Thursday, 22 June 2017 00:05

    Millions of Vietnamese involved in pyramid-scheme business

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    VietNamNet Bridge - After nearly 20 years in Vietnam, a pyramid-scheme business has attracted millions of people. Up to 90% of products are dietary supplements.

    Network marketing or multi-level marketing is a method of direct sales to consumers. Accordingly, the buyer can directly receive the goods from the company or through adistributor, not through the dealer or retailer.

    Appeared in the 70s with a lot of controversy, it only began in Vietnam in 1998.

    Multi-level marketing appeared in Ho Chi Minh City for the first time in 1998, by a group of people from Taiwan in a joint venture with a local company named Inconmex. At that time their product was the mattress, which they advertised as a miracle product to cure all kinds of diseases.

    Therefore, the price of the item was pushed to several tens of million a product, a huge amount of money at that time.

    In 2000, the Sinh Loi Company appeared, operating in the form of multi-level business, but it was not managed by law because Vietnam did not have the legal framework for this form of business.

    To join the network of Sinh Loi, members had to buy products such as massage machines, ozone machines, kitchenwares, and electronic goods ... for the price of VND3 to VND5 million, 2-3 times higher compared to the similar products on the market.

    Tens of thousands of people participated in the network of Sinh Loi. Until the end of 2004, the Competition Law and in 2005 Decree 110 were issued to put multi-level business under a certain legal framework. Legal documents recognized it as a legitimate business model in Vietnam.

     

    Shortly after that, after receiving many complaints from customers about the origin of Sinh Loi’s products, in mid-2006 the HCM City Department of Planning - Investment decided to revoke the license of the multi-level marketing of Sinh Loi for commercial frauds.

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