Is Shili Wood Direct Selling or MLM?

Hello, target. From your question, you can intuitively feel that you are not very clear about the concepts of direct selling and pyramid selling, so let's first look at what is direct selling and pyramid selling, and then make a judgment.

1April, 998, after China promulgated the Law on Prohibiting MLM, illegal pyramid sellers had no money to cheat, so they continued to cheat in the name of "direct selling". However, no matter how "illegal pyramid selling" is transformed, as long as we pay attention to observation and distinguish the difference between legal direct selling and illegal pyramid selling, we can always see the essence of these scams.

What is direct selling?

The World Direct Selling Association points out that direct selling refers to the marketing activities of consumer goods in places other than fixed retail stores (such as personal residence, workplace or other places), where independent marketers directly introduce products and services to consumers face to face through explanations and demonstrations. Legal direct selling is to deliver high-quality products directly to consumers, and at the same time, it also has perfect after-sales service guarantee and return mechanism, which can avoid the economic losses of consumers and salesmen. Real direct selling is a bright pearl in the field of marketing, which has not only successfully created large multinational companies such as Amway, Mary Kay and Avon, but also its excellent marketing concept and rich management philosophy under this concept, together with the successful cases of these pioneer companies, have been selected as the compulsory teaching materials of Harvard University MBA.

So what exactly is illegal pyramid selling?

1, the State Council's Regulations on Prohibition of MLM defines "MLM" as: "The MLM mentioned in this Regulation refers to the behavior of organizers or operators to develop personnel, calculate and pay the remuneration of the developed personnel based on the number of directly or indirectly developed personnel or sales performance, or require the developed personnel to obtain the qualification to join on the condition of paying a certain fee, seek illegal interests, disrupt economic order and affect social stability."

2. In the Opinions of the Supreme People's Court, the Supreme People's Procuratorate and the Ministry of Public Security on Several Issues Concerning the Application of Laws in Handling Criminal Cases of Organizing and Leading MLM Activities, the definition of MLM is: "In the name of selling goods, providing services and other business activities, participants are required to obtain the qualification to join by paying fees or purchasing goods and services, and based on the number of development personnel directly or indirectly, a hierarchy is formed in a certain order to induce and intimidate participants to continue to develop pyramid schemes involving others. If there are more than 30 people involved in pyramid schemes within the organization and the level is above the third level, the organizers and leaders shall be investigated for criminal responsibility. "

3. According to the Opinions of the State Administration for Industry and Commerce, the Ministry of Public Security and the People's Bank of China on Severely Cracking Down on MLM, disguised pyramid selling and other illegal business activities, the characteristics of pyramid selling or changing distribution behavior mainly include: (1) operators engage in store-free business activities through developing personnel and organizing networks, and participants get paid from offline marketing performance; (2) Participants obtain the qualification to join, introduce or develop others' participation by paying the membership fee or paying the membership fee in disguised form by subscribing for goods (including services, the same below), and get the reward; (3) The first participant benefits from the fees paid by developing offline members, and the amount of benefits is determined by the order of joining; (4) The organizer's income mainly comes from the entry fees paid by participants or the fees paid in disguised form by subscribing for commodities; (five) the organizer will pay part of the expenses paid by the latecomers to pay the remuneration of the latecomers in order to maintain the operation; (six) other personnel engaged in pyramid schemes in disguised form by developing personnel, organizing networks or taking high returns as bait.

The most fundamental difference between legal direct selling and illegal pyramid selling is that legal direct selling companies have their own factories and scientific research institutions, and the products produced and sold are approved by the state. The company and the direct seller are cooperative, and the interests are based on the sale of goods; Illegal pyramid selling companies do not have their own factories, but sell inferior products from other manufacturers to offline members layer by layer, and each layer should be added with intermediate profits. This kind of "indirect sales", which relies on the difference between pyramid selling and direct selling and earns intermediate profits through the conversion of atlas goods, makes the price of goods far from the actual price. The more pyramid selling levels, the higher the price of goods, so that the products of the bottom people can't be sold at all, let alone returned, and suffer huge economic losses.

Direct selling and pyramid selling are both "direct selling" in English. This kind of "store marketing-free" was first introduced to Chinese mainland from Hong Kong and Taiwan, but most of it was translated as "pyramid selling". Due to the existence of a regulatory vacuum, the development model of "Mouse Club" made the management of the direct selling industry out of control and became a street mouse that everyone shouted, so that many people are still discouraged from direct selling until today, and pyramid selling has become a derogatory term. In fact, pyramid selling is an evil variant of direct selling and a product of being used. On the surface, there is only a "wall" between direct selling and illegal pyramid selling. If it is well managed, it is justified. If it is not well managed, it will become an illegal pyramid scheme.

MLM can be simply summarized into three aspects: paying fees, pulling people's heads, and rebates at different levels! Of course, with the progress of society, pyramid schemes and vests are constantly updated, but no matter how they change, they are the same. If you are interested in more anti-fraud information, you can pay attention to my Baijia number "Old Man Prevention", which will continue to update the inside story and reveal pyramid schemes. I hope everyone can be vigilant and stay away from pyramid schemes!