the inspections.

There were also signs of dishonesty, as the company misled customers with false product information, selling products of unknown origin. “MoIT has transferred all relevant documents to the police, who are set to continue inspecting the company,” according to an MoIT statement.

The scandal came to light on October 23 when a businessman in Hanoi took to Facebook to rail against products his company had bought from the retailer, saying they were actually made in China.

According to the post, the company bought 60 Khaisilk-branded scarves at the Hang Gai shop in Hanoi for VND644,000 ($28) each, but one scarf had two tags: “Khaisilk Made in Vietnam” and “Made in China.” The company said it had checked the rest of the scarves and found signs that “Made in China” tags had been removed.

The brand’s owner, Mr. Hoang Khai, later admitted that half of the silk used by Khaisilk came from China, while the remainder came from Vietnamese craft villages. But he was adamant that his company always used high-quality materials.

Mr. Khai has apologized to customers and offered compensation. However, the public has begun questioning whether Khaisilk had been receiving help from market watch authorities as its shops have allegedly been selling Chinese silk for years without being detected.

“Khaisilk’s actions have violated the law, damaging the value of Vietnamese brands and deceiving Vietnamese consumers,” Minister of Industry and Trade Tran Tuan Anh told an October meeting on the day he set up a joint task force charged with launching an independent probe into the case.

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