640,000 multi-level marketers have an income of 316,000 VND/month

The Ministry of Industry and Trade has just reported on the multi-level marketing business situation in 2016. Accordingly, since mid-2015, the Ministry has stepped up monitoring and inspection of multi-level marketing activities nationwide to limit illegal multi-level marketing activities and ensure a healthy business environment for the industry.

On the other hand, the Ministry also directed the Competition Management Department to closely coordinate with relevant local agencies to strengthen supervision, inspection and handling of violations of the law on multi-level sales in localities.

Up to now, many enterprises have been inspected, fined and had their multi-level marketing registration certificates revoked by state management agencies. The number of people participating in multi-level marketing has also decreased significantly compared to 2015.

The income of multi-level marketing participants is insignificant.

According to the Ministry of Industry and Trade, from late 2015 to early 2016, 67 businesses were granted certificates of registration for multi-level sales activities.

By the end of March 2017, the number of multi-level marketing businesses had decreased from 30 to 37, a decrease of 45% compared to the end of 2015. Of these, 15 businesses had their certificates revoked, 12 businesses proactively terminated operations and 3 businesses temporarily suspended operations.

The total number of people participating in multi-level marketing by the end of 2016 was 637,637 people, a decrease of 212,363 people (25%) compared to the end of 2015.

Total multi-level sales revenue in 2016 reached about 7,800 billion VND, down about 200 billion VND compared to 2015 (down 2.5%).

Multi-level marketing revenue mainly comes from functional foods (59%) and cosmetics (24%). Revenue from household appliances accounts for 6.6%, revenue from fashion clothing accounts for 2%, revenue from equipment accounts for 0.5%, and the remaining 8.2% is from other items.

The total commissions and economic benefits that multi-level marketing businesses paid to multi-level marketing participants reached about VND2,400 billion, accounting for about 31% of the total industry revenue.

The industry's after-tax profit only reached 177 billion, equivalent to 2.2% of revenue. Of the total 37 enterprises reporting, only 11 enterprises achieved positive profits.

The Ministry of Industry and Trade said that the number of multi-level marketing businesses decreased sharply in 2016, the number of people participating in multi-level marketing also decreased relatively significantly, but the industry's total revenue only decreased by about 200 billion VND, showing that society's reaction to illegal multi-level marketing activities has almost no effect on the industry's total revenue.

"The total commissions and other economic benefits paid to multi-level marketing participants reached about VND2,400 billion. Although it is large in absolute value, if divided equally among nearly 640,000 people participating in the system, the average income of multi-level marketing participants is very insignificant, only about VND3.8 million/person/year, equivalent to only VND316,000/person/month. This shows that among nearly 640,000 people participating in multi-level marketing, only a small proportion are salespeople. The rest hardly participate in sales," the Ministry of Industry and Trade acknowledged.

The Ministry of Industry and Trade also confirmed that the operating efficiency of multi-level marketing businesses is very low, with after-tax profits reaching an average of 2.2%, and over 50% of businesses reporting losses.

According to VnEconomy