The government has issued a decree on multilevel marketing with stricterregulations in a move to better manage the business model.
Under Decree No 42/2014/ND-CP, which will take effect from July 1,multilevel marketing firms must have a charter capital of at least 10billion VND (454,545 USD).
The firms are also requiredto have a collateral of 5 billion VND (227,272 USD) in banks. Thecollateral will be used to pay the financial obligations of the firms incase the firms have to close down.
The new regulationalso bans multilevel marketing firms from direct selling as pyramidschemes besides banning the firms from requiring people to pay any moneyor buy the firms' unauthorised goods to participate in the firms'business.
Multilevel marketing sales people are also not allowed to provide wrong or dubious information to cheat people.
According to the new decree, the Ministry of Industry and Trade (MoIT)will take responsibility of granting business licences for multilevelmarketing firms, instead of municipal and provincial Departments ofIndustry and Trade as was done previously.
Licensedmultilevel marketing firms that have no operations or have stoppedoperations for 12 consecutive months will have their business licencesrevoked.
According to the MoIT, after 10 years ofpresence in Vietnam, the multilevel marketing businesses have attractedapproximately 1 million participants by the end of 2013. There areapproximately 90 multilevel marketing firms in the country, which arelocal, joint ventures and foreign-owned. A majority of the firms wereproducers and traders of food, cosmetics and house wear.
The multilevel marketing business model is familiar in other countries;however, it is a relatively new business in Vietnam. Many multilevelmarketing firms including MB24, Tam Mat Troi and Cong Dong Viet haveused the business model for scamming and manipulating consumers.-VNA
Under Decree No 42/2014/ND-CP, which will take effect from July 1,multilevel marketing firms must have a charter capital of at least 10billion VND (454,545 USD).
The firms are also requiredto have a collateral of 5 billion VND (227,272 USD) in banks. Thecollateral will be used to pay the financial obligations of the firms incase the firms have to close down.
The new regulationalso bans multilevel marketing firms from direct selling as pyramidschemes besides banning the firms from requiring people to pay any moneyor buy the firms' unauthorised goods to participate in the firms'business.
Multilevel marketing sales people are also not allowed to provide wrong or dubious information to cheat people.
According to the new decree, the Ministry of Industry and Trade (MoIT)will take responsibility of granting business licences for multilevelmarketing firms, instead of municipal and provincial Departments ofIndustry and Trade as was done previously.
Licensedmultilevel marketing firms that have no operations or have stoppedoperations for 12 consecutive months will have their business licencesrevoked.
According to the MoIT, after 10 years ofpresence in Vietnam, the multilevel marketing businesses have attractedapproximately 1 million participants by the end of 2013. There areapproximately 90 multilevel marketing firms in the country, which arelocal, joint ventures and foreign-owned. A majority of the firms wereproducers and traders of food, cosmetics and house wear.
The multilevel marketing business model is familiar in other countries;however, it is a relatively new business in Vietnam. Many multilevelmarketing firms including MB24, Tam Mat Troi and Cong Dong Viet haveused the business model for scamming and manipulating consumers.-VNA
