Photo: Viet Tuan
Vietnam Competition Authority directs companies to report on operations.
Multi-level marketing (MLM) companies must submit reports on their business activities in first half of this year to the Vietnam Competition Authority (VCA) under the Ministry of Industry and Trade (MoIT) before July 15.
Reports are to include MLM sales, the number of MLM products, the number of MLM agents, and the commissions, bonuses and economic benefits paid to agents.
Enterprises must also submit audited financial reports for 2015 and information on tax payments in 2015 and the first half of this year.
Since the beginning of the year many MLM companies have been inspected, with some being fined or shut down. On June 14 VCA named four MLM companies and their business violations. Unicity Marketing Vietnam was fined VND130 million ($5,829) for not completing procedures to update its business license after adjusting its business activities, conducting business in cities and provinces where it doesn’t have office while not informing local departments of industry and trade, and not training or not fully training agents.
Best World Vietnam, Herbalife Vietnam, and Naturally Plus Vietnam were fined VND50 million ($2,242) each for conducting business in cities and provinces where they don’t have offices while not informing the local departments of industry and trade.
In April, Hanoi’s Department of Industry and Trade requested the closure of eight MLM companies. Their business licenses had expired but they had not ceased conducting business. The companies were the UFC Vietnam Investment and Commerce Company, Trung Bao Anh Quoc Vietnam, World Nets Vietnam, JM Ocean Avenue, International Livi Investment, Akuna Vietnam, Thien Phuong Vietnam, and Melilea International Vietnam.
The reluctance of agents in MLM companies to come forward is one reason why violations are difficult to detect. One agent in an MLM company, who preferred to remain anonymous, said that even when participants suspect or discover violations by the company they are unwilling to tell State agencies.
He explained that after two or three months agents can receive from VND200 million ($8,970) to VND300 million ($13,450) after paying VND1 billion ($44,840) to the company. They therefore hope to see some of that money before approaching State agencies with their concerns.
Punishments for legal violations by MLM companies are also said to be inadequate. The Lien Ket Viet Company, for example, cheated about 45,000 people out of a total of VND1.9 trillion ($85 million) but was fined just VND570 million ($25,558).
The Prime Minister is currently collecting opinions from ministries and local authorities to strengthen State management over the MLM industry.