Khai Duc Company, which owns Khaisilk brand, will be given stringent punishment for violation of norms and fraudulent trading.

This was announced by Deputy Prime Minister Truong Hoa Binh, head of the National Steering Board against Smuggling, Trade Frauds and Counterfeits.

Binh has assigned the ministries of Public Security, Industry and Trade, Finance and relevant agencies to look into the violations.

Earlier, the Ministry of Industry and Trade had announced a series of violations by Khai Duc Company and had transferred documents of the Khaisilk scandal to the police for investigation.Statistics from the General Department of Customs showed that between 2006 and 2009, Khai Duc Company Limited imported fashion products from China and Thailand.

However, it stopped importing since 2009. The company had not produced or outsourced fashion products at its production units in Viet Nam. Instead, it bought them from shops, household businesses and other firms in the market, labelling its brand “Khaisilk®”, “stylised Khaisilk” and “Khaisilk Made in Viet Nam”, which the company has been selling in stores nationwide since 2012.

The scandal broke when a business firm in Ha Noi posted on Facebook in November last year complaining about products it had bought from the brand, which claimed they were actually made in China.

According to the post, the company bought 60 Khaisilk-branded scarves at the Hang Gai shop in Ha Noi for VND644,000 (US$28) each. However, one scarf had two tags --- one saying “Khaisilk Made in Viet Nam” and the other saying “Made in China.”

The company said it had checked the rest of the scarves and noticed that the “Made in China” tags had been removed.

Group Chairman Hoang Khai later admitted that the scarves were actually imported from China.

In addition to this scandal, the company had violated the Penal Code for trading fake goods. An assessment of some silk product samples of the company showed no silk component, although information labels on the products claimed they were 100 per cent silk.

Khai Duc Company had also violated the Tax and Invoice Management Law as some invoices used by the company were not issued and managed by taxation agencies.

Inspectors found a huge discrepancy between the company’s accounting data and checked products at some of its branches. The company management could not explain the reasons.

Some of its products did not have brands, while those that did lacked sufficient content as per regulations.

The company’s website also provides incorrect information to consumers. Khai Duc Company has sold many products of unknown origin.

Khaisilk is a renowned high-end brand, with a history of more than 30 years. The scandal has shocked many of its loyal customers. — VNS