Vietnam’s Vingroup’s 68 Lawsuits: Unpacked
In early August, Vingroup released its Q2 Consolidated Financial Statements, which revealed a 21.03 percent jump in liabilities, bringing the total to VND 805 trillion or about US$31 billion — roughly 7 percent of Vietnam’s GDP.
Needless to say, this drew a lot of attention and sparked an avalanche of analysis and commentary across a broad range of social media platforms, with a lot of questions regarding the viability of the company moving forward.
This was nothing new.
Vingroup’s financials are always a point of public discussion when they come around; however, this time there was a noticeable jump in interest — on YouTube Trends, for example, searches for Vingroup were the highest they had been all year in the week ended August 16, about two-and-a-half times their previous peak in June.
Unhappy about the coverage, Vingroup decided to try and shut it down last week by announcing, in a press release on its website, that it would pursue legal action against 68 individuals and organisations it believed had been disseminating “false information”.
Incidentally, this saw YouTube searches reach a new high last week.
That aside, this is a highly unusual approach to image management, unlikely to be seen elsewhere in the world.
Subsequently, it will likely present some interesting insights into doing business both in Vietnam and with Vietnamese firms, and therefore warrants monitoring.
With this in mind, this article backgrounds the situation, including the context and the claims, and considers what this might mean more broadly and what might happen next.
Who are the Vingroup 68?
This is a really interesting question in that Vingroup’s press release never said who it was suing.
Lacking this key detail, there was a broad and varied response.
Some influencers, for example, pulled content and issued apology videos to the corporation, while others were defiant, creating more content that challenged Vingroup to follow through.
In the week or so since, just one name has been announced in the local press.
That is, on Saturday, Tuoi Tre reported that Facebook user Hien Nguyen was being taken to court in Los Angeles, accused by the company of “defamation and unfair competition” pegged to claims she made on her Facebook page “that nearly 5,000 Vingroup employees resigned en masse due to concerns over the safety of the company’s electric vehicles.”
Incidentally, at the time it was reported, Nguyen had 409,000 followers. This has since grown by 7,000 followers at the time of writing.
Aside from that, there has been broad speculation as to who the other 67 might be, but nothing confirmed.
Interestingly, the number 68 is considered lucky in Vietnam.
What is Vingroup claiming?
Firstly, Vingroup is claiming that reports the company is on the brink of bankruptcy because it has total liabilities of VND 805 billion (US$31 billion) are incorrect.
It has countered that its holdings of interest-bearing loans and bonds is just VND 283,000, or about 1.8 times equity, which it says is “safe”.
This is, however, somewhat misleading: its total liabilities, as opposed to just loans and bonds, are actually 5.08 times equity, which is generally not considered good at all.
It also says that claims its vehicles are made in China and then rebranded as made in Vietnam are incorrect, citing a localisation rate of 60 percent as its evidence.
Moreover, it says reports of mass resignations are untrue and disputes fabricated information against the firm’s Chairman Pham Nhat Vuong, however, it does not specify what that might be.
Local media has speculated about what that unspecified information might be, in the process repeating long-running rumours related to the executive’s personal life — the point being the decision to provide only limited information looks to be exacerbating the situation.
Finally, it argues that claims government policy has been set to benefit the corporation are false, and that reports with respect to legal disputes the company has been involved in have been distorted.
Notably, these claims are vague and will require significantly more detail to properly assess.
Based on Vingroup’s press release alone, however, many seem likely to fall down against fair comment, opinion, and truth defences.
Is this legitimate?
There has been broad speculation that this is an intimidation tactic and that the company may not intend to follow through.
However, not following through on at least some of the 68 lawsuits could send the opposite message.
That is, that these are empty threats, empowering analysts, observers, and commentators to pick up where they left off and possibly to even double-down.
Moreover, defamation cases often see the plaintiff under significant scrutiny as defendants work to prove their claims. If defendants are successful, they then have the backing of a court verdict to continue to push those claims.
On that note, even if it were to win, proving damages might be difficult given Vingroup’s stock price is up more than 300 percent since January, and the company reported an 81 percent jump in revenue year-on-year at the end of Q2 — people are both still buying its products and its stock.
All of that is to say, it’s hard to say what Vingroup’s endgame might be.
So, what’s next?
Vingroup will have its work cut out for it pursuing legal action outside of Vietnam.
That said, it might be able to collect some small wins: takedown enforcements, small fines, and the like, and it has already seen a lot of content removed.
These lawsuits, however, risk drawing more scrutiny of the firm and already are drawing attention to the very claims the company wanted to make disappear.
Whether that serves Vingroup’s long-term interests seems doubtful, but remains to be seen.
