Multi-level marketing (MLM) sales reached 4000 trillion VND in Vietnam.

This information was revealed by Mr. Trinh Anh Tuan, Deputy Director of the Competition Management Department, at the six-month review meeting on the implementation of Directive No. 02/CT-BCT on strengthening inspection, supervision, and handling of violations of the law in multi-level marketing activities, organized by the Ministry of Industry and Trade.

Accordingly, Mr. Tuan stated that the number of multi-level marketing businesses operating had decreased from 67 to 50 as of September 9.2016.

The number of people participating in multi-level marketing is approximately 500.000, a 57% decrease compared to nearly 1,2 million in the same period of 2015.

Mr. Tuan also informed that, in the first six months of the year, multi-level marketing companies achieved total revenue of 4.000 billion VND and paid 452 billion VND in taxes to the State.

Of that total, foreign-invested enterprises generated approximately 1.800 billion VND in revenue (accounting for 45% of the market share), while domestic enterprises generated approximately 2.200 billion VND in revenue (accounting for 55% of the market share).

Although Government Decree No. 42 on the Management of Multi-Level Marketing Activities in Vietnam came into effect more than two years ago (July 2, 1.7.2014), according to the Deputy Director of the Competition Management Department, multi-level marketing still reveals many shortcomings, causing this business model to be distorted in Vietnam and creating public outrage.

"The evidence is that at least nine businesses have had their operating licenses revoked by the Competition Authority and have been fined nearly ten billion dong," Mr. Tuan said.

Agreeing with Mr. Tuan's opinion, Mr. Nguyen Thanh - Director of the Department of Industry and Trade of Thua Thien Hue province - also believes that the effectiveness of multi-level marketing should be seriously re-evaluated, considering whether or not it should be maintained, because in Thua Thien Hue province, the number of people who are victims of multi-level marketing is quite large, causing public outrage.

"The buyers of this type of business are workers, students, the elderly, etc., who unwittingly become victims of multi-level marketing. When a multi-level marketing company collapses, these victims are left penniless," Mr. Thanh stated.

According to the Director of the Department of Industry and Trade of Thua Thien Hue province, Decree No. 42 needs to be amended soon to improve the legal framework, because multi-level marketing is increasingly developing and evolving in unpredictable ways.

Appreciating the frank sharing of the leaders of the Department of Industry and Trade of Thua Thien Hue province, Minister Tran Tuan Anh affirmed that multi-level marketing is currently difficult to manage, but that does not mean it should be eliminated. This is because it is a modern business model that cannot be denied in the overall commercial activities of a developing country deeply integrated into the global economy like Vietnam.

Based on feedback from relevant units, Minister Tran Tuan Anh instructed the Competition Management Department not to focus on summarizing statistics but to conduct a comprehensive assessment of the practical situation of multi-level marketing, especially its impact on localities and the lives of the people.

According to the Minister, the Competition Authority needs to consider options for restricting the issuance of new licenses to multi-level marketing businesses while revising and improving Decree No. 42 as well as the legal framework for managing multi-level marketing.

Source: Collector