With an average income of 2.7 million VND per year, multi-level marketing is not a way to get rich.

According to the Ministry of Industry and Trade, there are currently about 360,000 people involved in multi-level marketing, with an average income of 2.7 million VND per year. Therefore, multi-level marketing is unlikely to make everyone who participates rich.

According to a report by the Ministry of Industry and Trade, multi-level marketing has recently seen a sharp decline in both the number of businesses and participants.

The number of licensed multi-level marketing businesses has decreased to 36 units, down 46% compared to the end of 2015. The number of participants is approximately 360,000, down 276,000 (43%) compared to the end of 2016.

With an income of 2.7 million VND per year, it's difficult to get rich from multi-level marketing.

In the first six months of the year, the total sales revenue of multi-level marketing companies was 3,067 billion VND. The total commissions and other economic benefits they paid to participants amounted to 986 billion VND. Thus, the commission rate on revenue was 32%.

The Ministry of Industry and Trade estimates that the average income of 360,000 people participating in multi-level marketing is approximately 2.7 million VND per person per year. Therefore, multi-level marketing is not a business method that can enrich all participants.

According to the Ministry of Industry and Trade, only about 360,000 people nationwide are still participating in multi-level marketing. Photo: Tien Tuan.

Of the 35 registered businesses, 11 incurred an obligation to repurchase goods from participants, with an estimated total value of approximately 6 billion VND.

The Ministry of Industry and Trade has also received many complaints from multi-level marketing sellers, but most of them are not actually selling anything; they simply give money to others hoping to receive high profits.

In particular, 100% of the profit-sharing agreements were not recorded in writing, so when disputes arose, the State authorities had no evidence to handle them.

The multi-level marketing "kingpin" Thien Ngoc Minh Uy has amassed 165,000 followers.

According to the Ministry of Industry and Trade, Thien Ngoc Minh Uy Co., Ltd., the largest multi-level marketing company in the country, ceased operations in April. At the time of cessation of operations, Thien Ngoc Minh Uy had 165,000 participants, over 20 branches, and 41 business locations in various localities.

The Ministry of Industry and Trade has reported to the Government, requesting that the Ministry of Public Security and local People's Committees ensure security and order, as the closure of Thien Ngoc Minh Uy could lead to complaints and lawsuits, potentially affecting public security and order.

The Ministry also established a task force, with the participation of the Ministry of Public Security, to work with Thien Ngoc Minh Uy Co., Ltd. to monitor and supervise the process of the company terminating contracts with participants, in case Thien Ngoc Minh Uy is no longer able to or refuses to refund the participants' money.

Several multi-level marketing companies were penalized in 2016. Graphic: Hieu Cong.

Since the beginning of the year, four businesses have been fined a total of 490 million VND.

To date, 15 out of 63 provinces and cities (Hanoi, Ho Chi Minh City, Quang Ninh, Lang Son, Yen Bai, etc.) have directed relevant agencies to handle issues arising from Thien Ngoc Minh Uy's cessation of multi-level marketing activities.

In addition to handling the closure of Thien Ngoc Minh Uy, since the beginning of 2017, the Ministry of Industry and Trade has also concluded investigations and fined four multi-level marketing companies for violating the law, with a total fine of 490 million VND.

The investigation has concluded, and procedures are underway to address violations by two other multi-level marketing companies involved in illegal business practices in this sector.

The Ministry of Industry and Trade is also developing and finalizing a draft Decree amending and supplementing Decree 42/2014/ND-CP to effectively manage multi-level marketing activities and provide sufficient legal sanctions for their regulation.

According to Zing.vn