There are still 19 multi-level marketing businesses in the country

Ministry of Industry and Trade According to the report, nationwide, there are currently 19 enterprises with multi-level marketing registration certificates in operation, a decrease of 48 enterprises compared to 2016.

In 2023 alone, the total number of people participating in multi-level marketing is more than 768.000 people, an increase of nearly 61.000 people compared to 2017.

Total multi-level marketing revenue last year reached more than VND16.866 billion, down 20% compared to VND2022 billion in 21.110. About 90% of multi-level marketing revenue comes from the sale of functional foods.

With this revenue, the total tax that multi-level businesses pay to the budget is about 2.255 billion VND.

Although the multi-level marketing market once reached hundreds of businesses, until now, only a few brands are known to many consumers such as: Amway, Oriflame or Herbalife. 

Looking at the way of organizing consumption and the compensation plan of multi-level marketing enterprises, it can be seen that many enterprises do not have a mechanism to encourage people to participate in retailing goods to the market. In some enterprises, the commission regime mainly focuses on team commissions and system commissions, not on individual sales efforts.

Therefore, multi-level marketing participants of these businesses only focus on building systems to increase system sales, thereby generating income for themselves.

The company’s goods are purchased mainly by the participants in the company’s system for purposes such as maintaining dynamism, achieving ranking targets, and qualifying for commission payments.

Specifically, to help participants quickly reach their level, businesses design product packages that include many products, priced up to tens, even hundreds of millions of VND for participants to buy in one purchase, in one order or in one bonus period without caring about whether the buyer needs to use it or not, or whether the product can be sold or not.

“With this design, each participant also tends to call on his or her downline, or new participants who do not really understand, to buy in large quantities to reach the rank, bringing commissions to the buyer and the upline,” said the National Competition Commission.

In this way, sales activities are no longer emphasized, but investment and speculation activities tend to develop. Looking at the overall activities of the enterprise, it can be seen that sales activities are not emphasized, but mainly system building activities, participants buy goods to create commissions for each other, and the lower line buys goods to support the upper line.

The fact that goods are not sold on the market but are mainly purchased by the participants in the system will give rise to many undesirable consequences for the multi-level marketing business itself and the multi-level marketing participants.

The Ministry of Industry and Trade assesses that multi-level marketing is a business line permitted by law. However, this is a sensitive business field, easily transformed into fraudulent activities, illegal financial mobilization, causing large-scale negative consequences for society.

Therefore, recently, the Ministry of Industry and Trade has synchronously deployed a series of solutions to rectify and ensure multi-level marketing activities take place within the legal framework.

In particular, through checks and inspections, this agency discovered and fined many cases of violations, revoked the multi-level marketing registration certificates of more than 20 businesses.

In 2023 alone, this Ministry has inspected 6 businesses, sanctioned administrative violations against 5 businesses and one person participating in multi-level marketing with a total amount of money. VND XNX billion.