Vietnam's government and local businesses have expressed concern about the impact of Chinese online platforms on local markets due to deep discounting. The trade ministry has also said it is worried about the potential for the sale of counterfeit items.

Nguyen Hoang Long, Vietnam's deputy trade minister, told a government meeting at the weekend that the ministry had worked with both Shein and Temu on the licensing matter.

"After the ministry's notification, if these platforms do not comply, the Ministry of Industry and Trade will coordinate with relevant agencies to implement technical measures such as blocking applications and domains," Long said in a government statement.

Fast-fashion retailer Shein has been selling into Vietnam for at least two years, while Temu, owned by Chinese e-commerce giant PDD Holdings, started allowing users in Vietnam to shop last month.

In a statement to Reuters, Shein said it sells products directly to Vietnamese consumers and is "committed to complying with Vietnam’s laws and regulations" and is "working closely with local authorities on this matter".

Temu did not respond immediately to a request for comment.

Vietnam allows imported goods of up to 1 million dong ($40)to be exempt from a value-added tax. The finance ministry said most items benefiting from this tax break are imported via e-commerce platforms and it is considering terminating the tax break.

Both Temu and Shein are also facing increased scrutiny and legal challenges elsewhere. Last month, Indonesia requested Apple and Google block Temu from their app stores to protect small merchants from competing with ultra-cheap items.

Vietnam's e-commerce market has grown 18% this year to be worth $22 billion, the third-largest in Southeast Asia behind Indonesia and Thailand, according to a report by Google, Temasek and Bain & Company released last week.

Other e-commerce platforms that operate in Vietnam include Singapore-based Shopee, Alibaba-backed Lazada and domestic companies Tiki and Sendo.

($1 = 25,260.0000 dong)

(Reporting by Khanh Vu, Phuong Nguyen; Editing by John Mair and Edwina Gibbs, Kirsten Donovan)