Nov 29, 2012

Vietnam - Multi-level companies close due to economic difficulties

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VietNamNet Bridge – As many as 14 multi-level marketing companies in HCM City have stopped their operations due to inefficiencies, the city's Industry and Trade Department said.

One multi-level distributor had its business licence revoked because of violations in sales.

There remain 21 multi-level businesses and about 10 branches of other multi-level companies operating in the city.

Multi-level marketing has developed quickly in the past few years. Both the number of businesses and people involved in the trade have increased, according to statistics from the Ministry of Industry and Trade (MoIT).

The MoIT's Department for Competitiveness Management has proposed the ministry revise its decree on multi-level business control in order to tighten management over the industry.

The department suggested increasing the amount that fraudulent companies are fined. Under the current regulation, a multi-level business must have its business licence revoked when its business registration is withdrawn or faults are found in the business's files or operation.

The move stems from the fact that some businesses took advantage of the multi-level-marketing model to appropriate money belonging to salesmen in their systems.

The most recent case of such behavior concerned the Muaban24 Online Trade and Training Co (MB24). Many people reported being victimized by the MB24 network, in which one had to pay VND5.2million (US$248) to buy a "store space" online.

Ha Noi police seized managers of the online trading company in August following allegations the company had appropriated billions of dong from customers.


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