Government tightens multi-level marketing regulations

The multi-level marketing model attracts many participants

Driving out weak businesses

Decree 40/2018/ND-CP to help build a clean and transparent multi-level marketing (MLM) environment gave enterprises nine months, starting on May 2, 2018, to meet its conditions. Only 23 of the 30 operating MLM enterprises have been certified so far as having satisfied the new conditions.

The new decree prohibits businesses from providing false or misleading information about the benefits of participating in multi-level marketing, the features and uses of goods, as well as the activities of MLM businesses.

The decree, which replaces two previous ones that became outdated, also requires MLM firms to place an IT server in Vietnam, and provide a system to receive and resolve queries and complaints from MLM participants.

Pham Van Cao, deputy head of the agency for investigation and addressing of unhealthy competition of the Ministry of Industry and Trade’s Vietnam Competition and Consumer Protection Authority said Decree 40 helps drive out inefficient and illegal enterprises.

Vo Dan Mach, Office Head of the Vietnam Multi-Level Marketing Association (MLMA) said most enterprises have prepared well and met the new conditions.

Efficient management needed

Nguyen Phuong Son, Head of Public Affairs at Amway Vietnam said multi-level marketing has proved to be an effective business model with revenues of hundreds of billions of US dollars each year. In countries with a similar economy to Vietnam’s, such as Malaysia, Thailand, Indonesia and the Philippines, multi-level marketing brings in annual revenues of more than US$1 billion, while those in Vietnam have reached only US$400 million.

Mach says the awareness of enterprises, MLM participants and consumers is most important for long-term, sustainable development of this model. According to Decree 40, businesses will have their licenses revoked if they infract the law even once.