MLM crackdown turns to Amway on July 18

Yesterday, the MoIT announced the results of the inspection of four out of the seven MLM companies it intends to scrutinise according to its plans announced in March.

Three of these companies are Vietnamese, namely Lien Ket Viet Nam, Lien minh tieu dung Viet Nam JSC, and Nhuong Quyen Thuong Mai Thang Long Ltd., and one is foreign, namely K-Link Vietnam, a subsidiary of Malaysian K-Link International Sdn. Bhd. They were all found committing varying degrees of administrative violations.

Common violations include failing to report on operations on time, signing contracts with suppliers that do not follow the format earlier registered with the MoIT, not giving enough information in the contracts, and violating tax regulations, such as wrongly reporting revenue.

The three companies left out from the first round of inspection are American MLM subsidiaries Amway Vietnam and Unicity Marketing Vietnam, and Vietnamese company Thien Ngoc Minh Uy.

Unicity has been crossed from the list because it was earlier inspected by the MoITs Vietnam Competition Authority (VCA) and fined VND110 million ($5,000) for administrative violations, and the government’s Resolution No.35/NQ-CP on supporting the growth of companies in the 2016-2020 period , issued in May, stipulated that government agencies can not inspect a company more than once a year.

Thien Ngoc Minh Uy’s inspection process is closing, and the company is answering for many complaints from suppliers. The results of its inspection are going to be publicised soon by the ministry.

Amway will be inspected starting on July 18.

The MoIT and its departments only fine the companies for their administrative violations, while other violations, such as swindling or tax evasion, are transferred to the police and the General Department of Taxation, respectively.

Deputy Minister Tran Quoc Khanh said if the violations were too serious, the companies would be asked to stop operations.

According to reports from local departments of Industry and Trade, since January this year, they fined 42 MLM companies, registered and unregistered, for all sorts of administrative violations for a total fine of VND2.8 billion ($125,500).

VCA, meanwhile, fined multiple MLM companies for 29 violations for a total of VND4.6 billion ($206,000), suspended two, and stopped the operations of five. In the period, Thai MLM company Aim Star Network and US MLM company Genesis Pure completed procedures to stop operations by their own initiative.

Currently, nearly half of the 61 MLM companies operating in Vietnam are wholly foreign-backed.