Direct selling news,August,2    Nguyen Tan Dung, the president of Vietnam,has signed an act which related to direct selling industry. Ihe act will take effect on July 1^st,it requires that the registered capital of direct selling enterprises must reach 10 billion Vietnamese Dong(US dollars 470,000).Besides, direct selling enterprises must take 5% capital as deposit, but should not less than 5 billion Vietnamese Dong. The deposit should be put in the local Vietnam banks. Direct selling enterprises are also prohibited to sell marketing chain to other companies.This means direct selling enterprises need to invest more money and stop the recruitment of salesmen after publishing in July. Direct selling is a marketing strategy, salesman’s salary is not only from their personal selling, but also from the percentage of selling products by recruiting salesmen. The most common is that salesmen sell products through lower-line relationship and word-of-mouth marketing.This act also strictly controls other aspects of direct selling enterprises system.Direct selling enterprises are prohibited to request salesmen pay for the deposit or entering fee; Also enterprises cannot provide commission or bonus as reward to recruit salesmen any more.Direct selling enterprises’ requirement that salesmen cannot return the commodity is also banned by the act. This act bans saleman to provide false information about direct selling enterprises as well, which including company’s product information and company’s operation information.

Direct selling enterprises will be revoked of business license after stopping

operations one year. The period of validity for related license is 5 years, after that need to extent. Vietnam Ministry of Industry and Trade will process this license independently and instead of provincial Ministry Industry and Trade to deal with related business.According to the statistics of Vietnam Ministry of Industry and Trade, from the first direct selling enterprise moving into Vietnam ten years ago, now hundreds of thousands of people have took part in related business in Vietnam.

Direct selling enterprises have attracted many people to join in by fraud and false advertising. According to the statistics of Vietnam Ministry of Industry and Trade, among more than 60 direct selling enterprises, nearly one third over 20 have closed the registration in Vietnam, 2 have been evoked the license.

(Original title: Vietnamese government tighten direct selling policy, enterprises without qualification ban to recruit salesmen)

Executive editor: Xiao Shen