What is multilevel marketing in Vietnam? What goods cannot be sold through the multilevel marketing business model?
What is multilevel marketing in Vietnam?
Pursuant to Clause 1, Article 3 of Decree 40/2018/ND-CP of Vietnam on regulatory framework for multilevel marketing in Vietnam as follows:
“multi-level marketing (MLM)” means a business model that utilizes the network of participants at different levels wherein commissions, bonuses and other economic benefits are or may be paid to participants based on their personal sales and the sales made by other distributors below the participants, also known as downline distributors.
Thus, a multi-level marketing means a business model that utilizes the network of participants at different levels wherein commissions, bonuses and other economic benefits are or may be paid to participants based on their personal sales and the sales made by other distributors below the participants, also known as downline distributors.
What goods cannot be sold through the multi-level marketing business model?
In Clause 2, Article 4 of Decree 40/2018/ND-CP of Vietnam specifically stipulating:
Subject of the multi-level marketing
...
2. The following goods cannot be sold through the multi-level marketing business model:
a) Medicines; medical equipment; veterinary drugs (including veterinary drugs used in aquaculture); pesticides; insecticidal and germicidal chemicals and preparations which are restricted or banned from household and medical use; other hazardous chemicals;
b) Digital content products.
Multi-level marketing in Vietnam
What are the prohibited acts in multilevel marketing?
In Clause 1, Article 5 of Decree 40/2018/ND-CP of Vietnam stipulating as follows:
Prohibited acts in multilevel marketing
1. A multi-level marketing company is prohibited from:
a) requesting a prospective participant to deposit or pay a certain amount of money in any way to be eligible to enter into a multi-level marketing contract;
b) requesting a prospective participant to buy a certain quantity of products in any way to be eligible to enter into a multi-level marketing contract;
c) paying money or other economic benefits to a participant in compensation for his/her recruitment of new distributors without consideration of his/her sale of products to recruited distributors;
d) refusing to pay, without legitimate reasons, commissions, bonuses or other economic benefits to eligible participants;
dd) providing false information concerning the compensation plan or benefits from participation in the multi-level marketing;
e) providing false or misleading information about features or uses of products or operations of the multi-level marketing company through speakers or trainers at conferences, meetings, training courses or training materials of the multi-level marketing company;
g) maintaining more than one multi-level marketing contract, position, identity number or others of equivalent validity for a participant;
h) implementing sales promotion program using multi-level network in which a participant has more than one position, identity number or others of equivalent validity;
i) providing commercial intermediary services as regulated by the Law on commerce with the aims of maintaining, expanding and developing its own multi-level marketing network;
k) receiving or accepting a participant's application or other document which states that the participant relinquishes a part or all of his/her rights as defined herein or says that the multi-level marketing company must not fulfill obligations towards to the participant as regulated herein;
l) using the multi-level marketing strategy to trade or sell a subject other than the one permitted in Article 4 herein;
m) failing to use the management system registered with the regulatory authority that issued the multi-level marketing registration certificate to manage its multi-level marketing participants; and
n) trading or transferring the network of multi-level marketing participants to another enterprise, except for acquisition, amalgamation or merger of enterprises.
Thus, it is forbidden for multi-level marketing enterprises to perform the above acts.
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