The problem of affiliation can be described as the "growing pains" of the direct selling industry, and the use of scientific supervision to eliminate the false and retain the true, help market players eliminate the problem, draw the bottom line red line, and standardize the healthy development of the direct selling industry.
On March 1, the 3 15 roundtable discussion on the fulfillment of social responsibility by direct selling enterprises sponsored by the State Administration for Market Regulation ** Supervision and Inspection and Anti-Unfair Competition Bureau was held in Beijing.
In the resolute eradication and resistanceMLM, affiliationand other illegal acts; Strengthen internal management and risk control; In terms of properly handling consumer disputes, all participating companies unanimously expressed that they would take the initiative62 direct selling enterprisesAt the same time, a letter of commitment was signed.
Growing pains?
The issue of affiliation can be described as the "growing pains" of the direct selling industry. In recent years, direct selling enterprises have innovated their business models and explored the integration and development of online and offline at the same timeEnterprises transfer direct sales licenses in disguiseIllegal direct selling or pyramid selling under the guise of direct selling or under the guise of a direct selling license also occurs frequently.
Delineating the bottom line and using scientific supervision to help market players overcome the "growing pains" is not only the focus of the work of the regulatory authorities, but also the focus of direct selling enterprises.
As early as 2021, the State Administration for Market Regulation issued the Notice on Verification of the Disguised Transfer of Direct Selling Business Licenses by Direct Selling Enterprises in the Form of Cooperation, requiring all provincial-level market supervision departments to comprehensively verify the relevant situation of direct selling enterprises in their jurisdictions, focusing on the unauthorized change of the equity of direct selling enterprises, and the cooperation and related parties of direct selling enterprises are affiliated with direct selling enterprises, in the name of direct selling enterprises, and engage in direct selling activities with the help of the influence of direct selling licensesand strengthen coordination and cooperation with public security organs and commercial departments.
The three departments will conduct joint inspections to comprehensively check the illegal cooperation and affiliation of direct selling enterprises.
At the beginning of 2024, before the 3 15 roundtable discussion on the fulfillment of social responsibility by direct selling enterprises, the State Administration for Market Regulation issued a roundtable discussionNotice on Carrying Out Special Investigation and Governance Actions for Direct Selling Affiliation. The goal of action is simple:Crack down on direct selling affiliationStrictly investigate and punish illegal acts such as engaging in direct selling without approval!
Focus on rectifying direct selling enterprises and companies, teams, distributors and other entities outside the enterprise (hereinafter referred to as the affiliated party) through cooperation in the establishment of branches, subsidiaries, joint ventures, business divisions, direct selling systems, etcAffiliated operationThe affiliated party is allowed to engage in business activities in the name of the direct selling enterprise, and the direct selling enterprise is allowed to engage in business activitiesManagement fees are chargedand other expenses for profit.
Almost at the same time, Zhejiang, Liaoning and other municipal supervision departments launched deployments, and this special investigation and governance action can be described as "a game of chess in the country".
Why is the affiliation "normalized"?
According to the statement of the State Administration for Market Regulation in the relevant documents, affiliation in the direct selling industry can be understood as the signing of a contract between a direct selling enterprise and a company, team, distributor and other entities other than the enterprise that allow the affiliated party to engage in business activities in the name of the direct selling enterprise, or business activities such as cooperation and underwriting.
Why is the direct selling affiliation gradually showing a trend of "normalization"? Nothing more than thatFive Causes:
1. Evade crackdowns and supervision, and resolve legal risks;
2. Industry depression: enterprises ensure survival, qualifications, and operation;
3. Complementary advantages: the two sides cooperate to achieve greater market space;
4. Profit-driven: colluding with each other to obtain illegal benefits;
5. The new regulatory challenges brought about by the new business format, and the lag of the two regulations, which affects the regulatory effect;
Last year, the State Administration for Market Regulation officially launched the revision of the "Regulations on the Administration of Direct Selling" and the "Regulations on the Prohibition of Pyramid Selling", using scientific supervision to eliminate the false and retain the true, help market players overcome the "growing pains", draw the bottom line red line, and regulate the healthy development of the direct selling industry.
Draw a red line on the bottom line
The 3 15 roundtable discussion on the fulfillment of social responsibility by direct selling enterprises is also a discussion focusing on affiliation issues, legal responsibility, moral responsibility, and social responsibility after the release of the special investigation and governance action for direct selling affiliation behavior in 2024. The participating companies signed a letter of commitment to take the initiative to eliminate and resist illegal behaviors such as pyramid schemes and affiliation.
The market supervision department will also conduct a comprehensive review of the illegal cooperation and affiliation of direct selling enterprises and related parties, and the behavior that violates the direct selling approval system and the order of the direct selling market of fair competition will be effectively stoppedIt is a wake-up call for enterprises that engage in illegal direct selling and pyramid marketing with "crooked minds and crooked brains".
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