Imposing penalties and revoking the business registration certificate.
In June 2024, Thien Su Vietnam Co., Ltd., located in Dai An Industrial Park ( Hai Duong City), was fined VND 245 million by the National Competition Commission (Ministry of Industry and Trade) for violations related to multi-level marketing. The fines were due to the company's failure to provide basic training to multi-level marketing participants as required; failure to notify the Ministry of Industry and Trade within the prescribed timeframe for changes in the trainer list; failure to properly conduct basic training for multi-level marketing participants as required; failure to properly issue membership cards to participants as required; and failure to notify the Hai Duong Department of Industry and Trade when organizing conferences, seminars, or training sessions that required notification.
In 2019, Thien Su Vietnam Co., Ltd. was fined 585 million VND by the Competition and Consumer Protection Department (now the National Competition Commission) for numerous violations in its multi-level marketing operations.
Tiens Vietnam Co., Ltd. invested US$1.5 million to implement a project for the production and sale of functional food and cosmetic products in Dai An Industrial Park since 2008, with an annual production capacity of 582,000 boxes of functional food and 24,000 boxes of cosmetic products. Of these, 60% of the products are supplied to the Vietnamese market, and the remainder are exported.
Previously, in 2022, the Department of Industry and Trade revoked the registration certificate for multi-level marketing activities in the locality for Siberian Health International Co., Ltd. (headquarters located in Thanh Xuan Trung Ward, Thanh Xuan District, Hanoi ). This company was fined 815 million VND by the Competition and Consumer Protection Department for a series of violations in its business operations, including: failure to comply with registered operating rules and compensation plans; failure to provide basic training before signing multi-level marketing contracts and failure to provide retraining after signing contracts; and providing misleading information about the features and uses of products at the company headquarters through product brochures. In addition to the fine, the company had its license revoked and was forced to cease operations from October 14, 2022.
Strict management
Compared to the beginning of 2023, the management of multi-level marketing activities in the province has significantly improved thanks to the implementation of Government Decree No. 18/2023/ND-CP dated April 28, 2023, which came into effect on June 20, 2023. In cases where a business does not have a headquarters, branch, representative office, or business location in the locality, it must appoint a local contact person. This contact person must be trained, pass a knowledge test, and receive a knowledge certificate from the Ministry of Industry and Trade before they can act as a contact person for the business.
Specifically, on June 26th and July 10th, 2024, the Department of Industry and Trade respectively confirmed the receipt of notification documents regarding the termination of multi-level marketing activities in the locality from Aloe Vera Trading Co., Ltd. (headquarters in District 3) and Diamond Lifestyle Vietnam Co., Ltd. (headquarters in Phu Nhuan District, both in Ho Chi Minh City). The reason for the termination of sales activities in Hai Duong by these two companies was their inability to meet the local distribution center requirements as stipulated in Decree No. 18.
Currently, there are 12 multi-level marketing (MLM) companies operating in Hai Duong province. Of these, one company, Thien Su, has its headquarters in Hai Duong, and 10 have representative offices in Hai Duong. Only Unicity Marketing Vietnam Co., Ltd., headquartered in Ho Chi Minh City, currently has no branch or representative office in Hai Duong. In contrast, during the same period last year, most MLM companies did not have representative offices or branches in Hai Duong.
Currently, the number of people participating in multi-level marketing in the province is over 14,000. Businesses certified to operate multi-level marketing in Hai Duong mainly deal in functional foods, cosmetics, household goods, etc. In 2023, the Department of Industry and Trade received 13 notifications from multi-level marketing businesses regarding the organization of conferences, seminars, and training sessions as regulated. The total revenue from multi-level marketing sales in the province in 2023 was over 480 billion VND.
According to the list of representative offices of multi-level marketing companies in Hai Duong provided by the Department of Industry and Trade, we visited the representative office of Amway Vietnam Co., Ltd. at 53A Quang Trung Street, Quang Trung Ward (Hai Duong City). However, according to some residents living there, this office is rarely open or operational. Also based on the same list from the Department of Industry and Trade, the reporter contacted the head of the Hai Duong representative office of Nu Skin Enterprises Vietnam Co., Ltd., who stated that Nu Skin Enterprises Vietnam's business in Hai Duong is small, with few distributors. The company also does not hold conferences or seminars in Hai Duong, and therefore declined to provide information.
Ms. Vu Thi Sau, Deputy Head of the Trade Management Department (Department of Industry and Trade), stated that after more than a year since Decree No. 18 came into effect, the effectiveness of managing multi-level marketing activities has significantly improved. However, recently, with the development of e-commerce and information technology, there have been instances of exploiting the online multi-level marketing model to carry out illegal financial activities, fraud, and property appropriation. Decree No. 40/2018/ND-CP stipulates that multi-level marketing activities are only permitted for goods, and the industry and trade sector only manages enterprises that have been granted certificates and is responsible for their multi-level marketing activities. Activities such as fundraising, foreign exchange trading, and virtual currency trading are not within the scope of state management and the authority of the industry and trade sector; therefore, coordination with relevant agencies is essential.
In the coming period, the Hai Duong Department of Industry and Trade plans to continue coordinating with the Hai Duong Market Management Department, the police force, and the People's Committees of districts to monitor multi-level marketing activities of enterprises in the province in order to promptly detect violations, disguised activities, and fraudulent schemes that lure people into participating for illicit gain.
I believe that the authorities need to increase regular on-site inspections of the representative offices of businesses in Hai Duong, to prevent the situation where they rent offices merely for show, but in reality, they just close them down and leave them idle.
PVSource: https://baohaiduong.vn/manh-tay-xu-ly-vi-pham-trong-kinh-doanh-da-cap-tai-hai-duong-388139.html
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