HCM CITY — The revenue of multi-level selling (MLS) activities increased four times in 2010 in the four-year period after they began to officially operate.
The 2006 figure was VND614 billion (US$29 million), which increased to VND2.8 trillion ($133 million) in 2010.
The number of people participating in MLS activities is nearly 900,000, according to official figures, and could reach 1 million.
The figures were released at a meeting on managing MLS activities, held last Friday in HCM City.
Bach Van Mung, head of the Ministry of Industry and Trade's Competition Management Department, said the rapid development of MLS activities had caused problems in management.
Violations occurring in MLS activities were mostly due to the quality of products.
MLS companies and distributors have also provided false information about the quality and the use of products.
Participants at the meeting said violations in advertising products by word of mouth had occurred at seminars and conferences held by MLS companies.
However, management of such advertising had been lax and it was difficult to penalise MLS companies, they said.
To develop their businesses, MLS companies gave high commissions to distributors, who raised the selling prices of products many times higher than the original price, they said.
A representative of the HCM City Department of Industry and Trade proposed that provincial departments of Industry and Trade be given the authority to end MLS activities that severely violate the law and consumer interests in their localities.
Under current regulations, MLS companies which want to expand their activities to other provinces only need to register with that province's Department of Industry and Trade and do not need to set up a branch there.
This regulation made the task of managing and monitoring MLS activities more difficult, participants said.
As of June, 63 companies, including 30 in Ha Noi and 29 in HCM City, were given licences to sell products, including nutritional supplements, cosmetics, household utensils and other items in the form of MLS.
Eighty per cent of the MLS companies have registered to sell nutritional supplements, according to the Ministry of Health's Administration for Food Safety and Hygiene Department.
Of the 63 companies, 20 have stopped operating or switched to other kinds of businesses. — VNS